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Business

How to Conduct Market Research: Market Research Matters

Written by MasterClass

Last updated: Oct 2, 2020 • 5 min read

Any company—from a small business to a large corporation—wants to know who its customers are, why they buy its products, and why they don’t, among other questions.

That’s where market research comes in.

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What Is Market Research?

Market research is the systematic process of gathering information about customer behavior and desires, analyzing and interpreting that information, and applying it to the development of a new product or and service. Market research can make use of statistical methods and analyses.

Some professionals distinguish between market research, which focuses on markets (i.e., groups of existing and potential customers), and marketing research, which gathers information about sales and marketing plans.

Why You Need Market Research

Business owners and managers do market research for a variety of reasons:

  • To maintain competitiveness in a particular industry by revealing information that can allow them to access new markets or market segments.
  • To develop data that can be used in drawing up a business plan.
  • To assess the effectiveness of sales and marketing plans.
  • To determine how a target market will react to a new product, service, or marketing message.
  • To refine pricing, advertising, public relations, or other specific features of products or services.

Market research can provide specific information, including the following:

  • The prices of different products in a particular market you want to enter.
  • The supply and demand dynamics of a market.
  • Market segmentation, or the way different subgroups of potential customers within a market behave relative to each other.
  • Trends, such as customer buying behavior over time.
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How to Define Research Goals and Research Scope

A company can do market research in a number of different ways, depending on the type of information it is seeking.

The first step is to decide what your goals are for the research.

  • Are you launching a new product and want to know if your customers like it or not?
  • Are you considering opening stores in a new location and want to know where potential customers there already shop?
  • Are you thinking of raising the price of your service and want to know how much customers already pay for your product and similar ones before they buy something else?
  • What is the level of customer satisfaction on your product?

You’ll next need to decide the scope of your research.

  • How big will this market research project be? How many people need to be part of this research?
  • How much money you can afford to spend on market research?
  • How long do you have to do the research?
  • Can your company conduct the research on its own, or will you need to hire market research consultants to do it for you?

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Types of Market Research: Primary Research and Secondary Research

Finally, you’ll need to consider the kind of research you’ll want to do, based on the kinds of information you hope to uncover.

Or you can do secondary research, which means you review previous primary research conducted by others and come up with analysis of that information.

Secondary research is cheaper and quicker, but may not allow you to answer your specific questions or provide you with answers to more open-ended questions.

Primary Research: The Difference Between Quantitative Research and Qualitative Research

When a company conducts primary market research, they have gathered new data themselves, and analyzed and interpreted that data.

Primary research is beneficial to a company because it can gather the information according to its specific needs. However, the primary market research process is time-consuming and expensive.

There are two types of primary research: quantitative and qualitative.

What Is Quantitative Market Research?

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Quantitative research deals with specific numbers that can be evaluated using the scientific method, statistical methodology, and mathematical models. Quantitative research collects data collection according to accepted scientific methods to ensure the data is reliable and representative of the population it purports to measure and allows you to draw scientifically valid conclusions based on the data.

Examples of quantitative market research include:

  • A political poll that elicits party affiliation from a particular sample of voters.
  • An opinion survey that asks a sample of consumers which soap they buy.
  • A longitudinal survey that measures a consumer cohort’s buying behavior over time.
  • A satisfaction survey that asks a sample of hotel guests how they enjoyed their stay.

What Is Qualitative Market Research?

Qualitative research is non-numerical and meant to elicit information about the meaning of things, to surface concepts via open-ended questions, to enumerate characteristics, to uncover descriptions, or to identify examples and document individual experiences.

Examples of qualitative research include:

  • Case studies, which take an in-depth look at one particular instance of something.
  • Ethnographies, which evaluate a consumer’s choices in the context of her entire life and personal situation.
  • Focus groups, which are guided discussions among a specifically recruited group of consumers about a particular product, marketing campaigns, or pricing strategies.
  • In-depth interviews, or IDIs, which are face-to-face consumer Q&As about a product, service, or marketing strategy.

What Is Secondary Market Research?

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Companies or market research firms conduct secondary market research by using information available on the internet or in libraries, reviewing government databases, and digging through academic journals to collate, summarize, and synthesize previous primary research.

The analysis can generate new data and conclusions that inform marketing decisions.

Sources for secondary research include the following:

  • Academic papers and journals
  • Government statistics and databases
  • Historical records and documents
  • Demographic data
  • Industry reports

Examples of secondary market research:

  • An analysis of the changing demographics of a target market over time.
  • Shifts in technology in a target market that may affect a new product’s acceptance.
  • Voter behavior and political party affiliation in a market.
  • Average household income in a market segment vs. average rent or mortgage payments.
  • The percentage of insured households in a hospital’s new neighborhood.
  • Average salaries for employees in my industry in the city where I’m putting a new factory.

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