Market research can be the holy grail of customer insights, revealing motivations behind purchase decisions, behavioral patterns, likes, and dislikes. Information like this can help you make informed decisions about creating new products or services, entering new markets, and more.
Done right, market research can be extremely valuable. But not planning properly or taking the wrong approach with market research can tank your efforts and flush valuable marketing dollars down the drain. We created this in-depth guide to help you avoid this unfortunate situation. Keep reading to learn how to do market research the right way — in four easy-to-digest chapters. But before the synopsis, let us summarize the basic market research process in 6 steps.
How to conduct market research
- Identify the problem. The problem may be a dilemma you’ve faced in the past and want to avoid facing again or it may be the need for a new revenue-generating opportunity.
- Establish your budget. Determine how much you’re willing to spend to get the answers you need.
- Design the research. Decide on factors such as sample size, questions, and method.
- Collect the data. How you collect market research data will depend entirely on the research method you chose.
- Analyze and present data. Whatever analysis technique you use, present your findings in a way that clearly and accurately communicates the takeaways.
- Take action. Once you’ve obtained the information you were looking for, take appropriate action.
- Chapter 1: Introduction
- Chapter 2: What is market research? Start out with a solid foundation by understanding what market research is, what it entails, and why it’s important. Bonus: Get tips on creating a buyer persona.
- Chapter 3: The market research process. How does the market research process work? Find out in this chapter, which walks through the six-step research process, from identifying the problem to taking action.
- Chapter 4: Market research methods. What methods can you use to find answers to your burning questions? There are plenty, but we walk through five frequently used methods, when it’s best to employ them, and pitfalls to watch out for.
- Chapter 5: Market research strategies. When you need to round out your market research efforts or gain some quick insights, these market research strategies are great options.
Remember to bookmark this guide for later reference. Market research can be a complex topic, and as your needs change you may need a refresher on approaches or methods you haven’t used before.
What is market research?
Market research is the process of gathering information about a target audience, typically your customers. The purpose is to understand their wants, needs, and preferences; you can then use that data to benefit your organization in a variety of ways.
Why is market research important? As a critical part of business strategy, market research can inform your decisions on a number of things, including
- Future product offerings. What types of products or additional features might customers like to see?
- Current marketing materials. Are they effective, or can they be tailored differently to achieve better results?
- Service structures. What can you change to improve the customer experience?
- Business processes. How could you change them to achieve better outcomes for customers?
Gathering insights directly from customers gives you the opportunity to check your assumptions. Even the most talented of employees can’t read customers’ minds, which is why asking customers for their input is essential to understanding them.
Market research consultant Annalisa Tammaro adds that conducting market research lowers your risk of making the wrong business decision, such as introducing a new product your customers won’t like: “The importance of market research lies in getting customer feedback on a specific subject early on to ensure you’re heading down the right path. Your research findings then provide a key reference point for all related decisions.”
Market research comes in two flavors: primary research and secondary research. We cover these research types below, along with an important foundational component of market research — the buyer persona.
Primary market research
In short, primary market research is research you either conduct yourself or hire someone to conduct for you for a specific purpose. What makes this type of research primary is that you or your designee are going straight to the source to gather the information you want. If you’ve ever put together a focus group, conducted an interview, or sent out a survey to your customers, you’ve done primary research.
For example, if you’re thinking about redesigning one of your products, you’ll want input from customers regarding what they like and don’t like about it. This will give you a sense of what aspects can be improved during the redesign to make the product more appealing. Seeking input from these customers through a survey or similar method would be considered primary market research.
Secondary market research
In contrast, secondary market research is the process of compiling research that’s already been conducted and analyzed, so you can use it for your benefit. Unlike primary research, secondary research may not have been performed for the same purpose for which you’re using it.
Examples of secondary research include publicly available studies by government agencies, for-purchase studies by research firms like Nielsen and Gartner, reports by trade associations, and data collected by competitors. “Even web searches for interesting statistics can be considered secondary research,” explains Tammaro.
