Market Research: Definition, Types & Examples
What happens when you develop a new product or service and want to get it in front of the right audience? How do you know who the right audience is? And how are you supposed to determine the most effective way to get in front of them?
There is a lot that goes into figuring all this out. Luckily, market research is for this exact type of scenario. So how does market research work and what should you include?
This guide will cover everything you need to know as well as a few examples. Plus, we included information on how to conduct market research and the importance of doing it properly.
You will have a better opportunity to get your new product or service in front of the right audience. Before you know it your business can see an increase in sales and loyal customers.
Table of Contents
- Market research helps determine how viable a new product or service will be.
- Market research can range from focus groups, interviews, and competitive analysis. It can also include campaign research, brand awareness research, and market segmentation research.
- Doing research allows you to better understand customer wants, needs, desires, and pain points.
What Is Market Research?
Market research is a process that you take to learn as much information as you can about your target market. It’s used to help verify the effectiveness of a new product or service. As well, it aids your entire team in better understanding your brand perception.
This is important information to compile so you’re effectively communicating the value your business offers. It’s not a fortune teller or a way to see into the future. But you can gain extremely valuable insights that can help paint a clearer picture.
Consumers today hold a lot of power when it comes to the products and services they want to use. By simply doing some quick online research, they’re able to come to a purchasing decision all on their own.
So, market research is going to help you verify if a product or service will have success. It’s also going to help you better understand existing products and market size to ensure brand perception is effective. These details will lead to the most accurate way to communicate the value your company offers.
There are several areas of market research to look into for a complete picture. Yet, just understanding a single area can provide actionable and valuable insights. You’ll be able to understand who your buyers are and the value they’re looking for.
Why Should You Do Market Research?
There can be different market research methods to learn more about existing and prospective customers. But with the amount of competition that is out there today, finding out exactly what your target customer is looking for is paramount. By understanding their pain points, problems, and desired outcomes, you can ensure you offer the right product or service.
To take it even further, market research helps generate additional insights into several other things. Some of these can include:
- The attitudes a customer has for certain products, brands, or topics
- How and where your target customer does their research about a product or service
- What new trends are evolving
- Who is included within your market and some of the challenges they face
- Which competition your target customers are navigating towards
- If there is a demand for the new initiatives, products, or services you’re exploring
- Customer needs that aren’t being addressed or served, and finding a way to leverage that opportunity
- The attitudes your customers have about price points for products and services
As you can see, market research is going to provide a ton of valuable information to use. You can develop a better sense of who your target audience is and what they’re looking for. And through all of this, you can make more informed decisions in the future.
This is why it’s more important now than ever to adapt your marketing strategy to complement consumers’ buying behavior. You need to have a deep understanding of who they are and the specific market they’re in. Plus, it’s equally as important to know more about what might influence their purchase decisions.
And instead of speaking to one of your sales reps, consumers are more likely to ask a friend or family member or read reviews online.
By finding out more information about the insights outlined above, you gain a better sense of your market. Then, you can use this information to answer and address specific questions.
These can include things like:
- Is there a demand or desire for the product or service you’re offering?
- How many people are going to be interested in your product or service?
- Are there any similar products or services that are already available?
- What is the employment rate and income range of your target audience?
- How is your business going to reach your customers and where do they live?
- How much are customers willing to pay for your products or services?
When you’re able to compile data and research from all the above points, you get an inside look into your target audience. This is important to help eliminate the possibility of any. And, you will be able to dive deep into the specific attitudes your customers have.
All in all, market research is important to help you make better and more informed business decisions.
Types of Market Research
Certain types of market research can be more effective compared to others. This is because there can be a different strategy put into place depending on the product or service you offer.
For example, observation-based research would work well to uncover the challenges a product might face. Whereas something like pricing strategy research would allow you to create an accurate pricing strategy.
Below you will find a breakdown of several of the different types of market research you can use.
Focus groups are an effective way to get in front of potential customers and better understand what they like and don’t like. Through carefully selected participants, you can test out product features. Once the focus group has a chance to explore, they can provide feedback and you can ask targeted questions.
It’s a powerful way to determine differentiation and highlight the qualities your product or service provides. You can gain insights from both primary sources and secondary sources.
With this type of market research, you take an observation approach to understand how customers use your product or service. It highlights the benefits and pain points of the entire user experience.
Observation-based research allows you to see the challenges the customer might face. This can be a good way to find new opportunities or solutions to make the experience better.
Similar to a focus group, but instead of a group of people it’s a one-on-one discussion. It can be either in a virtual or natural setting, or in-person which allows for the conversation to flow naturally.
With an in-depth interview approach, you can craft questions to ask the interviewee to better develop buyer personals. You will learn more about their budget, challenges they face, ideal customer age, and other lifestyle aspects.
Developing an in-depth buyer persona will allow you to create a more effective marketing strategy.
You might have the perfect product or service, but if you don’t price it properly it can lead to fewer sales. Pricing research will give an inside look into other products or services that are similar in your market.
Pricing research lets you define an accurate pricing strategy and you can generate a wide variety of options. By doing this you can ensure you price your product or service fairly and in the same range that the customer expects to pay.
Market Segmentation Research
When you truly understand the needs of your customers you can also understand their expectations. Market segmentation research is an effective way to put your target audience into categories. You do this based on certain defining and specific characteristics.
