New products and services don't just happen; they are the result of interactions with consumers, market assessment, and other similar activities that can be aptly described as market research. Market research allows manufacturers and service providers to evaluate the feasibility of their product or service by providing valuable insights into consumer needs and behaviors.
With no doubt, conducting market research is the first step in the realization of a new product or service. Understanding what market research is and how to go about it, can unlock a plethora of benefits for your product or service; especially in terms of sales and consumer engagements.
Market research is an investigation into the viability of a new product or service in terms of its target market(s). It is a process of evaluation that entails carrying out a feasibility study for a product or service through interacting with its potential customers and possible target markets.
One way to understand market research is to view it as an aggregation of different processes and actions that ultimately influence your everyday decision making. For instance, before stocking your home with groceries, you conduct some background checks to ascertain that you really need them.
Market research bridges the gap between a product or service and the consumer or target market. The insights gained through market research help the manufacturer or service provider to create a product or service solution that caters to the specific needs of the target market.
There are two types of market research, namely; the primary market research and secondary market research. In primary market research, the organization collects data directly from the sources while in secondary market research, the organization relies on already gathered information to understand the target market.
Primary market research is a research approach that entails gathering information from target markets; either through a third-party or by getting in touch with consumers directly. This type of market research can take a qualitative or quantitative approach, and the data gathered can be exploratory or specific.
Exploratory data is typically open-ended or generic in nature while specific data is close-ended and tailored to definite scenarios. As mentioned earlier, primary market research can be segmented into 2 – qualitative market research and quantitative market research.
Quantitative market research is a research approach that gathers quantifiable data from the target market and consumers. This research methodology allows organizations to gain definite insights into the peculiarities of a target market using different tools like surveys, polls, and questionnaires.
Quantitative market research adopts a scientific approach to data collection and it leverages deductive reasoning in order to arrive at useful insights that can inform practical decision making. Here, the organization takes a calculated guess (hypothesis), collects data and analyzes the data in order to confirm or refute the hypothesis.
Qualitative market research is an investigative approach that gathers qualitative data from target markets using tools and methods like focus groups and interviews. Qualitative market research works with a small but highly validated sample size in order to gather objective data that translates to insightful information.
This research approach can be adopted when you need to gather data bothering on the psychological profile or perception of the research subject(s). Results from qualitative market research can help an organization to refocus its brand on the specific needs of the market by allowing you to understand the consumers' behaviors.
A survey is a research tool that is used to collect data from a predetermined research sample. It typically consists of a set of standardized questions in which respondents provide answers to either online or offline via paper forms.
One of the many advantages of using a survey for primary market research is that it allows you to gather data from a large sample size that effectively represents your target market. In addition to this, a survey is a convenient method of data collection and it also helps you to save time and cost.
In spite of these advantages, a major challenge experienced with surveys and online questionnaires is survey bias. This happens when respondents provide false or inaccurate answers due to a number of reasons including fatigue and poor comprehension of the questions.
An interview is a data collection method that involves interacting personally with research subjects in order to collect relevant information from them. During an interview, the researcher (interviewer) asks the respondent a set of questions that can be close-ended or open-ended depending on the predetermined objectives.
There are 3 types of interviews that can be used in primary market research, namely; structured interview, semi-structured interview, and unstructured interview. Structured interviews are close-ended because they make use of premeditated questions while an unstructured interview is open-ended as it relies on spontaneity.
A semi-structured interview is a type of qualitative interview that has a set of premeditated questions, yet, allows the interviewer to explore new developments in the cause of the interview. In some way, it represents the midpoint between structured and unstructured interviews.
As a result of its one-on-one nature, an interview allows for detailed data collection and also helps you to gather more accurate and objective information from respondents in quantitative market research. Apart from the verbal answers provided, gestures and non-verbal communication also provide useful insights during interviews.
Observation is a data collection method that involves paying attention to research subjects as they interact in their natural environment in order to gather useful insights into their behaviors. It is a common research method and it can be quantitative or qualitative in nature.
In quantitative observation, the researcher focuses on the numbers; that is, observing the research subject in terms of numerical values like age, weight, and volume. Qualitative observation, on the other hand, utilizes the 5 sensory organs, together with subjective parameters, while examining research variables.
Observation, whether qualitative or quantitative, is the easiest and most common method of data collection. Also, it results in more accurate data because the researcher has the opportunity to filter and verify the information that has been observed from the research subjects.