Consider the previous example of wanting to redesign one of your products. Instead of expending the effort of setting up a research study of your own customers, you may purchase a completed study using participants that align with your typical customer persona. Depending on the purpose of the purchased research, you may not get answers to specific questions, but it could still provide tangential insights that inspire you to create a completely new type of product.
The key to market research: Buyer personas
A buyer persona is a collection of demographics, behavior patterns, motivations, quotes, goals, and other identifying aspects that represent your ideal customer. Buyer personas are a critical part of market research because they provide a basis for tailoring your research questions and qualifying the input you receive from research participants.
Tammaro provides a few tips on building a buyer persona:
- Identify patterns from available customer data. For example, if you run an e-commerce store, review visitor demographics and their buying behavior to determine commonalities.
- Segment your customers into smaller groups. Not all customers are alike, especially if you have a broad assortment of products. You may need to create multiple buyer personas based on characteristics like age, income, or personality traits.
- Use multiple research methods. With a survey, you can easily reach many customers and identify broad customer demographics or concerns. However, other methods like one-on-one interviews can provide a deeper perspective and unearth emotional motivators you can use to build an in-depth buyer persona.
Now that we’ve introduced you to market research as a concept, let’s move into how the market research process works.
The market research process
Conducting market research can provide you with a wealth of knowledge and information about your customers, but only if you take a thoughtful approach. You can’t simply come up with a few questions off the cuff and send them out. Effective planning and execution are essential. Start by outlining a clear market research process like the one laid out below by Holly Brown, CEO of Boston Research Services.
Step 1: Identify the problem
Your market research problem will differ from those of other businesses, and even in your own business, it will likely change over time. The problem may be a dilemma you’ve faced in the past and want to avoid facing again, or it may be the need for a new revenue-generating opportunity.
Here are a few examples of potential business problems you can address through market research:
- Customers, prospects, and the general public have a negative perception of your brand.
- You’re confused about exactly what drives customers to purchase your products or services (or, more generally, the types of products and services you provide).
- You believe there’s more potential profit in your products.
- You’re unsure about how customers will respond to an upcoming ad campaign.
Once you’ve identified your overarching business problem, Brown recommends coming up with two or three related objectives to explore. Limiting your objectives “helps you avoid respondent fatigue from asking too many questions, but also ensures you don’t develop tunnel vision.”
Step 2: Establish your budget
Market research always has a cost. You must determine how much you’re willing to spend to get the answers you need. The larger and more complex the problem, the more you should budget, even if you’re doing everything in house.
If you’re willing to let a market research firm do the legwork, Brown recommends contacting three firms for quotes. You’ll need to provide your criteria and audience demographics, among other aspects.
Ensure the quotes you receive include the programming of the survey; field work, such as hosting interviews and gathering data; data analysis; and delivery of results. Be prepared for extra fees if you require additional components, such as regression analysis or segmentation, which are more complex statistical methods for analyzing data.
Step 3: Design the research
This step is the “how” of the market research process, when you decide on factors such as
- Sample size and characteristics. Choosing the right sample size depends on a number of factors. For one, are you reaching out to current customers (which will be limited), a representative sampling of customer look-alikes, or a broad demographic? In addition, your topic can limit the number of available participants. For example, semiconductors are more niche than TVs, meaning there are fewer participants who can answer questions about them.
- Questions. Whatever method you go with, you’ll need to determine exactly what questions to ask and which answer choices to provide, if any. Recall the objectives you set. “If a question doesn’t help achieve one of your objectives, don’t use it,” cautions Brown.
- Method. You’ll need to select a mode of delivery for your questions, such as a survey, interview, or focus group. The questions you come up with will help you choose a method. For example, open-ended questions work better in an interview or focus group setting than a survey.
Step 4: Collect the data
How you collect market research data will depend entirely on the research method you chose. For example, if you chose a survey, you can use a robust survey tool to distribute and collect your data for later analysis. If you chose an interview, you may have recordings from participants you’ve transcribed for later review.
Step 5: Analyze and present data
Your market research analysis approach should reflect your chosen method.
