What is market research and how does it fit within a company’s Marketing Strategy process?
Market research is an important part of any company’s marketing strategy process. It can help a company uncover what will resonate with the new target audience, as well as what marketing strategies will be the most successful.
Simply put, market research is the systematic process of collecting, analyzing, and interpreting information about a target market, consumers, competitors, and the industry as a whole. It’s an essential tool for entrepreneurs, as it helps them make well-informed decisions and take the guesswork out of innovation.
Businesses at different stages of growth carry out market research for different reasons. Startups might conduct market research to determine the feasibility of a new business, while more established companies might use it to identify and develop potential new markets. Whatever the reason, market research is an indispensable tool for making informed decisions about products, services, and marketing strategies.
To put things in perspective, The global revenue of the market research industry exceeded 76.4 billion U.S. dollars in 2021, growing more than twofold since 2008. In 2020, North America generated the largest share of market research revenue, representing 54 percent of the total, followed by Europe with 23 percent (Statista)
Why Market Research is so critical to any business?
Keep in mind that market research is an ongoing process. As your business grows and evolves, so too should your market research efforts. Staying on top of marketing trends, testing the demand for new products or features, and making sure you’re placing your products in the right places is a necessity in a world that changes so rapidly year after year.
You might find myths and misconceptions about market research, and some people have a strong aversion to the word “research” because they believe that it implies a highly sophisticated set of techniques that only highly trained people can use. Others believe that, too often, research generates lots of useless data that is in lots of written reports that rarely are ever read, much less used in the real world.
But the truth is, that market research has a variety of purposes, and a variety of data collection methods might be used for each purpose. The particular data collection method that you use during your market research depends very much on the particular information that you are seeking to understand.
What are the different types of market research?
Primary vs Secondary Data Gathering
There are two main types of market research data: primary and secondary.
Primary research is conducted by the business itself or by someone hired by the business. This type of research is used to gather pieces of information that are not already available in the public domain. In this context, the business hires a marketing research firm specifically to perform research on a topic. Secondary research is conducted by an outside source, such as a government agency or university. This type of research is used to gather the information that is already available in the public domain (in other words, free or public reports and publications).
Both approaches are valid and normally a company should be very aware of the sources of information pertaining to its own field of business, but surely primary research is king when the objective of the research is very specific to the company itself. Start by scanning websites like Euromonitor or Statista if you are interested in professionally made reports. Complement with other findings via the omnipresent Google, but avoid deriving business decisions from sources that are not professional.
Qualitative vs Quantitative methodologies for market research
First things first, there’s no winner between Qualitative and Quantitative research, they are equally needed though serve different objectives.
Qualitative research gathers data that is not numerical, and It is used to understand attitudes and behaviors. You can’t “quantify” the findings, but the depth of understanding of the research objective can be substantial. Quantitative research gathers data that is numerical. It is used to measure outcomes and trends. Data coming out as a result of quantitative research can be objectively quantified and, since the sample of people involved in the research should be representative of the population it represents, the findings have statistical significance.
To oversimplify, qualitative research should uncover the “why”, while quantitative market research is interested in the how many.
The Market Research Process: Methods and Tools
There are many different data collection methods and tools, including surveys, focus groups, observation, and interviews.
Surveys
Are the most common type of quantitative research. This is because it is a common understanding that they are easier to produce and (thanks to digital technologies) distribute. They are normally used to collect data from a large number of people. Professional questionnaires are carefully assembled with intent and method in both form, wording, and sequencing.
Focus groups
Are used to gather data from a small number of people, once again carefully selected by researchers based on demographics, psychographics, and other criteria. They are used to understand attitudes and opinions. People who participate in a focus group are generally rewarded for their time with a small sum. During the session, a moderator asks an open-ended question and lets the group resonate around a topic. The key in focus groups is the moderator’s ability to conduct the discussion and interpret the reactions understanding the psychologies behind certain answers and reactions.
Interviews
Are used to gather data from a small number of people. They are used to understand attitudes and opinions. Similar to questionnaires, the researcher conducted interviews personally (CAPI), by phone (CATI)
Observation
Is used to gather data about what people do, rather than what they say. It is used to understand behaviors. A typical example is when a company is trying to understand the shopping behavior, filming customers while they shop. A special type of observational research, called ethnographic research, literally brings the researcher to live certain situations together with the customer (at home or at work generally). What’s the objective? Deeply understanding the context behind how decisions are taken and actions are done.
The Market Research Process: Steps
Define your research objectives
In order to complete your market research project, you’ll need to set specific objectives. The objective should be something that can be measured and is focused on the how of the study, rather than the what.
