Research is an essential part of marketing. Unfortunately, not everyone knows how to do market research that will yield the best results. Learn the basics of market research below.
How to Do Market Research to Help You Grow Your Business
What is market research? Simply put, it is the process of gathering and analyzing various information about customers in your target market. It is done in an effort to learn who your customers are, what they want, and how they respond to your product or service. Market research is used in business to improve user experience, inform marketing strategies, and boost conversion rates.
It is important not to confuse market research with market analysis, though some people use these two terms interchangeably. But, what is market analysis anyway? Market analysis is a broader subject and explores a particular market, industry, or sector. It uses existing and historical data to predict potential results. Market research is more specific and studies both the market and its customers. Its goal is to answer questions.
The Two Types of Research
Before learning how to do market research, you must first understand its types. There are two main types of market research — qualitative and quantitative. Qualitative research focuses on information that can’t be quantified or measured in numbers. This type of research is used in determining customer behaviors, opinions, and attitudes. It uses interviews, surveys, and focus groups to collect data.
On the other hand, quantitative research is the exact opposite. It focuses on numerical data which you can methodically collect and analyze in order to test a hypothesis. In short, qualitative research deals with words and descriptions, whereas quantitative research deals with numbers and statistics.
Market Research Components
When performing market research, there are some key components that you must measure, such as:
- Market Size. How big is the market with regard to its sales?
- Trends. What are the trends in the market that can affect your product or service? There could be revolutionary products similar to yours being introduced. New technologies also have the potential to impact your offerings.
- Growth. Has the market grown in the past years? Increased competition can also affect market growth.
- Supply and Demand. Is there still a demand for your product or service? A number of factors can influence supply and demand, such as new competitors and consumer purchasing power.
- Distribution. How are your products and services distributed? Are sales taking place online or in-store? Perhaps there are other available mediums you have yet to explore.
- Profit. Gross sales may be up, but are you profiting from your products and services? Analyzing your profit margin will allow you to determine whether it’s time to reconsider your pricing strategy, costing, etc.
- PESTEL. Analyzing the various political, economic, social, technological, environmental, and legal factors can help you better understand your market.
Sources of Market Information
To properly conduct market research, you must know how to collect relevant data. There are two main possible sources of market information you can use: Primary and Secondary.
To collect from primary sources, you must gather first-hand data about your customers and market. In other words, you have to do this yourself.
Primary sources include contacting potential customers directly, engaging in conferences, holding focus groups, and conducting interviews. This method usually involves more work for your marketing team and generally tends to cost more money.
In contrast, secondary research doesn’t take a lot of time and effort. You can collect data from secondary sources. That means using already-published information as references. This includes data and statistics from your local chamber of commerce, industry reports, associations, and the like. You can also obtain statistics from government agencies such as the Census Bureau, the Bureau of Economic Analysis, the Economic Research Service, etc.
While this method takes less time and money, it is important to keep in mind that data from secondary sources may be outdated and, therefore, no longer reliable.
Market Research Process
Here is how to conduct market research using the six-step process:
1. Identify the Problem
What is the first step in the marketing research process? Easy — the first step is to define the problem, question, or objective. What exactly do you want to accomplish with this market research? What problem are you trying to solve? Is there a question that you need to answer?
It is imperative to clearly define your problem in order to effectively proceed with the market research process. Typical examples of a problem or opportunity include:
- How do visitors locate your website?
- Which market strategies are working?
- What button color converts more leads into customers?
- Which marketing promotions work the best?
- How should we price this new product or service?
2. Decide on a Research Design
The next step in the market research process is to determine your research design. This is your detailed plan of action. This is where you must decide on the specifics. What research method will you use? Will you conduct a survey or hold a focus group? If you’re conducting interviews, will you do it over the phone or in-person? Additionally, who should be included in your sample? Where are you going to find subjects?
3. Plan the Research Instrument
After deciding on a research design, it is time to prepare your instrument. For instance, if you’re going to conduct a survey, this is the point where you should design your survey questionnaire. What questions should you ask in order to get the responses you need? If you’re holding a focus group, prepare the questions you want to ask as well as the materials the moderator will need.
Once you have your final research tool, test it out with a small group first before deploying it en masse. A test run will help you determine if there are any holes in your design. Perhaps there are unclear or misleading questions. Furthermore, testing your tool will allow you to catch problems and fix them before wasting your time and energy with a larger sample size.
4. Collect Relevant Information
Now comes the actual deployment — this is when most of the legwork will happen. This is when you should perform your interviews, hold your focus groups, and conduct your surveys. Additionally, make sure to record your collected data appropriately. This usually comes in the form of a spreadsheet to make the information more organized and structured.
5. Analyze Your Findings
Now that you have your raw data, it’s time to analyze them. You can normally do this with the help of a software or the tools built into the programs you’re using.
For instance, if your raw data is in an Excel spreadsheet, you can use tools such as pivot tables, charts, summaries, and graphs, too.
Organize your data further by separating them into categories or groups like gender, age, income bracket, etc. In doing so, you can pinpoint significant trends in your data and draw conclusions.
6. Make Recommendations and Take Action
After compiling the most relevant points, facts, and ideas, you must then think about your plan of action. Now that you have the answer to your problem or question, make the appropriate recommendations. Finally, implement your business decisions.
A Necessary Component of Marketing
Research will always remain a part of marketing. You can’t learn about your customers without going through the right channels and taking the correct steps. If you want answers to important questions, you must know how to do market research properly. Armed with this weapon, you can blaze through unfamiliar territory, arrive at meaningful conclusions, and then enact the best courses of action.
Tanner Grey specializes in web design and digital marketing — an equally critical part of the marketing process. Contact us online or call us today at 844.500.1339 to learn how we can help you grow your business.
- Hiring A Digital Marketing Agency VS In-House Marketing Team
- 5 Digital Marketing Trends In 2020
- What to Consider When Redesigning Your Website