Building a small business for the first time is really difficult! You have to create a product or a service that’s perfect for your audience. Then you have to tell people you exist. These two tasks are the essence of marketing. While they sound simple, anyone who’s tried them knows how tricky and nuanced it can be.
Enter market research. It’s a straightforward concept: you gather data about people and companies and figure out what people want and need. Do it well and you’re well on your way to crafting the perfect products and services.
In this article, we’ll talk about what market research is and what tools you have available. Then we’re going to give you 9 specific steps you can use right now to grow your business!
- Market research – what is it and why does it matter?
- Primary research vs. secondary research
- How do I do marketing research? (9 Steps)
What is market research, anyway?
My favorite definition of market research comes from Shopify.
Market research consists of systematically gathering data about people or companies – a market – and then analyzing it to better understand what that group of people needs. The results of market research…are then used to help business owners make more informed decisions about the company’s strategies, operations, and potential customer base.
In short, you use all the information available to you to figure out what people want and how (or if) they’re able to get it.
Why bother with market research?
There are a lot of reasons to spend time on market research. In fact, if your business is still just an idea, you should focus heavily on market research at the beginning.
This fantastic article by Oberlo contains some reasons to perform market research, the best of which I’ll list here for you:
- Determine the feasibility of new businesses. In short, you can see if people even care about what you want to make before you spend time and money making it.
- Identify and develop potential new markets. Sometimes, you can watch new trends being born before businesses are able to act. Market research helps you find demand for products or services that don’t exist yet.
- Test the demand of new products of features. This can be a real life-saver. Market research lets you check for product-market fit before you make a whole bunch of a product that no one wants.
- Boost the success of promotional campaigns. When you pay attention to what people are saying online, you can tweak your messaging. Even our own company is working on doing this!
What are your marketing objectives and how does market research help?
Before you start a big research project, stop and think about what you want to come out of it. There are a few different reasons why you would initiate a market research project:
- Starting a business and seeing if it’s viable.
- Looking at related products or services that you want to start selling soon.
- Testing products or services that aren’t ready to be released to the public.
- Improving the ROI of current marketing efforts such as ads.
- Getting in touch with customers and seeing if you’re really meeting their needs.
- Keeping an eye on competition.
- Gauging the size of your current market and other markets.
This is just scratching the surface, too. The point is: think about what you want to get out of market research first.
As you might imagine, there are different kinds of market research. You can broadly categorize them into two types, though: primary research and secondary research.
Sometimes if you want to get good information, you need to go right to the source. By that, we mean the customers!
Marketers over the years have come up with all kinds of ingenious ways to get customers to talk about what they want. Sometimes it’s as simple as informally asking questions. Other times, you want something more rigorous such as a well-made survey.
In any case, a few examples of primary research include focus groups, surveys, and interviews. Note that most primary research methods can be done in-person, on the phone, or online. It really depends on what you and your customers are comfortable with!
There are two basic ways that primary research can be used: exploratory research and specific research.
Exploratory research is where you have open-ended interviews or surveys. You never know what you’re going to hear from your customers, and that’s the beauty of it! Exploratory research is great when you don’t have specific questions you need answered.
But let’s say you do have specific questions that need to be answered. That’s where specific research comes in. With specific research, you ask detailed questions intended to receive precise responses to narrowly-defined questions.
Both kinds of research have their place. Think back to your objectives and really consider whether exploratory or specific research is more useful for you.
The problem with primary research is that it’s subjective. It’s very, very human and that has its ups and downs. Secondary research is more focused on quantitative data. You know the sort – trend reports, statistics, industry data, and more.
Secondary research is better in two cases. The first is if you need hard, empirical data instead of the softer, more human data gathered in primary research. The second case is when you need to analyze your competition.
Where do you turn when gathering secondary research? There are several places you can go:
- Government statistics relevant to your industry
- U.S. Census data
- Bureau of Labor & Statistics data
- Commercial sources such as Pew or McKinsey
- Your own internal data sources (Google Analytics, social media metrics, sales figures, etc.)
Everything we’ve said up until this point is useful for understanding why market research is valuable. But let’s say you’re ready to just dive in and do it. That’s great!
If this describes you, we’ve come up with 9 steps you can follow. These steps will carry you through just about any market research project you can come up with!
1. Understand the basic purposes for market research
We spent most of the first part of this article covering it, but it bears repeating. Market research is best done with specific objectives in mind. You must understand the purpose of the research prior to conducting it for the best results.
If you want another point of view on this, check out this article on The Balance.