Quantitative methods like surveys with closed-ended questions can use techniques such as cluster analysis, which separates objects into specific, exclusive groups that are similar. Qualitative methods like interviews call for techniques, such as analytical induction, where you hypothesize and re-hypothesize the reason for events as you learn about similar events.
Whatever analysis technique you use, present your findings in a way that clearly and accurately communicates the takeaways. This could be in the form of simple statements, tables, graphs, slides, etc.
Step 6: Take action
Once you’ve obtained the information you were looking for, take appropriate action. Your actions will depend on your objectives, but here are a few examples of actions you might take:
- Direct your marketing toward a new or different type of customer.
- Highlight a specific benefit or feature of your product in marketing campaigns.
- Change your product or service’s pricing structure.
In step three, we mentioned selecting an appropriate market research method. In the next chapter, we’ll walk through several widely used methods and when they should be used.
Market research methods
When you’ve identified your problem and established your budget, the next step is to choose the appropriate market research method (sometimes referred to as a market research technique).
Whether you’re gathering quantitative or qualitative data, or a mix of the two, the market research methods below are some of the most frequently ones used to gather key information for decision making.
Market research focus groups are widely used to gather qualitative data. With focus groups, you bring together a small selection of people to ask their opinions or gauge their reactions to a stimulus. The people are typically representative of your customers, and the stimulus is usually one of your products. A moderator leads the session.
Mark McElwain, a market research expert with SRAX, says focus groups are a great way to drill down on a specific topic, such as feelings about a new product. His key recommendation for getting the most out of a focus group: Employ a talented moderator.
According to McElwain, the moderator can make or break your focus group. “Extracting insightful answers from participants takes a certain level of finesse. You have to get people to open up and talk at length, and that takes knowing people and being able to read the room. A great moderator can get insights from people in any focus group, whether it’s one about the Oprah Winfrey Network or Mercedes.”
One thing McElwain says to look out for with focus groups is group think — where one participant’s opinions become so overbearing, they influence the opinions of the rest of the participants. “If a moderator can’t maintain control of the room, one participant can wind up directing the conversation and subsequently skew results.”
Unlike focus groups, qualitative interviews offer a more individualized approach to gaining customer insights. And while the moderator (or interviewer) is still important here, your market research interview questions are the most important component of a successful interview.
Pay extra attention to ensure your questions align with your objectives, and that they are open-ended to elicit in-depth responses, whether you’re conducting your interview in person or online.
McElwain says interviews are another useful way to go deep regarding a specific topic, but they are also generally more expensive and less scalable than focus groups. “Like any market research method, the interview has benefits and drawbacks. For example, the interviewee may be more open without the presence of other people, but you’re also only getting a single perspective.”
Market research surveys tend to be more quantitative in nature, as most questions are closed-ended, requiring a simple yes or no response, or multiple-choice answer. Surveys are great for reaching a wide audience — think hundreds or thousands of people — because they can be done online and anonymously.
Easy-to-use tools like JotForm help you quickly create, distribute, and collect data for all manner of market research surveys.
Observation market research is qualitative and involves directly observing participants using your product in the “real world” or a representative environment. The purpose is to study customer behaviors that naturally occur in certain contexts surrounding your product to better understand customers.
However, McElwain cautions that observation market research has its issues: “The danger is you only have an experiment group, instead of an additional control group. This makes it impossible to compare results as you would with more scientific observation research.”
The market research study (or field study) is a qualitative form of research that encompasses a number of methods requiring in-person interaction. For example, observation, focus groups, and interviews can all be considered field studies in some way. One method that departs from these examples is the in-home usage study.
An in-home usage study is most frequently used to test products. Participants use (and typically keep) your product, documenting their usage over a predetermined time period. For example, you may send participants a new dishwashing soap that they are supposed to use daily. Every day, participants respond to a survey that asks questions about their experience, such as how well the soap performed on tough cleaning jobs.
Now that we’ve covered the methods, let’s get strategic. The next chapter goes into the various strategies you can employ with market research.
Market research strategies
You can perform market research in a number of ways.
While the standard methods of surveying and the like are valuable, there are also unique market research strategies you can employ to gain not only information but different perspectives that can further inform your decision making and even prime your more traditional research methods.
