Market research plays a key role in helping businesses to better understand their customers and marketplace, to help them make more strategic decisions.
This week’s blog explores the topic of market research.
 |
| Marketing team discussing a marketing strategy |
What is Market Research?
Market research is the organized effort of planning, gathering, recording and analysing information to better understand a target market. This includes factors such as market size, the competition and customer types.
“Information used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues…” (American Marketing Association, 2004)
Research is a key component to guide businesses with important strategy decisions, such as changing elements of their marketing mix and how this is likely to impact customer behaviours.
The research process first identifies and formulates the problem, then determines the research design such as the research method and collection of data and the final stage is the analysis and providing recommendations based on the research findings.
Why is market research so valuable?
There are many strategic and tactical decisions that businesses make in the process of identifying satisfying customer needs. There are many uncontrollable environmental factors such as economic conditions, politics, and social changes that complicate marketplaces. Analytics can show a business what is happening, but you can only learn so much. Market Research helps a business discover the ‘why’.
Research provides relevant, accurate and up to date information to understand a marketplace at a current point in time. This new knowledge of relevant information informs decision-making by reducing uncertainty. Often bad decisions in business are the result of guessing instead of putting any time and effort into researching what the customer would think or how the market would react.
You will never think on behalf of your customers or experience a product or service in the same way. Testing your assumptions means you will not waste time and money on a bad idea.
Research helps businesses improve decision making to create better products, improve the customer experience and improve their marketing to attract and convert more leads. This leads to three broad goals for market research. First is to better understand the marketplace; second, to better understand your customers; third, to monitor performance.
Gain a better understanding of your market
Without understanding a market, a business is just throwing something out there, hoping it will work. Do not learn from mistakes, look for the opportunities first and then tailor your products to suit.
A market analysis is a powerful tool to study the dynamics of a specific market, whether it is online, or localised. This analysis helps a business understand market trends to discover opportunities and guide strategy. A business needs to identify internal strengths and weaknesses, as well as external opportunities and threats. This is a SWOT analysis.
Part of understanding a market is knowing what your competition is doing better than you, to improve. A similar analysis a business can use through research is a PESTEL analysis, which investigates Political, Economic, Social, Technological, Environmental and Legal factors in a marketplace.
Some of the broad goals business have for market research are:
• planning and implementing marketing strategies
• a competitor analysis
• risk analysis
• identifying market trends and opportunities
• learning the potential for a market
• target market selection and market segmentation
• product testing and refinement
• business planning
• understanding social, technical, and political aspects of a market
 |
| Young woman shopping at a hardware store |
Getting to know your customers better
Research helps businesses understand their customers wants, needs, desires, beliefs and actions. Only then, a business can recognise whether their offerings meet those needs.
When you understand your customers better, you learn to learn how they think. You learn what they value, how they make a purchase decision, and what they think of your competitors. Once the behaviours and preferences of your target customers are better understood, you can modify your offering and accordingly the marketing to better meet their needs. This is crucial for planning a marketing strategy that aligns with not only who you are, but also what the customer is looking for.
Define your buyer persona
If your business does not already have buyer personas or understand your market segment and target customers well, this is a good place for your research to start.
Buyer Personas are fictional and generalised representations of ideal customers, created by a business to better understand them and therefore more effectively target marketing to communicate with them. Personas include characteristics such as age, gender, family, location, income and challenges.
Your research participants should then match the characteristics of your buyer personas. If you have more than one persona, focus your research on your most important personas and recruit a separate sample group for each.
 |
| Sales forecast |
Monitoring performance
Market research can also help a business to monitor and evaluate their marketing or product’s performance. Large companies invest millions of dollars into product development, to ensure all that effort is worth it. Provide the right solution for a customer’s problem, at the right price, with the right marketing. There is a lot to get right… or wrong.
Ways you can test consumer opinions of new products or products in development is through focus groups and beta-testing. Companies can also analyse their existing data, such as analytics, to better understand the demand for their current products and services, to then make tweaks and improvements.
Research methods
Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyses the results, and communicates the findings and their implications.
There are two major types of market research: primary research and secondary research. Primary research is sub-divided into two research methodologies, quantitative and qualitative research; although it can be a combination of the two, called mixed methods.
One general research question guides the research; for example: How should we segment our market for product x. Or, who is the most profitable region for product y. More specific research questions follow to guide the research process and what information to gather.
Primary Research
Primary research is the design, collection and analysis of your personal data through methods such as talking to customers or observing behaviours. Primary research can be exploratory or specific. Exploratory is when research is trying to understand a certain scenario and is better suited to qualitative research such as open-ended questions with a small sample.
Specific research usually follows exploratory research and delves into more specific research queries a company may have. It is more direct towards asking certain customer segment-specific questions.
Two methodologies guide the design of primary research — qualitative and quantitative research techniques.
