Market Research: What You Need to Know
As ordinary people become well-informed, the importance and value of market research increases. Why? It helps discover what target audience members look for, what they choose to purchase, and why. It allows you to get to know them better and find ways to solve their issues with what you produce and sell.
This article is an overview of what market research is. It includes advice on conducting it, information on what it can do for your business, and a few other relevant research-related issues.
Figure out the theoretical basics
What is market research? It is a study as a part of which you collect, analyze, and interpret information about the market for a service or a product; buyer persona, current and potential customers, their needs and preferences. It helps you find out where people you want to cater to live and shop, how they do their research before buying anything, and what encourages them to make their choice.
The main goal of market research is to understand the potential of what you produce or provide in the current situation based on available data. It includes looking into the challenges that exist in the industry, its key players, and trend analysis. Researching competitors, comparing your company and its proposition is an integral part of this process.
There are two types of market research: primary and secondary. Let`s clarify what they are.
Primary market research is the one that is done in communication directly with your current or potential customers. For the most part, it is either specific or exploratory. The first one focuses on issues that already exist, and the second one discovers those that may occur in the future. Some of the formats used to conduct it are face-to-face or telephone interviews, surveys done by mail or online, and focus groups.
Secondary market research does not involve any direct communication with consumers. It is done by analyzing data resources that already exist: online content, trade publications, sales-related reports, private and government agencies, trend reports. If you need to know more about your competitors, this is what you should choose.
Find your ideal consumer
Before exploring how to do market research, we recommend commencing with your buyer persona research. In short, it is a general idea of your perfect customer. You need to create their picture in as much detail as possible to help you with the strategic planning that will come later.
Some of the critical aspects that you must consider are location, gender, age, family status, job situation, salary range, personal preferences, and problems. It is vital that you get a better understanding of who your target audience is before you continue the research. Creating this generalized image will be useful when you decide how to communicate with your consumers and market your products to them.
If you decide to conduct primary market research, identifying the people you will work with is the next step. It is better to start with one buyer persona and talk to 10 people that fit the criteria. However, you can have several groups. You do not have to limit yourself to just one. But it would be best if you made sure that each of them is nuanced and clear to you. If not, you risk losing your valuable resources and not getting the results you aim for.
When it comes to selecting people to talk to, consider those who have recently bought something from your brand or your crucial competitor, or declined both. Dive deep into your client database and rely on it. Go through messages on social media platforms to find those users who were interested in your product and made inquiries but did not make any purchases. They had their reasons, and this is an opportunity to discover them. The participants must have fresh memories and opinions about these situations. Their experience is full of insights and answers.
Before you send out invitations, come up with an appealing motivation: an exclusive proposal or a a discount code for their next purchase.
Put your knowledge into practice
If you choose primary market research, your options are face-to-face or telephone interviews, surveys done by mail or online, and focus groups. Whichever one you choose, thorough preparation is crucial. Come up with a detailed plan of the conversations you will have with the study participants and all the questions you will ask. Plan to spend 30 minutes on each survey and announce the duration in advance.
Some of the aspects that we recommend to cover in the conversation:
What are your critical tasks at work?
Why did you consider buying this particular product?
Where and how did you do your personal research?
Did you look for alternatives?
Is there one particular source that you trust more than others?
Did you ask anyone for their opinion?
What were the key reasons behind your decision to make the purchase or skip it?
Top tip: do not ask questions that can be answered with a “yes” or a “no”. Ensure that every question you ask has an open end and invites the participants to go into details.
When you finish collecting answers, analyze them all to find out what similarities they have. Write them down. Answer some extra questions to process the information you now have: What were the people you talked to like? What surprised you about this experience the most? What was the most common reason to make a purchase? Describe the decision-making process at every stage to go back to this information later. Take time to think about how you can implement these findings. Come up with a detailed plan.
If you choose secondary market research, using social media intelligence software can have a significant impact on the process. YouScan is capable of finding all of your brand mentions and posts that feature your logo, analyzing them and providing you with insights.
In both cases, google a market research report template. Learn from the past experiences of other businesses.
Diversify your toolset
One of the tools that can be helpful within market research is a five forces analysis template. This model was created by Michael Porter, an economics and business strategy researcher who has written more than 20 books. It consists of the threat of new entrants, the threat of substitutes, the bargaining power of customers, bargaining power of suppliers, competitive rivalry.
The threat of new entrants: how easy is it to join the industry that you are building business in, and what are the challenges that a new player faces? If it is easy, then there is an issue. It means that competition is potentially very high and can increase in the future.
The threat of substitute products: how unique is what you sell? Figure out how many alternatives your target audience has. How can your price and quality compare to theirs?
Bargaining power of customers: how many are out there, and how big are their orders? Cash is king, so you must know the level of their need for what you produce.
Bargaining power of suppliers: how complicated is the process of providing you with the materials you need to create your product? You may manufacture it, but you can rarely avoid working with some suppliers. How many options do you have in terms of companies, price range, delivery dates? You need to create a list of alternatives for a quick switch without wasting time and losing a fortune.
Competitive rivalry: how many competitors do you already have, and how do they affect your business? Figure out the answers to these questions and develop a strategy to deal with the issues that exist or may occur in the future. Preparation makes perfect.
Building a business in 2020 without data is unreasonable and risky, so if you are an entrepreneur, market research is an essential element of a business strategy. It can help you identify consumer groups that you need to focus on, their key characteristics, needs, and wants; uncover the strengths and weaknesses of your company and its key competitors. It can have a significant impact on how you market your product, sell it, and make a profit.
Would you like to conduct market research with the help of social media intelligence? Request our free demo.