Below we describe several less-structured strategies you can try out today.
Following industry publications that relate to your product or service helps you keep a finger on the pulse of your market — trends, competitor happenings, new problems customers are facing, and shifts in customer demand. These publications can also help identify the right questions to ask in a survey or interview as well as questions to ask internally to improve business processes for better customer outcomes.
In many cases, you can also partner with industry publications to access or purchase their list of readers; you can then try to engage with those people using traditional research methods like surveys.
When you want to gain insight about your competitors, competitive assessments offer solid learning opportunities. “They help you understand how competing brands are viewed from a customer’s point of view,” explains George Kuhn, president of Drive Research.
Competitive assessments often include a range of activities to gain a full picture of the competitive landscape:
- Research competitors’ websites. Most companies have a collection of white papers, e-books, blogs, brochures, case studies, and other content that showcases their expertise.
- Enlist mystery shoppers to make calls and send emails. Mystery shoppers pose as customers to observe and measure competitors’ customer experiences.
- Conduct customer interviews. Going straight to the source is often the best way to be in the know. In person, such as at a mall, you may need to get permission before asking for customer feedback about a shopping experience, but it can be worthwhile to get this kind of input.
Kuhn shares an example of an apartment developer who wanted to minimize the risk associated with building a new complex — i.e., Will people rent if we build here?
His firm performed a competitive assessment, inventorying the market and conducting mystery shopping calls to get an idea of the number of unoccupied units, typical amenities offered, square footage ranges, etc. His team also performed a market analysis to see where the population was shifting, how much customers were willing to pay, and what they were looking for in a rental community.
Internet market research
As a tried and true strategy, internet market research can answer many of your questions — whether they’re about competitors or customers. However, despite the ease of conducting internet research and the plethora of information that’s available, Kuhn says this strategy can be problematic.
“For one, you have to be careful with your search terms. Even changing a single word in a phrase can produce significantly different search results. More importantly, knowing which sources to trust is a big issue. Just because a site ‘answers’ your question doesn’t mean the answer was accurate,” Kuhn says.
Social media market research
With the rise in online socialization, social media market research has quickly become a viable way to gain information about customer sentiment. Kuhn says there are two main angles to using social media: using your own or competitors’ social accounts to mine insights, and using your social account as a primary research tool.
“Your social media account gives you great data points to learn more about the people who follow you, which should mostly consist of your customers and prospects,” explains Kuhn. This includes demographic data such as age and location. Meanwhile, reviewing both your account and your competitors’ accounts can tell you what type of content people are responding to, as well as what people are saying about that content or the brand that shared it.
Alternatively, you can use your social media account as a vehicle for other research methods, such as surveys. “You can run ads on social platforms. For example, if you’re a brick-and-mortar retailer, you can target surveys to people living close to your store to gauge whether they’re aware of your presence and, if so, why they haven’t visited. You can then use their responses to improve your marketing.”
Strategizing is important, but it’s also important to know what tools are available to conduct market research. Check out JotForm, our easy-to-use form builder for creating and distributing surveys and interview questionnaires, as well as collecting and organizing responses.
More about your market research guides
Annalisa Tammaro has over 20 years of market research experience in a variety of industries, with vast knowledge of quantitative and qualitative research methods. Her strengths include management and communication skills, which she combines with her ability to help others draw critical connections between research results and business opportunities.
George Kuhn is the president of Drive Research, a market research company in upstate New York. He has 15 years of experience in market research managing both qualitative and quantitative research for brands like FedEx, Google, Samsung, T-Mobile, PBS, and Clorox.
Holly Brown is the president and CEO of Boston Research Services, a full-service market research firm located in Auburn, Massachusetts. She has 20 years of experience helping companies with their market research needs, from providing sample audiences and fielding their surveys to analyzing their data.
Mark McElwain has been in the market research space for over 10 years, working for companies such as E-Rewards (Dynata), Nielsen, FocusVision, and now SRAX. With both domestic and international operations experience, Mark brings a depth of knowledge to all manner of market research engagements.