Avoid the common trap of wanting to know everything from your customers. Very common for all marketing managers! I still remember the pressing of my researcher continually asking me “What do you really want to know?”. Remember you are spending money on research to take a business decision: What is the key piece of information you need to steer that decision left or right?
Find the right market research partner. It is key to your success.
The best advice is to partner with a professional researcher: he/she knows the nuances behind market research development.
Together with the researchers, you can brainstorm over the best method to pick (see above) but also who and how many customers you need to onboard. This is a critical concept: sampling.
Because researching all the people that populate your market (a.k.a population) would be impossible and highly inefficient, the researcher needs to define your target sample size and make sure it is representative of the population. He/She can do this by using a probability or non-probability sampling method. As a general rule of thumb: performing quantitative research with less than 100 people in each cohort gives you results that are less statistically relevant. Without getting into statistics, this is what you need to know.
There are two types of sampling methods – probability and non-probability. Probability sampling involves selecting respondents in such a way that every unit in the population has an equal chance of being selected for inclusion in the study sample. Non-probability sampling, on the other hand, does not involve any selection process and is often used when it is not possible or practical to randomly select respondents. Moreover, Once you’ve chosen your sampling method, it’s important to avoid bias in your sample by ensuring that the respondents are representative of the population. This can be done by using stratified sampling or cluster sampling.
Easy right? That’s the difference between creating your survey and performing professional research. That’s why a professional researcher should be involved
Analyze and Process data gathered.
Data that come out of the research are not immediately useful for your business decisions. This is valid for quantitative research too, but especially clear for qualitative. In this phase, you (or your research partner) adopt statically known techniques that “normalize” data so as to minimize any possible bias. I have attended many Focus Groups for example and I can guarantee you that what you hear during the group can form an opinion in your, resulting in poor judgments.
How do I use my market research findings to make decisions about my business?
Now that you have conducted your market research, it is time to put the findings to use! Go back to the questions you had before starting the research and see how the data gathered informs you in taking those decisions. At this point, I am sure you’ve got some clear answers and newly formed questions. This is quite common and shouldn’t discourage you as, at the end of the day, Management still navigates with some uncertainties all the time.
The role of market research is, once again, to inform decisions providing the best possible ground to take them.
It’s time to go back to the desk and plan for corrective actions, prioritize features, and decide on communication.
Let me stress once again that market research is an ongoing process, not a one for all investigation. You should continually be gathering information so that you can make decisions that are in line with the current needs of your customers.
What are some common mistakes businesses make with regard to market research?
There are a few common mistakes businesses make when conducting their market research. One is not having a clear objective for their research. Without a specific goal in mind, it can be difficult to stay focused and determine whether or not the research is successful.
Second, businesses often do not know who their target customers are. This can lead to them wasting time and resources trying to reach people who are not interested in what they have to offer. It’s much more effective to focus on those who are most likely to buy from you and this decision comes from experience, by partnering with a researcher specialized in your company domain and pulling together data that your company should already have.
Third, businesses sometimes forget that knowing who they don’t serve helps them define who they do. Focusing on a niche can be more profitable than trying to appeal to everyone.
Finally, many businesses don’t learn from their competition. Studying what your competitors are doing and how they’re doing it can give you valuable insights into the market. You may even find ways to improve upon what they’re doing.
In conclusion, how can I avoid making these mistakes in my own market research?
It’s important to learn from the mistakes of others. Here are a few common mistakes people make and how you can avoid them:
1. Failing to do your research. This is perhaps the most important thing you can do when starting a business. Make sure you know your target market, your competition, and what solutions you offer that are unique.
2. Not planning for the long term. Too many businesses focus on short-term gains rather than long-term success. Plan for the future and put systems in place that will help your business grow.
3. Not taking advantage of technology. Technology can help you streamline your processes, reach more customers, and automate tasks. Don’t be afraid to use it to your advantage!
4. Not having a clear vision. A business needs a clear vision and mission to succeed. Know what you want your business to achieve and develop a plan to get there.
5. Failing to adapt. The world is constantly changing, and businesses that don’t adapt will quickly fall behind. Be willing to change with the times and experiment with new strategies and tactics.
6. Perform research that’s not research. I hope you understood, by now, that what the Startup world call research is in most cases a handmade set of questions that have no scientific relevance. This is not to blame startup theories (better to ask a few questions that not asking at all), but an operating business can’t do guesswork when it comes to informing key decisions that affect their bottom line. If you don’t have an internal researcher or department, outsource to professionals.
