It doesn’t matter who you are or what kind of service or product you have. Market research is the lifeblood of the success of your venture. After all, why would you go to the expense of creating a fantastic product (according to you), just to have it flop because you don’t know if there’s a demand for it? Why does it at all? Because
“Whoever gets closest to the customer wins.”
That means the fundamentals of knowing if the market will accept your idea, if so, who will buy it, and why they would buy it. It's up to you to discover what's driving their need.
Welcome to market research.
Importance of Market Research
When you go into business, you create a business plan to show investors, banks, and yourself the direction you plan to take for your business. Product and service marketing is no different. You wouldn't get into your car and drive across the country without a map, would you? You need a written plan. A strategy that says, "I'm going from here to here."
When you have a concept for a product or service, you need a thorough understanding of who will buy it. Is there enough demand to sustain sales? These are the basic all-important questions you need to answer before you delve into the time and expense of developing your product or service.
Types of Market Research
There are two major types of market research you can use. Primary and secondary. A mix of both types gives the best results.
Primary research is very useful when you're figuring out who exactly your customer is. Look at primary research as a customer active venture. Your customer or potential customer will be the one answering your questions. You can do this in a few different ways:
- Man-on-the-street: This is going out and being very hands-on. You can stand on a street corner and start talking to people.
Focus groups: These are small samplings of volunteers that you question and receive feedback from.
Surveys and polls: Social media is great for polls and surveys, especially if you've got a following already. You can also use direct mail surveys or hire a polling company if you choose.
- Interviews: By phone or face-to-face.
From all this info you gather, you can easily get a solid picture of who your customer is. You need this picture, or customer avatar, to market your product to the people who are most interested in it. Sit down with a piece of paper and your research notes. On this piece of paper, you're going to "draw a picture" of your customer. Start by determining who was most interested in your product or service.
- Male? Female? Both?
- Married? Divorced?
- Career mom with hubby and kids?
- Newly divorced dads?
- Bearded ladies?
The point here is to get very specific about who your customer is. What are their interests and how do they typically shop? There are a million things you can ask but it's going to be specific to your offering. This is your customer, the person you will direct your advertising focus on. You might also address:
- What are their goals and values as it relates to your product or service?
- Where do they usually go looking for their information? Online, window shopping, or the Yellow Pages (is that still a thing?).
- Demographics: Name, age, marital status, where they live, how many kids, kids in college, or still at home? Income level?
- Likes or dislikes about similar products or services?
When you develop your product or service, you are developing it with this personality type in mind. Everything from the product/service itself to packaging, ads, needs to appeal to your customer base. You can now see clearly why this is important information to know BEFORE you get into the product development stage of your journey.
Ask people in your target market for in-person interviews. These are more "deep-dives" and will allow for a wealth of pertinent information to come forward. You need to do it right, though.
- Think more like a journalist hunting for a story.
- Don't talk, listen.
- "Why?" will become your favorite word. Asking why will allow for a more in-depth conversation. You'll be able to dig in and find out what they've done in the past.
- Ask if you can be allowed to record the conversation. This allows you to be more focused on what's being said rather than taking notes.
- Avoid "leading" or "loaded" questions. This will make your question biased and not give a true indication of your customer's preferences.
Try not to get too intensive when you're creating your on-the-street "in person" questions. Keep it short and simple. You ask over five questions and people will start getting nervous.
Secondary and Online Research
Ok, we know that's a lot to swallow… but there's more! Secondary research is obtained from indirect sources. These sources are places like trade associations, directories, and community organizations. For instance, it could be a research poll that was conducted by another company. These are typically less expensive and are more general but a starting point, nonetheless. This type of research is useful for analyzing competitors and identifying your target demographic. Some great places to start your research are:
Types of Questions to Ask
This can be tough because every business or product is unique. It's ultimately going to be up to you to determine what questions you need to be answered in your research. But, if you're just starting out, there are some basic questions you'll probably want answers to before developing your product or service. In the Customer Avatar section above we covered some very basic questions, but more in-depth probing is needed to get a well-rounded picture of the market and your competition. In Small Business Trends, they cover many questions demographics, existing- customer-directed questions, price and value, product or service questions, online visibility, reputation management, and messaging and advertising. Breaking down questions into categories like this will help you ask the right questions. Since we've already covered demographics, some of the other pertinent questions might be:
Market Research Questions
- How large is the target market and is it sustainable?