Qualitative research
Qualitative research aims to explore feelings, behaviours and experiences — things we cannot measure with numbers and statistics. Common qualitative research methods include in-depth interviews, focus groups, and observation. The idea is to gain deeper knowledge about your customers and/or target market, to find out the why behind their decision-making process.
“Qualitative research encompasses a family of approaches, methods and techniques for understanding and thoroughly documenting attitudes a behaviour… Qualitative research seeks the meanings and motivations behind behaviour as well as a thorough account of behavioural facts and implications via a researcher’s encounter will people’s own actions, words and ideas.” (Mariampolski, 2001)
Instead of asking specific questions to get an objective answer, qualitative research does not follow a scripted approach. The researcher is facilitating a conversation rather than trying to lead it. Do not ask yes/any questions, as this style of questioning can bias the outcome, through unintentionally swaying participants’ thoughts.
There should be a general focus for the session, outlining the topics you want to explore, but it should be natural and conversational with open-ended questions. You might include one scripted question such as “take me back to the day when you first decided that you needed to solve this x problem”
From this point, you guide the participants which “can you tell more about that?”, and “how…?”, “who…?”, “where…”, “what…?” Just delve deeper into topics that the participant thinks are important to discuss. Get them to go deeper into their experiences.
Qualitative research goes deeper than quantitative to explore the ‘why’ instead of just the ‘what’. The general demographic information is not as important in qualitative research, as we want to understand the consumption experience itself rather than customer characteristics. Just find out a little bit of background information to give context to the participant, such as their career and family life.
 |
| Market research team |
Quantitative research
Quantitative research aims to describe and explain a situation or problem (attitudes, opinions, behaviours), through generating numerical data or data that can be easily transformed into statistical data. The aim is to be as objective as possible to be able to generalise the results for a larger population.
“Quantitative research… explaining phenomena by collecting numerical data that are analysed using mathematically based methods (in particular statistics).” (Creswell, 1994)
Common methods of quantitative research are customer surveys, polls, questionnaires, and analysing digital analytics or secondary data. With the rise of digital technologies, mobile surveys have become increasingly popular making it far cheaper and easier to compile this kind of research.
Quantitative research typically begins with asking demographic questions to form an accurate picture of who the participants or ‘sample’ for the study are. Demographic questions are those such as gender, age and education. For example, a male under the age of 20 is going to have many differences to a woman over the age of 65. Because quantitative research focuses on numbers and statistics, a larger sample increases the validity of the results whereas qualitative research has a much smaller sample.
A substantial portion of the questions is closed-ended, meaning participants have set responses to choose from that best fit their situation. This makes large datasets fast and easy to analyse, but the data is generalised and cannot delve into the nuances that qualitative research can.
Some examples of quantitative survey questions are:
• Demographic questions: Gender, age, religion, ethnicity, occupation
• How often do you use the product: Every day, once a week, once a month, very rarely
• What price do you think is fair for the product: $80, $100, $120, $150
How to find research participants
Once you have decided to conduct market research and choose a suitable method, you need to find participants. Research participants should be a representative sample of your target customers, as well as some of your actual customers. This will help you to understand their characteristics, challenges, and buying habits.
Ideally, your sample will also include people that researched your business but decided not to purchase. If they have chosen a competitor, you want to know why.
Finding customers is the easy part. Anybody who made a recent purchase should be in your CRM. You want to ask recent customers, as their experience will still be fresh in their minds. If you do not have a CRM, ask people when they purchase if they would like to do a brief survey.
CRM will hold information such as an email for potential customers who enquired or evaluated your services but did not make a purchase. You can also find participants through social media or online forums and other communities. Find out where your target audience spends time together. You can even create a Facebook group specifically for the study. Use your network to find participants, but they must be relevant. Stay away from friends and family, but they might know somebody. A post on Facebook and LinkedIn can be fruitful.
It might help to offer an incentive for participants to be involved in the study. You could offer something like a $50 or $100 voucher to spend 30–60 minutes to be a part of a focus group or complete a survey.
Secondary research
Also known as desk research, secondary research is a research method that uses pre-existing data. No fieldwork (e.g. no observations or surveys required), hence the term desk research. This existing data is summarised to strengthen the findings of primary research. If your data matches the findings of previous studies, it is solid evidence.
Secondary research is far quicker to compile and cost-effective than primary research as data collection is not first-hand. The kind of data you can find helps paint the ‘big picture’, such as industry trends or geographic factors.
Common sources of secondary research include:
- Academic journals, market research, industry reports or trade publications
- Online sources — websites, databases, publications, government data
- In-house company data and analytics — e.g. CRM, social media
That is this week’s blog.
I hope you enjoyed this week’s content about market research.
See you next week,
Dan
No comments:
Post a Comment