How to do market research
Market research is the process of gathering and analyzing information. It can be to learn about prospective customers, partners, or even competitors for a specific product or service.
The most common type of market research for marketing teams is to better understand customers, so this article focuses on that use case. It also covers partners and competitors but looks at them from a go-to-market perspective.
The purpose of market research done by marketing teams is to deeply understand what your target buyers want, their ability and willingness to pay for it, and their alternative solutions. You can gain valuable insights and use those findings to develop go-to-market strategies that will engage your ideal customers.
Why is market research important?
Market research is essential to the success of your business. You need to know your audience, where your product fits, and what alternative solutions customers could choose — whether you are launching a new product, enhancing an existing offering, or entering a new market. There will always be external forces you cannot control, but if you analyze and understand what you can, then it is possible to adapt accordingly.
Your marketing strategy should be informed by market research, but it is also essential to defining business models, buyer personas, and competitor analysis. For example, when you know what social channels your audience frequents, you will know where to reach them. And then you can plan campaigns and craft messages that resonate.
Even if you frequently interact with your customers and have substantial industry experience, conducting regular research can help uncover new findings and ways to improve your marketing plan.
What are the components of market research?
There are many different aspects of market research to consider. Depending on your product and what you are planning, you might need some or all of these research components. If you are interested in entering a new market, for example, you might investigate the market size, trends, growth potential, and competitor activity there. Below is a table of the common areas that your market research might focus on, presented in alphabetical order.
Buyer demographics and psychographics
Buyer demographics and psychographics consist of the similar characteristics and common beliefs your buyers share. The purpose is to understand your buyers so you can develop relevant campaigns and content.
Buyer power refers to the ability of buyers to impact product quality, price, and customer service. The purpose is to know whether you have strong buyers (that can make an industry more competitive and decrease profit) or weak buyers (that can make an industry less competitive and increase profit) to evaluate the profit potential and competitiveness of a market.
Channels are the approaches you will use to reach your target buyers. The purpose is knowing how to effectively reach and market to your audience.
Competitor activity includes the established players and alternative solutions customers use. You will also want to know how easy or hard it is for new rivals to enter your market. The purpose is to identify and rank the other companies trying to serve the same market as you.
Growth potential is the rate at which your segment will grow. The purpose is to help you evaluate the demand of a market and if it will be worthwhile for your business.
Market size and trends
Market size is how large the market is, and market trends involve the behavior and patterns of the market. The purpose is to understand the opportunity for your product or service and respond to trends.
Partners are the other companies you create alliances with to expand your business. You need to understand your partner dependencies and how much leverage they have. The purpose is to know whether you should continue to pursue a partnership or move on.
Positioning is how you will position your product to your target audience. The purpose is to be able to articulate where your product fits in the market, your competitive differentiators, and why customers should care about it.
Pricing is how much you will charge for your product and how you will structure that charge (monthly, annually, one-time, etc.). The purpose is to set a price that maximizes profits and also considers consumer and market demand.
Risk involves the factors that could negatively impact your business. The purpose is to understand your likelihood of success and what to watch out for.
How to do market research
Now that you are familiar with the typical components of market research, you can start doing the research itself. Strategy templates are a useful way to capture what you know about market forces and share that information with your colleagues. For free templates you can download and customize (including competitor profiles, buyer personas, and positioning frameworks), see the “Marketing strategy templates” guide.
While your research process will vary in complexity depending on the scale and extent of your plans, here are the four core steps for conducting successful market research:
Define objectives: In order to collect the right data, you must first establish what you are trying to learn. Clarify the focus of your research by listing out the questions you have about a problem or opportunity. For example, if you are considering developing a new service, you would want to understand your ideal customer, how much they would be willing to pay, and how to position the offering.
Plan and conduct research: The next step is figuring out where you can find the information you need. You can employ a mix of primary and secondary sources — primary includes interviews, surveys, and focus groups, while secondary consists of sources such as industry publications and trade associations.
Analyze the data: Once you have gathered your data, you will want to review it to determine common themes. It can be helpful to organize your findings with categories based on the market research component they relate to (such as approach, competitor activity, price, and so on).
Share actionable conclusions: Now it is time to share your insights and take action. Document your research and make it accessible to your team. Depending on the type of research you did, you could create a note summarizing your findings or fill out detailed buyer personas and competitive landscape analysis.
How often should market research be done?
Conducting market research is not a one-time effort. It is something you need to constantly monitor as conditions change. If you did initial research while preparing to launch a new product, you will want to do further evaluation afterward to assess how well it was received.
In general, it is vital to stay abreast of industry shifts and changing customer preferences so you can continue improving how you present your product. Make your market research easily accessible so that everyone stays informed — this will lead the entire team to produce better work. And most importantly, it will lead to greater business success because the team will understand what customers really want and how to deliver it to them.
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