How to Do Market Research
You can’t launch an advertising campaign and build a marketing strategy without sufficient information — it's a business risk. Successful marketing research will help launch products that are interesting to the audience. It's not always low-cost to do research, but to enter the market with a product that the consumer doesn't need is an even bigger loss of money. Find out in this article what marketing research is and how to do it correctly.
What is marketing research?
Marketing research is the collection, classification and analysis of information about the market situation: prices, competitors, customers and more. Market data allows businesses to build strategies and minimize uncertainty. Market research is carried out by individual companies and specialized agencies; for example, Deloitte, BCG Group and others.
Market research examples of Deloitte
Why is marketing research important?
Internal marketing analytics answers the question "what is happening", whereas marketing research tells you "why this is happening."
Imagine, some analytic data shows that 30% of users abandon an item in an online shopping cart. It’s marketing analysis that can explain the reason: too high of delivery costs, inconvenient checkout process, competitors were cheaper, and so on.
Marketing research is necessary to:
- Identify trends and best practices in the market and repeat successful experiences.
- Get to know your potential customers and their needs, and give them what they want.
- Plan new products, services and changes in the company, not in isolation, but together with consumers.
- Run more effective marketing campaigns: marketing is still numbers, not just creative ads.
- Get to know competitors and work with them correctly; understand strengths and weaknesses.
- Build pricing correctly.
- Adjust business strategies if market trends change.
The market research volume is projected to grow to $83 billion by 2023. For comparison, it was $76 billion in 2019. This means that companies are putting less and less trust in the intuition and authority of leaders, and are instead trusting the data.
Primary and secondary research
Marketing research is divided into two types: primary and secondary. They differ in the way the information is collected.
Primary marketing research
Such research is conducted from scratch by the companies themselves. They do not use information from third-party sources. Primary research answers specific questions, and the research purpose is always aligned with the company's business. This type of research is reliable because the company knows exactly how the data was collected and what methods of counting were used. However, primary field research is not always within budget.
Secondary marketing research
Secondary research is a search for information among already existing materials from both official and unofficial sources: reports of other companies, agencies, consulting companies and government organizations (IBISWorld, CB Insights). The downside is that you cannot be sure of the accuracy of the information and the correctness of the calculations. Additionally, the data from such research quickly becomes outdated.
Types of market research
There are dozens of types of market research. Due to the development of digital technologies, there is a need for new ones. Let's talk about the most popular types of research.
|Market Research||Exploring opportunities, mechanisms and market trends in order to make appropriate business decisions. The position of competitors and potential obstacles are also assessed. As a result, the company can find the right niche and assess the profitability of the business in the current environment.|
|Macrosystem Research||Analysis of external conditions — all markets in the industry that can indirectly affect the results of the company.|
|Buyer Persona Research||Identification of the target audience — age, gender, income, social status, interests, education and other parameters — in order to determine the correct segmentation of the audience. Research gives you a deep understanding of the audience's problems in order to offer a solution as a product or service.|
|Competitor Research||Allows you to identify the weaknesses and advantages of competitors and assess the possibilities of cooperation. Analyze competitor's prices and advertising campaigns. Competitive analysis helps you understand your place in the market, separate yourself from competitors, and ultimately outrun them.|
|Product or Service Use Research||Product researchers study the specifics of how consumers use the product: how they react, what difficulties they have in the process, etc. Research drives product improvement.|
|Pricing Research||Price research is the study of the cost of similar goods on the market: what price the buyer expects and what price he is actually ready to pay. The purpose of the study is to find the price at which the company will receive the maximum profit in the current environment.|
|Brand Awareness Research||Helps you understand whether the target audience knows your brand, whether potential customers perceive you correctly, and how you could improve your positioning.|
|Customer Satisfaction and Loyalty Research||Assessing the level of customer satisfaction with a product, service or company. The research shows whether the customer's expectations match reality and what flaws are experienced with your product. As a result, the company receives an answer on how to make the level of loyalty such that the customer comes back to make a repeat purchase. Besides, these studies help to adjust advertising campaigns and find ways to improve customer experience.|
|Market Segmentation Research||The company defines consumer segments in the industry. This way, it can offer each segment a product according to their interests, habits, and product needs. By analyzing each segment, you can identify narrow niches and create a product entirely for the client.|
|Campaign Research||Research and analysis of past campaigns takes place through an experiment that is carried out with existing clients and potential audiences. A research analyst explores the elements of campaigns that generate the greatest response in order to use them in future projects.|
Marketing research methods
Among the classic marketing research methods are observation, focus groups, polls, interviews and experiments.
