Running a successful small business involves conducting in-depth research on the market. The wealth of information gained from market research can help businesses to decide which products to sell, how to market them and what pricing strategies to use.
However, there are many different types of market research available. Understanding your goals and the advantages of each kind of research will help you decide which methods to employ for your business.
What Is Market Research and Why Is it Important?
Market research is the process of collecting and analyzing information about a particular market. It includes interpreting information about how a product is received in that market as well as what the history of similar products looks like. In addition, market research involves understanding the characteristics and spending habits of your target customers, including how much they are willing to spend, where they like to shop and what problems they are facing.
Market research also involves gathering data on competitive businesses in your industry. It’s important to know what products and services they offer, what pricing strategies and business models they use and how they appeal to customers with their marketing campaigns.
Through market research, companies can understand the viability of a product or business idea before fully embarking on the venture. Market research is an integral part of the core of the business. In addition to helping companies understand the industry as a whole, it also plays an important role in market segmentation and developing a brand identity.
Difference Between Quantitative and Qualitative Data
There are several different types of market research, each with a particular strength for attaining specific information. When deciding what kind of market research you want to use in your business, consider whether the data you will receive is quantitative or qualitative. The kind of data you have will determine the types of insights you’re able to glean from it.
Quantitative data, as the name suggests, provides businesses with numerical data that requires statistical analysis. The types of market research methods that yield this type of information are surveys and public and commercial research sources.
Examples of quantitative market research data include how many prospects are aware of your brand, what prospects are willing to spend on a product or how many competitive products exist in the market. Quantitative data can help businesses find the answers to the questions what, who, where and when.
Qualitative data, on the other hand, is non-numerical and provides information about customer behavior and industry trends. Examples of market research methods that result in qualitative data include focus groups, in-depth interviews and unstructured questions.
Examples of qualitative data include customer opinions on your brand logo, in-depth analyses on competitive businesses or market attitudes toward a new product. In contrast to quantitative data, qualitative data helps answer the questions of why and how.
Differentiating Between Primary and Secondary Research
The way information is gathered also determines what kind of market research your business will use. Market research methods fall into two distinct categories: primary and secondary. Primary research is anything that your business conducts itself or with a third party, like a market research firm. It can include both quantitative and qualitative data.
On the other hand, secondary research is market research that has already been conducted by someone else and has been published. It may include research from others in your industry or government organizations. Secondary research leans toward providing more quantitative data than qualitative data.
1. Surveys and Questionnaires
Surveys are a primary research method that provide quantitative data. They are easily accessible by small businesses since they can be run online through many free or paid platforms, like SurveyMonkey. Surveys are great for learning about your customer segments, brand awareness, pricing strategies and customer satisfaction. Often, surveys use multiple choice or yes/no questions.
Questionnaires, while similar to surveys, employ long-form written questions instead. They are perfect when the businesses requires more insight or detail about a certain area. Often, questionnaires are used for customer feedback and for learning about customer loyalty.
2. Focus Groups and Interviews
Focus groups are a useful tool for learning about user opinions on price, advertising concepts and marketing messages. A focus group consists of a small group of diverse participants who interact with and influence one another. A facilitator leads the group through several topics and manages the open-ended discussion so the business can hear several viewpoints.
Interviews, on the other hand, are conducted one on one. This is a beneficial way to get advice from experts, industry leaders and mentors. By providing detailed qualitative data, interviews with key individuals in the market such as analysts, industry executives and consumers can provide businesses with new target audience insights.
Both focus groups and interviews can be conducted live in person or through teleconferencing or video conferencing. While it is beneficial to have face-to-face meetings, being able to speak digitally makes this kind of market research more cost effective for small businesses.
3. Publicly Available Information
There is a wealth of already-published information that small businesses can use to learn more about their market and consumers. Some of this information is freely available online, while other details can be purchased or viewed through a subscription to the organization. Publicly available market research includes:
- Industry sales data: Associations in your industry may publish annual reports with sales data that includes your competitors. This is a valuable way to understand the success metrics in your industry and see where your business is relative to them.