- What product/services are similar to ours?
- What is your greatest challenge when deciding on this type of purchase?
- What influences you to buy online?
- What determines your budget for this type of product?
Questions to Ask Existing Customers
- How did you find out about us?
- Why do you like our product or service?
- Would you refer us to your friends? And why?
- Why did you decide to discontinue service with us?
- How is your customer service experience with us?
Pricing and Value
- Did you consider buying a similar product/service from another company?
- Do you think our price is too high or too low?
- Ask about features they would like in your product or service.
- Do you like the way you purchase our products or is there another way you prefer?
- At what price would you consider this product too expensive and not buy it?
Analyzing the Competition
- Who are our top competitors?
- What is their market share?
- How does our competition effectively drive web traffic/attract buyers?
- What keywords are they using?
- What does my competitor do well? What is their weakness?
Nothing can give you better answers than a meticulously formatted customer interview. Always ask open-ended questions. This is the "why" we talked about earlier. Yes or no doesn't tell you much. It's the reasons behind the answer that gives you the insight you're looking for.
So, we've talked a lot about the different types of research, where to research, how to build your customer profile, and the kinds of questions to ask. Let's take some of the confusion away and put this into a cohesive picture now. Here are the six actual steps you take to conduct fundamental market research.
Define your goal and the problem: At the heart of market research, there is always an end game or outcome that you want. Outline what that goal is and the obstacles in the way of reaching it. Be sure that you define a clear goal, a specifically identified set of problems, and a definite outcome desired. This will allow you to have an effective and focused intent on your outcome.
Determine your market research plan: These will be the steps that you take to get the information you need. Decide if you will use surveys, focus groups, interviews, and what secondary research sources you will include. Secondary resources could include research initiated by another company, for instance, white papers and case studies. You would also want to include some of the many sources, such as outlined above in the secondary research section: associations, directories, census information, market research companies, and so on.
Design and prepare the tool for your research: This will be your interview, focus group, and survey questions. Your research method will be determined by the data you intend to collect. Determine what questions will be appropriate for the type of tool you will use. It's a good idea to create a small sampling before broadcasting to a wider audience. This allows for any problems with the data to reveal themselves and gives you time to adjust if necessary. There are three specific types of research in this area:
Exploratory research is used when knowledge of the subject and/or market is vague, not well understood, or limited. This is typically your "getting started" research to focus on getting general insights, getting a basic understanding of the topic, and narrowing your objective's focus.
Descriptive research is typically used to measure interest in the marketplace. This is a quantitative inquiry; you're looking for numbers rather than the "how" and "why." Surveys are a fantastic tool for this type of inquiry.
Causal research is very specific. It's like a scientific experiment. You're trying to figure out of Case A CAUSES Reaction A or if Case A CAUSES Reaction B. Cause and effect.
Harvest your data. This is the heart of the project. You should gather information from your surveys, go through the recordings from your focus groups and interviews, and compile all that information into one source—usually, some kind of spreadsheet or database.
Evaluate the data you've gathered. This is where you rub your hands together in glee, for all will be revealed. You've collected all the data and now it's time to analyze it and get those precious answers you've been waiting for. Start building tables and graphs and segment your data into groups according to age, location, buying behaviors, or other categories that make sense, and start looking for trends.
Compile and create a visual representation of your data. Yes, we're talking charts and graphs and that sort of thing. Compile your key takeaways into an easily digestible report or presentation. It would be best if you restated the initial goal and problems outlined at the beginning of your market research. Present your recommendations, insights into the data, and answers you've compiled to achieve that goal and solve those problems based on the data.
We know we've given you a million things to think about. The best practice is just to go to your whiteboard and start brainstorming. Write your ideas down, start planning how you're going to get the information you need and choose the tools you need to gather it. Whether it's tweaking your product, evaluating interest in the marketplace, or getting the nitty-gritty on your competition, market research is the most important tool you will ever use in your business. After all the hard work over, enjoy all the data and success that comes your way!
Scripted can help you with your content needs and with a free trial to their business reporting tools. Get your idea, business strategy, or content strategy going by signing up today!