It’s not always as simple as pricing your product or service at a lower price point than your competition. A competitive analysis allows you to understand the competition within your industry and market. You will gain insights into what products or services are doing well and which ones aren’t.
As well, you can compare your product or service to others that are similar. By doing it this way you can determine opportunities to set yourself apart.
Have you ever had a campaign that went extremely well? What about a campaign that didn’t? With campaign research, you can take a deep dive into past campaigns and analyze what worked and what didn’t.
You will be able to make certain adjustments, changes, and updates to ensure what you’re doing will be effective.
Customer Satisfaction Research
Do you know what your customers love most? Have you had a product or service in the past that customers couldn’t get enough of? With customer satisfaction research, you can determine effective ways to get returning customers.
Plus, you can also find insights into what motivates your customers to keep coming back. This is all actionable information that you can then incorporate into your strategy.
Brand Awareness Research
Having positive brand recognition is important. Without it, customers won’t take your product or service seriously. Brand awareness research dives into what your customers recognize and know about your brand.
It’s basically a way to understand what your customers associate your brand with when they purchase something from you. And it can generate insights into why they interact with your business in the first place.
Example of Market Research
Let’s say that you have a new product or service that you want to take to market. You have created a business plan and have started to develop an in-depth business plan. But still, you want to receive some more valuable information.
Conducting market research will help confirm several details:
- Consumer interest
- Consumer demand
- An accurate pricing strategy
- Consumer behavior
- Consumer desires
Gaining insights into these areas will allow you to move forward with the business plan you have in place. You will be able to make sure your product or service is priced accordingly and will reach the right audience.
If you choose to skip over some of these things, or if the market research comes back negative, some adjustments might be required. The key point to keep in mind with market research is that you want to align with customer needs, desires, and interests.
Primary Market Research and Secondary Market Research
Market research can be a massive undertaking and an extensive process. It’s worth recognizing that depending on the information you want to learn, it can be either quantitative or qualitative.
With quantitative research, it’s more focused on actual data and helps highlight reverent trends. You can find this information through certain public records.
With qualitative research, it’s more focused on the public’s opinion. You’re able to explore the reasons behind how a market feels about certain products available in the market.
From here, there are two main ways to conduct market research. They are primary research and secondary research. Let’s take a closer look at both and how they work.
Primary research is a way for you to get immediate information about your customers and the market they’re in. It can be most useful when you’re looking to differentiate between certain buyer personas.
You can then break primary research into two specific approaches: exploratory primary research and specific primary research. Here’s how each of them works:
Exploratory Primary Research
This is usually taken as the first step in your market research. It’s more concerned about potential problems you should be aware of. And less about potential consumer trends.
Think of things such as surveys, feedback forms, or open-ended interviews as good examples.
Specific Primary Research
A lot of the time, specific primary research will come after the exploratory stage. It gets used to focus on the main opportunities and issues you have already identified. In this case, you’re able to ask targeted questions to try and find a solution to a potential problem.
Secondary research is much more focused on the available data you have at your disposal. This information can come from public records like market statistics, industry content, and trend reports.
This approach is especially useful when you want to get an inside look into and analyze your competition. From here, there can be a few approaches to take with secondary market research.
Commercial sources will often come from industry insights and market reports. Keep in mind that it can be common for commercial sources to have a cost associated with obtaining them.
On the flip side, public sources are usually free to obtain and contain a ton of valuable information to use. For example, if you’re looking for public market data you can access information from the Bureau of Labor & Statistics.
This type of information is information that you’re typically already going to have access to. Think of things like your customer retention rates, revenue per sale, and any other relevant historical data. It’s an effective way to determine what buyers might be looking for at that moment.
Taking the time to conduct effective market research can be the difference between a product or service being successful or not. It’s an important process to take to ensure you’re not wasting valuable time and money on something that won’t work. You can gain insights into customer buying decisions, product differentiation, and economic trends.
Even if you think you know your target customer, there can always be things you’re unaware of. Plus, you can conduct market research in any number of different ways. It could be through interviews, focus groups, campaign research, or competitive analysis.
Whatever type of market research you do you’ll end up with valuable information. This will help lead to a successful product or service with better business decisions. And you can ensure it’s a product or service your customers want and need.
Frequently Asked Questions
Why Should You Do Market Research?
It’s all going to depend on what you want to get out of your market research. For example, you can see if there’s a demand for your product or service. You can also look into similar products in the market or how much customers are willing to pay.
How Do You Gather Information for Market Research?
The type of market research you conduct will dictate how you gather the information. For example, focus groups can provide feedback and you can also ask questions. Something like campaign research is a way to find out what has worked or not worked in the past.
How Do I Find People for Market Research?
It might depend on the type of research you’re going to conduct, but there can be a few common ways to find participants. You could contact past trial or research participants or crowdsource on social media. Or, you could recruit internally or contact your email subscribers.
What Is the Difference Between Market Research and Marketing Research?
Market research focuses on the specific aspects of your target customer and the market that they’re in. Marketing research, on the other hand, looks into all the marketing processes. These can include pricing, packaging, advertising, and even policymaking.
What Are Paid Market Research Surveys
Paid market research surveys are where participants receive an incentive, usually a monetary amount, for taking part in the survey. They might also receive other incentives such as gift cards for inviting other friends and family members to take part.
What Is a Market Study?
A market study is similar to market research. It’s a proactive analysis of a specific market and what the demand for a product or service might be. It will typically look into things like location, competition, price, and economic activity.
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