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Many businesses that rush into the market usually have a short market lifespan. The business owners may be in shock as to why the business failed.
This sudden death of a business happens for a couple of reasons.
One of them could be because they do not necessarily conduct proper market research before investing their time and resources into a new product or service they want customers to patronize.
In this guide, we'll consider what market research is, its types, the best way to conduct it, and finally the benefits of doing it.
This guide will be helpful to you whether you want to start a business and are looking for a suitable market or you're already in business but are looking to scale up.
So let's quickly look into these areas in detail.
What is Market Research?
Market research refers to the techniques individuals or companies use to collate data about the market they intend to delve into or improve on.
The data they are able to collect will better inform their decisions on what to do or not do before going into the market or improving it.
As Indra Nooyi, former CEO of PepsiCo, rightly said, "Market research is critical for any organization that seeks to thrive in a competitive global economy." "By understanding customer needs, preferences, and behaviors, we can make informed business decisions that drive growth and success."
The purpose of carrying out market research or a survey is to understand the market that's associated with those products or services and the reactions from the target audience to the product or service.
Market research can be done by having one-on-one interactions with individuals, groups, and also conducting interviews just to obtain different opinions about the products or services that are to be introduced.
The information obtained from the survey is used to tailor products and services to the right audience.
Types of Market Research
Market research is categorized into two categories based on the methods and tools companies use to collect information from their target audience—usually referred to as samples—that helps inform the decisions they make. The types are as follows:
Method #1: Primary Market Research
In this method of research, companies either conduct the survey themselves or contract with an agency that carries out on-ground surveys.
Usually, the market research carried out involves the collection of data from a target audience, usually referred to as "samples."
The information they get from these samples is either numerical in nature (quantitative) or non-numerical (qualitative).
It is this information that companies analyze to determine whether or not the product or service they want to introduce to the market will succeed or fail.
In qualitative market research, there are some channels used to collect data through which a company can make informed decisions. They are:
I. Focus groups
In this collection method, companies focus on small groups, usually made up of 5–10 members, who respond to online surveys sent to them.
The focus groups are able to work remotely without the physical presence of the interviewer.
This is a very effective method for collecting complex information, but it's cost-intensive.
II. One-on-one interview
As the name implies, it requires that the interviewer carry out a personal interaction with the correspondent.
In this method, the interviewer collects information from a sample or respondent based on the questions he or she is able to ask.
As this is a question-and-answer section, the interviewer must be able to ask questions that are not yes-or-no in nature.
It should be open-ended so as to allow the respondent to answer the questions without hindrance.
Method #2: Secondary Market Research
In this method of market research, companies rely on data and information collected by others, such as government agencies, academic institutions, media agencies, blogs, etc., that have been analyzed.
The information these external sources have collected helps companies know how to make their decisions.
Though it is not as accurate and effective as the primary market research methods, it can be used as an additional source of information.
One advantage of this method is that it's not expensive to collect data, and it doesn't demand as much time as the primary market research method.
How Best to Conduct Market Research for your Business
It's important that whoever is going to do the market research knows exactly what to do.
There are steps that should be followed to make the whole process easier. Here's a closer look at the steps involved in effectively carrying out market research:
Step #1: Identify the Problem you want to Solve
Having a well-defined problem you want to solve through the research is the first step towards making effective market research.
You should be able to clearly identify the reason for your research so that it's easier for researchers to carry out the survey.
The problem you intend to solve should be effectively made into questions that can be answered by the sample you'll choose.
Step #2: Determine the Type of Research
Once you have been able to clearly define the problem you want to solve, you should choose the type of research method that will be most effective for your research.
As earlier stated in this article, there are two types of market research methods that companies use to collect data.
You can decide to collect new data by sending out researchers or by collecting previous data from external sources like libraries, media houses, etc.
Step #3: Determine the Sample
It's okay for you to have chosen your research type, but you can't stop there.
The next step to take is to determine who your target audience will be for the research. As earlier said, your target market is your sample.
You don't want to carry out research on the wrong sample; hence, you must inform your researchers of the specific samples to carry out their surveys and interviews on.
Also take into consideration that not all of the samples will respond to your research questions for different reasons, such as being busy, being unwilling, etc.
So you'll need to factor in these variables and consider increasing the number of your samples so as to get a good value for your research.
Step #4: Collect and Analyze Data
After you've identified those who will participate in your survey, your researcher swings into action, conducts the interviews, and gets all the necessary information that will be helpful for the survey.
Ensure that the right data collection tools are used to avoid errors. Once all the data have been collected, they should be analyzed using the appropriate software.
This step in the market analysis process is very crucial as it could hamper the rest of the market research steps.
All the other steps link up to get to this one. Other steps will be a waste of time if anything goes wrong with the analysis.
To prevent error, a professional must be allowed to carry out the analysis meticulously to obtain an accurate result.
Step #5: Make the Research Report
The next thing to do once the results have been analyzed is to make a detailed report on the research process.
Every single activity of the research process should be documented. The documentation should be written in such a way that the result of the survey aligns with the reason for the survey itself.
The report should begin at the end, telling the final story before coming back to how it all began.
When this is done, the main message is seen at the beginning, and any other information could come up later in the report.
Step #6: Make your Decision
All the above steps led to this final one, which is decision-making.
At the end of the research, you'll have to make a decision about either introducing the products or services to the market if the survey was positive or going back to the drawing board and probably reconsidering your product or service lines if it was negative.
You've learned a lot through the whole process, so it's time to make that decision!
Benefits of Conducting Market Research
Conducting market research comes with benefits. Some of the benefits include:
1. You'll Gain Accurate Information
Market research utilizes actual data collected from people that is meticulously analyzed.
For this reason, the information you get is accurate enough to help in the market research process.
2. You'll be able to Make an Informed Decision
Since the data collected are accurate and the whole analysis process is done by a professional, errors will be eliminated.
The result would be able to guide you and help you make informed decisions as to whether or not you should introduce new products or improve on an already existing one.
3. You can Determine the Market Size
With your market research, you'll be able to know how large your target audience is.
This will inform you on what to produce, quantity, sales and marketing strategies to use, your customer base, and return on investment (ROI).
4. You'll Learn about Customer Preferences
By carrying out market research, you would be able to draw conclusions about the preferences of your target audience.
This can guide you on what to produce and the services to offer in line with their needs.
5. You can Develop Workable Sales and Marketing Systems
With market research, you'll know what sales and marketing strategies are best suited to reach your customer base and increase sales.
Conclusion
Conducting market research is as important to any company, big or small, as their plans to succeed. Entering the market with a new product without having done thorough market research will make you lose money and resources.
You have read about the types of market research you could employ, how best you could conduct market research, and the benefits you get when you do so. When you are able to apply all these, then you'll succeed in your business endeavours.
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Marketing