How to conduct market research: a beginner’s guide

As a new business owner, before you set up shop or quit your day job, you need to understand the market you’re entering. Not least because there might be no interest in your product or service but because you want the ability to make confident business decisions backed by data.

Market research serves a very important purpose in any new business. You need to have a lay of the land before you spend money, invest your time and resources and generally get excited.

This blog explores the concept of market research and how to get started for your small business.

What is market research?

Market research is pretty much what it says on the tin — it’s research you do about the market you want to enter. You’ll want to collect and interpret any data you collect to understand whether your product or service is viable, how you should price and market your business to your target audience, and ensure you’re able to compete.

After conducting market research, you might decide to take your business down a different path or shelve it completely. Or, it might confirm that your business could thrive in a busy marketplace. Either way, it’s so worth conducting.

Why is market research important?

• Minimises business risk. Going into business is risky, but market research helps lessen that risk considerably. By understanding the market you’re entering, you go into your business with your eyes wide open.
• Identify your target market. A benefit of market research is that it helps you pinpoint who your ideal customers are. By understanding who you’re targeting, your business becomes more focused.
• Understand customer needs. After pinpointing your target market, you can hone in on their needs, helping you reframe your product to solve customer problems.
• Improve marketing strategies. Market research improves your marketing, by shedding light on who makes up your audience and what their needs are, you can tailor your marketing strategy and promote yourself on channels where your audience hangs out with a message that resonates with them.
• Plan future growth. To plan for the future, you need to have an idea of where your business is heading, and that means understanding market performance. If you know year-on-year your market is growing, you can focus your efforts to capitalise on growth opportunities as much as possible.

What is primary market research?

Market research falls into two categories: primary and secondary. Primary research is research you conduct yourself with customers, potential customers and stakeholders. Although primary market research can be time-consuming and expensive, it’s very targeted, so the results will give you a more accurate picture of how customers receive your products, giving you actionable takeaways to implement into your business.

What is secondary market research?

Secondary research is where you glean information from research already available in the market. This research is quicker to access and usually broader, for example, industry reports or public records. Secondary market research gives you access to data you can use to shape your strategies immediately, but it’s important to note that data quality varies, and the research might not suit your specific business needs.

It’s a good idea to start with secondary research before you spend time and money collecting primary research. This is because secondary research can give you a great insight into how the market is performing and how products similar to yours are already being received. Then, if the secondary research shows promise for your product, you can conduct your own primary research to substantiate your product’s specific place in the market.

Methods of collecting market research data

Market research can be both qualitative and quantitative. Quantitative research is all about your numbers, collecting data from surveys, questionnaires or polls. Whereas qualitative research is more focused on understanding consumer behaviour and their motivations for purchasing. This type of research is collected through focus groups, interviews and through observation.

Here are some data collection methods to consider:

Primary market research methods:

• Customer surveys. You can create anonymous surveys to encourage unbiased and unfiltered responses. Learn what customers like and dislike about your business.
• Focus groups. A small group made up of your specific demographic where you can ask questions about your product and gather useful feedback in a group setting.
• Social media listening. Listen in online communities about what people are saying about your company, the products you sell or similar products to yours.

Secondary market research methods:

• Access reports. Use existing market or industry reports to get a better understanding of the state of the market.
• Online research. Google is your friend to learn more about what competitors are doing or reading articles about challenges your industry is facing, etc. You can learn a lot just by searching.
• Trade publications. You’ll find trending topics covered in these publications, giving you a good idea of current customer sentiment.

When should you start conducting market research?

Before you start your business, you should conduct your market research. Market research is necessary because without it, you’re going into business blindly. But even after you’ve launched your business, you should still continue to collect and analyse market research data; it keeps you in the loop, helping you make informed business decisions.

Eight steps to conducting market research

These eight steps can be used to guide you through the process of conducting marketing research for the first time.

1. Make a plan

Before conducting your market research, you need focus. What do you want to know? What issues or opportunities do you want to understand in greater detail? You need to make sure you’re not wasting your time collecting data that is irrelevant.

2. Analyse your competition

What do they do well, what can you learn from and do better? Watching and analysing what your competitors are doing helps you understand your target audience.

3. Use research available to you

Have a look around, what research is already out there that you can use to better understand what customers are after, what behavioural trends are relevant, and what’s the state of the market?

4. Don’t just focus on one research method

Collect a balance of qualitative and quantitative data. So alongside your surveys, make sure you gather focus group opinions, too. This approach gives you a more balanced view of your market.

5. Collect current customer data

Before searching further afield for data, use what’s already at your fingertips — your customers. Even if you only have a handful of customers, survey them to find out why they chose you, what questions did they have when researching their options and so on. Squeeze them for useful information you can use to inform marketing efforts.

6. Analyse and present your findings

Look at the data you collected and look for patterns and trends that support your initial research focus.

7. Implement your findings

After sifting through your data, it’s time to implement your findings into your marketing strategies, product and service development and use the findings to make better business decisions.

8. Continue researching and remain agile

Market conditions change, which means to remain competitive you must continue researching and understanding your market to adapt and continue serving your customers.

Understanding your market makes business sense

Without market knowledge, you can’t move forward confidently with your business — it’d just be guesswork. And guessing is risky. If you’re hoping this is your year to grow your small business, having a solid foundation will never be more important than it is right now.

A good foundation equates to high-quality market research, a fantastic business idea and the working capital to execute it.

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