How to Pick the Right Market Research
Market research is simply looking at a particular market or market segment that you intend to market a product/service to and determining characteristics about them.
This could include demographic information, like age, sex, income, number of children, married/single, etc.
It can also include psychographic information (also known as AIO, or activities, interests, and opinions). Examples include religious/political affiliation, hobbies, use of social media, or preferences for a particular brand.
However, market research is usually broader than just examining the characteristics of a market or market segment.
It can also include the following:
- Opportunities for your product/service in the existing market
- Examination of competitors, their market share, and their products/services and how they compare to your offering
- Your own offering and how it matches up with target markets/market segments and their wants/needs
Because every market/market segment is different and every product/service is different, market research needs to be unique to your needs.
Types of Market Research
There are many different types of market research, and the type you pick depends on your needs.
Primary vs. Secondary Market Research
Two overarching types of market research exist that you need to pick from:
- Primary market research
- Secondary market research
These terms might be a little daunting, but they’re actually simpler than you might think. Primary market research is just research that you do yourself. This is common for very large brands with internal research and development departments.
However, primary market research is regularly outsourced to companies that specialize in it. This is what most startups and small-to-medium-sized businesses do. It makes a lot more sense than trying to do the research yourself because those experts have the tools and experience necessary to make the most of your research budget.
Secondary market research is just the use of data that someone else has already collected. This might mean you pay to access data that another brand has created themselves, or it might mean paying for research papers from companies that specialize in market research.
In either case, once you’ve determined the type of market research that’s best for your business, then you can choose specific market research methods.
Types of Market Research
Whether you collect the data yourself, outsource data collection, or use existing data, you need to collect that data somehow, and that data needs to be specific.
A few types of data collection methods include:
- Surveys — online, in-person, or over the phone
- Focus groups — online and in-person
- Shop Alongs or ethnographies
- In-home interviews or one-on-one interviews
The names might be daunting, but they’re just different ways of collecting information about your market directly from the people who make up the market.
Surveys are a very common way of collecting data for many businesses. They’re cost-effective, simple to create, and simple to administer.
Many businesses can easily put together surveys themselves. It’s not uncommon to survey your existing customers as that’s a simple group that you can easily access. There are also a lot of free and paid market research tools that can be used to conduct surveys.
Focus groups are more expensive than surveys but can provide much more useful and detailed information. Focus groups should always be conducted by professionals — or at least, you should pay for a professional moderator.
Because you have to pay the participants themselves — and pay much more than you would for them to take a survey — costs for focus groups can be high, so they’re not right for every business.
Shop alongs and ethnographies are when a researcher accompanies a participant as they shop in a store or as they use a product/service in their home. These can be more cost-effective than focus groups, but you only get data from a single person, which generally isn’t enough to base important product/service decisions on.
In-home interviews and one-on-one interviews are very similar to shop alongs and ethnographies, except they often only take place in the home of the participants. Again, they can give you much more in-depth information from a single person than you would get from a focus group, but again, this is only one member of the market, so you’ll need to do a lot of these to get enough data to make decisions accurately.
You can also conduct secondary market research by using existing data, even your own data. For example, an ecommerce website usually has a plethora of data on purchasing habits and content consumption habits of existing customers. This data can be mined to better understand the market.
How to Pick the Right Market Research for Your Business
Ultimately, the type of market research you pick depends on a variety of factors. Here are a few things you need to get in order before you choose any type of market research.
Goals
Each type of market research has benefits and drawbacks, so your goals should drive the type of market research you choose. You also need to consider the type of information you need.
For example, if your goal is to just get a broad understanding of the market’s opinions on a particular product or competitor, a survey might be sufficient.
However, if you have a prototype of a product that needs to get into the hands of the consumer so that you can see how they interact with it, you might want to choose a focus group or one-on-one interviews.
Existing Information (Internal and External)
Once you have your goals in mind, look at what information already exists, both research that has been conducted by other companies and data that you collect internally. You may be able to skip doing surveys entirely, for example, if you already have data on problems with a product based on buyer reviews.
Budget and Time Constraints
Finally, you need to set a budget and outline how quickly you need this data. Focus groups can take a lot of time to set up and administer, but internal research might be able to be done quickly (and at a low cost).
If your budget doesn’t allow for some of the more in-depth types of market research, then you might just need to pick something more cost-effective, like a survey.
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