Observation — Researchers observe a person who uses a product under real or simulated conditions.
Focus groups — Several people in a group of 6-10 test out the product and then discuss it with a moderator. This method can cost you a pretty penny, and there is a risk of dishonesty from the participants because of the influence of other people in the group and the authority of the moderator. Another flaw is that focus groups cover a rather narrow audience.
Survey — the easiest and most popular way to research. The respondent is asked to answer a series of questions, either short-answer or multiple choice. There is the potential for false results because buyers might report loyalty to some brands in the survey, but buy others.
With the development of technology, market research methods are becoming more digital and the research process is accelerating. Online surveys are very easy to conduct, and companies actively use this option on websites and social networks.
The marketing automation platform Altcraft Marketing has its own service for creating surveys, questionnaires and applications. This service is called Forms. Using directly obtained data, you will make targeted advertising and get new customers. In addition, if you are aware in advance of what your customers are unhappy with, you can quickly react to negative reviews. This way, you’ll be able to keep a positive public opinion about your brand.
Example of a survey on the Aviasales website that users see while the ticket search is loading
Experiment — A method that studies a change in some familiar parameters: packaging, prices, elements, configuration, etc. One or more variables are changed and the results observed. This method can be costly, especially if the price is changed for the experiment.
Interview — A one-on-one conversation with respondents. This method helps to dive deeper into the client's difficulties. What’s more, interviewers can read non-verbal signals during an in-person meeting. The method can bring about unexpected conclusions; for example, one may learn opinions about the product that the company did not even know about.
Marketing research steps
In the classic marketing research process, there are 6 steps.
Step 1. Identify the problem
The first step in the marketing research process is to decide what problem we must solve with the help of research: an advertising campaign is ineffective, demand for a product is decreasing, a new product is released that needs to be made successful, and so on. Then we define the research purpose. The purpose should answer the question of how to solve the problem or correctly identify it. Based on the goals, we set tasks — the actions that will lead to the goal.
Let’s say we have a company. We’ll call it Company N. Company N’s competitors released a new product, and sales dropped. The purpose of the research may be to determine the competitive advantages of a competitor's product, and then use the collected data to refine your product. Tasks are comparing prices, analyzing reviews for each product, and more.
Step 2. Research plan
To avoid possible mistakes, the plan should be detailed and include the following points: research budget, methods, sources of information (primary or secondary), description of the audience for the sample, and methods of collecting information.
Step 3. Collecting data
This is the longest stage, and also where the most mistakes occur. Here you can face bad faith of respondents, market researcher bias and even incorrect data collection. Detailed preparation for research helps you to minimize errors.
Step 4. Data analysis
Researchers analyze the data they obtained using electronic means, market research tools or on their own (for example, open questions in surveys). Based on the analysis, the results are formed.
The analysis includes:
- data verification: surveys with questions, viewing interviews and so on;
- editing: excluding incorrect answers and those that cannot be processed;
- classification of responses and coding them into a more understandable form;
- transfer of data to the analysis tool: tables, special services;
- data cleansing and work with missing answers, data correction;
- the data analysis itself.
Step 5. Presentation of results
The customer of the study receives the processed data in the form of clear and formalized results and conclusions. The report also includes a description of the objectives, research methods, and recommendations.
Step 6. Making decisions
After checking the results, the customer draws conclusions and makes business decisions regarding the problem that the research is supposed to address. In some cases, research can actually reveal a new problem.
Marketing research is a pillar for business and a kind of compass that indicates the right direction of development. No method can give a 100% guarantee that your business decisions are correct. But with research, there is a better chance of getting an objective picture and avoiding the HiPPO Effect, when a business makes decisions based only on the opinions and intuition of managers. Data is a more reliable advisor.