However, this method of data collection is quite subjective because it is prone to generalizations from the researcher. Since the quality of data gathered via the observation method can be affected by the researcher's bias, it is important for observation to be carried out by an expert.
Observation can also take a naturalistic or participant approach. In naturalistic observation, the researcher is absolutely removed from the research environment; that is, he or she has no direct contact with the research subjects as they interact and exhibit their behaviors.
A focus group is a small set of demographically diverse participants who are brought together to provide a series of information about a product or service. It is one of the most common methods of gathering data in primary market research.
The interactions in the focus group are usually coordinated by the moderator who ensures that the conversation remains within the boundaries of the research aim and objectives. This ensures that the data collected is relevant to market research.
A focus group can be made up of 6-12 individuals and the questions asked can be both close-ended and open-ended in nature depending on the peculiarities of the research. Focus groups are designed to identify and understand perceptions and to gain insights into how consumers feel about a particular product or service.
Apart from being an easy way to gather data from target markets, focus groups enable you to gather in-depth information about the feelings, views, and perceptions of the consumers in relation to your product or service. Participants can freely communicate their viewpoints and confirm or refute each other's experiences.
Secondary market research takes an investigative approach where the organization depends on available information in order to gain insights into consumers and target markets. Here, the organization does not gather information directly from the research subjects, rather, it depends on existing data.
Secondary market research data can be collected from different sources including libraries, journals, newspapers, publications, and a research thesis. Also, this type of research helps organizations to save time and money instead of investing resources in data gathering and processing from scratch.
Reporting is a secondary research method that involves collecting data from relevant sources, which is subjected to further verification and analysis. You can use reporting tools to extract data from different sources including newspapers, NGO reports, and news websites.
When reporting data, you should rely on sources that clearly communicate important information and provide integral details about the market that can serve as a valid footstool to decision-making for an organization. Data accuracy is key as false data can negatively affect your research findings.
Existing market research is an effective and verifiable source of data in secondary market research as it contains specific information about the research environment and subject(s). Even though data from existing market research has a high level of accuracy, you will need to introduce new research questions as you make use of this data source.
Examples of sources of existing market research include business journals and archives.
Having a clear understanding of your competition; especially in terms of their strengths and weaknesses, will help you to create an effective marketing strategy for your product or service. Competition, however, is not always uni-dimensional; that is, Organization A vs Organisation B.
To effectively identify your competition, you need to identify organizations that offer similar product(s) and/or services as yours within a specific industry. You can curate a list of these organizations using social media channels and market reports.
If you are venturing into a new industry, conducting market research will help you understand important factors like pricing and packaging. Market research also helps you understand your competitor's behaviors and how to better position your product and service.
When carrying out market research, you should focus on understanding the demographic distribution of consumers in your target market as this will help you create a product that appeals to them. It gives you a clearer idea of market interests, consumers' buying habits, purchasing power, and their preferences.
Understanding your consumers' demographics will help you create a buyer persona which is a fictional representation of your ideal customer. As you create a buyer persona, be sure to include important information like age, spending habits, gender, location, and income.
Achieving synergy between the location of your business and the geographical concentration of your customers is important for your product/service success. Hence, your market research must include a detailed description of the best physical environment for your business and you can also detail the reasons for your choice.
Choosing the right location for your business increases your brand visibility and it also makes your marketing more effective. When your business is situated in an environment where its products and services are in high demand, you will record a boost in sales and increased profits.
This goes without saying as the essence of conducting market research is to better understand your product’s feasibility before it is introduced to the market. Hence, in carrying out market research, you must gather pieces of information that are specific to your product.
You should provide a detailed product description and also create an outline of the value and unique selling point(s) of your product. You can also provide an overview of the product feature and other information like its logo and name.
Capital refers to the assets needed to create your product and it can be economic or financial in nature. Economic capital includes tools and machinery needed for production while financial capital is the money; that is debt and equity, used in business operations and expansion.
As one of the 4 factors of production, capital plays an important role in determining the feasibility of a new product. In your market research, you should state how much capital you need to cater to all business processes related to your product.
Administering an online survey with Formplus is an effective way to conduct market research. Use this 6-step guide to create your market research survey with Formplus:
Carrying out market research is very important when introducing a new product or service to the market. With market research, you'd understand the feasibility of your business and make informed business decisions.
An online survey is one of the simplest and most effective ways of doing this. With Formplus, you can create market surveys or get started with this market research survey template in a few minutes and share it with respondents using any of the easy-to-use multiple sharing options.
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