2. Know the tools you have available
We touched on this earlier when talking about the difference between primary and secondary research tools. Let’s now get into more depth. You have a lot of research tools at your disposal. Here are just a few:
- Surveys. Whether you use open-ended questions to collect varying responses or specific questions to collect neat, easy-to-classify responses, surveys are an excellent tool for learning about your customers. You can do them online, in-person, and over the phone.
- Focus groups. Sometimes the best way to understand what your customers like is to get 10 of them in a room. Send one person in the room to ask questions and another to take notes.
- Observations. If you have a physical product, give some customers the product and see how they interact with it. The same principle can be applied online by watching how users interact with your website.
- Interviews. One-on-one interviews are also a great way to understand how your customers think. In doing them, you can ask specific questions and see how they responses.
- Industry associations and trade groups.
- Trade journals.
- Government data. As we mentioned before, the Census and BLS typically provide great high-level data for business owners to review.
- Industry experts.
- Websites in general. When in doubt, Google it!
- Competitor websites. Nothing can tell you what competitors are up to quite like reading their website and social media channels.
- Your own web analytics. By paying attention to the pages your customers are accessing and staying on, you can figure out what kind of products or services are likely to go over well in the future.
- Your own email and social media analytics. By looking at your email and social media data, you can see which messages you’re sending that customers are responding to. That can tell you a lot about what they are interested in.
3. Define your target audience
No amount of market research can save you if you don’t know who you are selling to. Think long and hard about the kind of people who are likely to buy products or services from your business. Ask yourself some key questions such as:
- What are my customers interested in?
- Where do they live?
- What kind of media do they consume?
- How much money do they have?
The more specific your answer those questions and others like it are, the better able you will be to create products that meet their needs. After all, customers only choose to buy when they determine that your business is meeting a need!
4. Find your niche
If you really want to succeed in business, you need to find a niche. People have a finite amount of attention and a seemingly endless amount of options available to them. That means you need to laser-focus on a super-specific target audience and create a product that fits them so well and so uniquely that no one else can compare.
If you don’t know your niche, market research – particularly exploratory research – can help you find it. If you do know your niche, you can narrow down your more specific questions to be extremely relevant to the people you’re talking to.
5. Imagine your buyer as a real person (because they are)
Nothing makes companies feel out of touch like speaking about people in groups. You know what I’m talking about.
“Generation Z likes that, but Millenials like this!”
Get out of here with that! You need to think about your buyers as real, breathing individuals – because they are. Some companies such as HubSpot even recommend creating buyer personas. That is, creating a character – like in a novel, movie, or D&D game – and imagining them with certain characteristics. Those includes:
- Job title(s)
- Family size
- Major challenges
You don’t necessarily have to go through a formal “buyer persona” process, but the message here is clear. When coming up with questions for market research to answer, think of individuals and not groups.
6. Reach out to participants
It’s kind of a no-brainer, but you need to get in touch with people if you want to do primary market research. Here are a few ways you can do that:
- Reach out to people who recently bought your product.
- Send an email to regular clients.
- Cold contact people on social media.
- Use incentives such as free items or even money. (We use this when running contests for which one of the entry conditions is “ask a marketing question”).
7. Prepare your questions
Before you send a survey, set up a focus group, or call somebody for an interview, take a moment to write down some questions. When in doubt, stick with open-ended ones. Tailor them based around your market research objectives.
Here are a few generic examples to get you started:
- What are your personal job responsibilities?
- Tell me about your goals.
- What has been your biggest challenge in the past year?
- How familiar are with different options on the market?
- Where do you go to look for more information?
8. Analyze your competition
Once you gather enough information, you will start to have a clearer idea of what customers want. Take a moment at this time to review your own website and your competitors’ websites. How does your company compare to others? Is your competition adequately addressing the needs which you have observed today?
9. Review the results
At long last, after the arduous process of collecting data from different sources – primary and secondary – you have enough to proceed. Take your time and organize your thoughts. Perhaps put together a brief summary report of your findings.
You can do all the market research in the world, but if you never take the time to properly review it, you’ll see limited benefits from it.
If possible and appropriate, take your research and come up with goals for the near future. Perhaps you will launch a new product or start using a new social media channel! The right moves depend entirely on your research.
To spend time on market research is to spend time well. Properly conducted, market research lets you understand your customers more completely as human beings. Your business can then adapt. You can come up with new ways to address your customers’ needs or even simply find new ways to reach out to them.
Either way, the benefits are clear. Schedule some time in the next month to conduct some market research. You’ll be glad you did!