Have you ever read a mystery novel you really enjoyed? If so, you understand the thrill that comes with getting to know a cast of characters, finding clues, and using logic to unlock the story’s secrets.
In this introduction to market research, we’re treating this topic a bit like solving a mystery. You’re working to understand the mysteries of your target market and competitors (think of these as the characters in your story). You want to understand what motivates, encourages, and frustrates your consumers. In the case of your competitors, you want to anticipate their game plan to stay a step ahead in your market.
Market research is an ongoing challenge to learn more about your business, your audience, and your industry. When carried out successfully, it can help you see the big picture, as well as where you fit in that picture. Because it relies heavily on data and analysis, you can uncover the right clues to solve the mysteries of your market.
Even though we’ve been talking about fictional stories, it’s likely that you’ve already been conducting market research in the real world—intentionally or not—for as long as you’ve been in business. You already know your customers are both the cornerstone and foundation of your business, so we’re here to help you learn everything you can about them.
In this two-part introduction, we’ll cover the basics—the what, why, when, and how of market research—to get you started solving mysteries.
What is market research?
Put simply, market research is the process of gathering information about your target market and the current state of your industry. Some research strategies can be complex and layered, but your main purpose is always the same. Your goal? To learn all you can about your consumer, so you can meet them where they are.
To get an answer, start with a question
Quality market research brings you answers, so you should start your process by formulating your core question to direct your research. These fundamental questions that can get you started on asking specific questions about your business:
- Who are your potential customers? When you research your market, you want to know how many consumers are out there, and what their interests and needs are. Once you’ve identified interests and needs, you can learn how your consumers look for solutions to their needs, and market your product more effectively.
- What products do your competitors offer? It’s good to size up your competition. Research what your competitors offer and how that differs from your product. Find out how much your shared market is willing to pay for a solution like yours, and what influences their choice between similar products. Learn from where and how your successful competitors are advertising their products, and from where unsuccessful competitors went wrong.
- Why do your customers purchase your product? If you’re selling a service or product, you likely already know how it fulfills one or more of your consumer’s needs. Don’t stop there: keep your product relevant by asking how your customers use the product once they have it, and what more it could do for them.
- Why do some potential customers choose not to purchase your product? No hard feelings: when a potential customer chooses the competition, it’s a learning opportunity. Find out what motivates them to choose a competitor’s product, so you can win over the next prospects.
Let your research paint a picture
Market research allows you to step back and view the big picture, locating your place in the industry. Done correctly, this process brings you data, and data allows you to make informed decisions. After all, facts will always paint a more accurate picture than a gut feeling.
Data will also paint a more accurate picture of your current situation than previous outcomes of past business decisions. For example, just because a certain feature was popular in your last product doesn’t mean it will be in this one. Instead, listen to what your customer surveys, focus groups, and social listening tell you will be a desirable feature.
Navigating your changing market
If you’ve been in business for even a little while, you already know competition gets tougher by the day. As recently as fifteen years ago, your competitors were likely a handful of small, local businesses and you probably knew your customers through face-to-face interactions. Today, thanks to global ecommerce, you’re competing in a vast field of both local and international companies. The web is likely inundated with products similar to yours—perhaps some with cheaper price points, or some with a larger internet presence and high-ranking, professionally designed websites.
This is why market research is no longer a luxury reserved for big corporations with deep pockets (if it ever was). If you run a business of any size, understanding your market is the key to your company’s survival.
Why research your market?
As we mentioned, you’re probably already conducting informal market research on a daily basis, whether intentionally or not. Every time you chat with one of your sales reps about customer complaints, compare your prices with your competitors’ prices, or talk with a prospect about product features, you’re learning more about your market.
But there are numerous reasons why it’s worth formalizing this process. Perfecting your market research process can help you find answers you didn’t even know you needed.
Segment your target market
Market research reveals the socioeconomic, sociocultural, geographical, and personal structures of your target market. This helps you focus on specific segments so you can adjust your marketing, advertising, and promotional strategies. When you know more about your different market segments, you can create effective campaigns and compelling marketing materials that resonate with your niche audience—you’ll know ahead of time which email subject line or ad image works best for which segments. Furthermore, knowing your audience is just as important for retaining customers as it is for bringing in new ones. After all, 34% of consumers have admitted to “breaking up” with a brand because of “poor, disruptive, or irrelevant marketing messages,” and nine out of ten consumers report “developing an unfavorable attitude” towards a company that sent them irrelevant advertising.
Identify new chances to meet needs
Market research can help you discover under-serviced or ignored segments whose needs aren’t being met at all (for instance, a special group whose pain points no business has considered). Ask yourself: is there a gap in your market you can fill by adding new features to your product?
Market research reveals current customer opinions, giving you insights that may drive future innovations and product improvements (which in turn drive more sales). What else do current customers want? What are you currently doing right? What could you do better?
Find where you fit
Through market research, you’ll learn about your competitors’ products, services, pricing, and marketing strategies, as well as their customers’ sentiments. How do they attract and retain customers? What do their customers say about them? What does their content marketing look like? Where are they flourishing? Where are they unsuccessful?
To understand your place in your industry, you should work to clarify your unique selling proposition (USP), value proposition, and brand position. The more thorough your knowledge of your competition, the better you’ll understand how your offering is unique. This is crucial when it comes to differentiation statements (like your USP) and strategies (like your product differentiation strategy).
Get to know your consumers like your own family
Clay Christensen, professor at Harvard Business School, has observed that 95% of new products fail because businesses neglect to “crawl into the skin of [their] customer[s]” and empathize with them. Thanks to market research, you don’t need to be a mind-reader. You can test new products and features on your target audience and gather feedback directly from them. This sort of research and response can mean the difference between success and failure when it’s time to go on the market.
Avoid unpleasant surprises
We already mentioned one risk—launching a dud product—proper market research can mitigate. Market research can also help avoid bad brand positioning and poor pricing strategies. Knowing your market helps you recognize and prepare for economic and industry shifts. When you know your consumer’s needs, you can test and run ad campaigns that resonate with your target audience. If your business is an ongoing story, market research helps you anticipate what happens next, and keeps you from being surprised by unpleasant plot twists.
Thorough market research offers a multitude of benefits, and this short list only gives you an idea of what you stand to gain. Research your key questions and pay close attention to what you find—this is how you meet your consumer’s needs.
In our next section, we’ll dig into when you should conduct market research, and how you can get started.