- Industry trends: Current sales data is important, but when looking at the bigger picture, it’s vital to understand industry trends. Publications and associations within your industry may publish trends and forecasts. Market research organizations such as IBISWorld also publish commercial data on consumers and industries.
- Government statistics and publications: If you’re looking for information on patents, you can find it in government publications. Data.gov contains all of the freely available data from the U.S. government. You can also look at resources from the World Bank and Pew Research Center.
- Government census: The U.S. Census Bureau is a great resource for learning about demographic data in specific locations. This is particularly useful for businesses that are entering a new market or expanding their target market.
- Educational institutions: Many technical schools and universities conduct industry research in specific areas. They can provide information on industry trends, historical background information and upcoming forecasts.
Publicly available information is heavy on qualitative data. As a result, your business will need to conduct data and statistical analyses to understand how that data affects your business. For example, a census may tell you how many people of a particular age group live in the vicinity of your business, but you will need to decide how that information is relevant to your company.
4. Brand and Media Research
A company’s brand includes everything from the logo and website to the people running it. It’s important to know how prospects and consumers feel about your brand, and this kind of market research can provide qualitative data through a combination of methods that include interviews, focus groups, surveys and proof of concepts. Brand and media research can help a business to understand market views on brand recall and awareness, brand loyalty, brand image and trust.
When developing a brand or changing brand direction, it’s important to consult leading industry magazines, newspapers and TV media to see the popular trends. This is also a good way to keep up with competitor advertising campaigns and understand the trends on which your counterparts are focusing.
5. Customer Profiles
A customer profile is a reference tool that every business needs. It contains detailed information on your ideal customer’s demographic, geographic, psychographic and behavioral traits. This business tool should be updated frequently so that the information you have is current. If your customers’ needs change, then the business should be able to pivot to meet them.
A combination of several different market research methods can be used to build and maintain a customer profile. Some of these include surveys, public information and focus groups.
6. Test Markets and A/B Testing
Using test markets and A/B testing in market research is a useful way to understand how new marketing campaigns are received by prospects and consumers. Through this method, businesses can test different taglines and marketing messages on a small audience before rolling out the campaign to their full target base. By gleaning the data from the test, businesses can tweak marketing campaigns so that they have the maximum appeal for consumers.
Many online tools such as Google Optimize offer free and paid versions of services that enable businesses to test different versions of their website on small groups of people.
7. Online Analytics
A company’s website provides a wealth of data. This method of market research involves using software and data-collection tools to analyze your website visitors’ behavior. By learning what your prospects are doing on your site, you can optimize content to meet your goals, such as closing sales, building engagement and increasing brand awareness.
Tools like Google Analytics can help businesses to understand how users find their websites, which pages they visit the most and how long they stay on each page. A customer relationship management tool like Salesforce enables businesses to collect detailed information about their customer base.
8. Competitive Analyses
Keep your friends close but keep your enemies even closer, as the saying goes. It’s critical for businesses to know what others in the same industry are doing. As a result, competitive market research and analysis is one of the most important methods a small business can employ. Some information about competitors can be gleaned through secondary sources, such as industry publications or government reports.
Other competitive research can be done in house by visiting their locations or websites and making detailed observations about products, marketing campaigns and promotions. By learning what your competitors are up to, businesses can make decisions on which products to roll out and how to differentiate themselves in the market.
Deciding Which Types of Market Research Are Right for Your Business
It can be difficult to figure out which types of market research are right for your business. Keep in mind that the best place to start is by identifying your goal. What do you want to achieve with the information? This will help you determine which method is right for you. For example, if you want to know how your customers perceive your brand, then you can use a combination of focus groups, surveys and interviews, for example.
When it comes to using primary or secondary research, take a look at your market research budget and schedule. Acquiring primary research can be time consuming and costly, but it is very rewarding and tailored to your business. On the other hand, a lot of secondary research is free and readily available, but it needs to be analyzed according to your business goals.
You don’t need to use only one kind of market research method. Many methods can be used in combination with others to round out the type of data you gather. Always be sure to consider the objective of the research first and then find the process to help you achieve your goal.