Market Research: The What, Why, When And How
For as long as there have been markets, there has been a thing called “market research.”
The Phoenicians - a civilisation in the Middle East, established four and a half thousand years ago - studied consumer demand for their exports, and became the trading powerhouse of the classical world. Marco Polo’s diaries talk about the trade studies he conducted for Kublai Khan.
Despite this long history of success, a lot of businesses still don’t fully understand the markets they operate within, or the people they’re trying to reach. That’s why we’re going to walk you through what market research is, what good it does for a business, when’s the right time to do it, and how to do it well.
What is market research?
When we talk about market research, we’re specifically talking about:
- Marketplaces - Establishing where you can sell your products and services.
- Customers - Who your audience is or who they could be.
- Competition - Who else your customers buy from, and how you can differentiate.
Let’s be clear here: it’s not marketing research. That’s a much bigger concept that includes market research under its umbrella, alongside business logistics, media research, motivation and memorability studies - it’s a huge discipline.
When do you need market research?
Market research is helpful when launching a new business, product or service, and equally crucial as your business grows - helping you to stay relevant, keeping up with changes in consumer behaviour.
- When setting up your business or marketing strategy or tracking performance - This kind of market research looks at specific and measurable forms of success over time. Most businesses should be doing this tracking work more often than they currently are, but we all have to live in the real world. Decisions have to be made, priorities have to be chosen, but your overall strategy will be stronger if it’s informed by a sense of how well your business performs currently.
Again, this falls into the three core areas of market research. If you don’t regularly assess the marketplace, you may miss new business opportunities at home or internationally. If you don’t regularly research your customers, you run the risk of losing them to a newer product or a disruption in the market. And if you ignore your competitors, you have no benchmark to compare your own service or offering to.
- When you’re developing new products or new markets - In other words, when you’re trying something new in an area you’ve not explored before.
Business expansion, according to strategic mathematician Igor Ansoff, falls into two safe categories: developing new products or services, and developing new markets to sell them in. In either case, market research will reveal the opportunities in the marketplaces, whether there is a customer base for the product, and what competitors there are in the space.
Market research in both examples is about opportunities - either spotting new ones or making sure you don’t get left behind.
How do you do (great) market research?
Most businesses are already conducting low-level, in-house market research, talking to their own sales personnel and checking their customer feedback to find out the specific things customers need, want, ask after and value. Some are checking the competitions’ website activity, or using Google Trends so they know the web searches that lead people to their door.
This is - wait for it - really useful. But it’s also often ad hoc and unstructured, not built into the business on a strategic level, and it doesn’t tell you everything you need to know. To go further and start conducting organised, joined-up market research, you have three real choices.
1. Do it yourself
You already have access to more market research data than you realise. For one thing, the Office for National Statistics publishes reports on industries, regions and marketplaces for free, giving you solid, proven quantitative data - that’s things you can measure and track with pure numbers.
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Your own salespeople are a great source of qualitative data - that’s “why” and “how” information that can’t be measured in numbers but can be described at length. Salespeople interact with your customers every day, and can describe how they understand and build customer relationships.
To go further, it helps to know a thing or two about methodology. Market research can be a big project, but it’s so much easier with the right tools for the job:
- A quick SurveyMonkey poll may do the trick for simple questions with quantitative, measurable answers, or you can devise a questionnaire for short, structured interviews.
- Field trials and focus groups are ideal for deeper qualitative studies - if your goal is to do with customer or user experience, you need access to people so you can ask them follow-up questions and explore why they think and feel what they do.
- A social listening tool like Hootsuite can track what people are saying about your business online.
A universally recognised measure for customer satisfaction is Net Promoter Score - once you know what they think of you, you can sift customers out into loyal promoters, passives you need to work and retain, and detractors who need to be brought around. That’ll give you a good idea of who falls into what category and enable you to start segmenting your marketplace further.
2. Smaller agencies and freelancers
Often, this group will work with you directly to shape a research strategy, especially at senior level. You’re not hiring a handful of people to follow a script and do some telephone surveys; you’re hiring someone who is able to help you through the whole research process from design to execution.
An experienced researcher will know about methodologies and analysis techniques, and can help you ask the questions that get you the answers your business really needs. Market research at this level can turn into a real opportunity for business development beyond the specific results you’re after right now.
Trade associations and business contacts may be able to recommend a market research group with knowledge of your industry; the Market Research Society and the Chartered Institute of Marketing can also match you up with their members.
You can even subscribe to a syndicated monthly tracker for your sector, which allows you to tie in market share, awareness and consideration figures into your marketing activity in the shorter term. The Market Research Society Research Buyer’s Guide will help you find a good, accredited research provider.
3. Large-scale research
This may mean using an industry report, compiled by independent researchers in your sector, subscribing to an existing syndicated tracker, or adding questions to an omnibus survey from an organisation like Ipsos or YouGov.
At this level, you might not have access to the kind of one-to-one hands-on help that develops a research strategy from the ground up. It’s more on you to brief your research partner, describing your company and its goals, the objectives of your research and how you’d like it delivered, the timescale and budget you have for your research, and what you already know about your target audience and customer base.
Which one’s better? The truth is, it’s hard to be objective about your own business. Your own biases will colour your research process, as well as the conclusions you draw. A third party is more likely to give you useful results and highlight the things you don’t already know or believe. It will be pricier, but the cost will be balanced with the value you get from the research.
How can market research go wrong?
Whether you conduct market research yourself or through a third party, there will be dangers - potential pitfalls you need to step around.
- Taking the results too seriously. Market research data is an aid to decision-making, not a statement of fact. Figures to four decimal places are too specific - you’re looking for broad indicators of what’s likely to work, not precision number-crunching.
- Not taking the process seriously enough. It’s not enough for the Marketing Director to ask his wife, his mother-in-law, and his mates at the golf club what they think of your business. You need to do the diligence and look at your actual customers and prospects - who are they, and what groups do they fall into?
- Paying too much attention to the competition. If you’re just copying industry leaders and doing what they do, you’ll always be - at best - the second biggest name in your industry. When we started up The Marketing Centre, nobody else was offering part-time senior level support; our market research indicated there was competition from consultancies and agencies, but nobody was doing exactly the same thing.
The late, great Steve Jobs claimed Apple never does market research, saying - among other things - that “it’s hard for consumers to tell you what they want when they’ve never seen anything like it.” It’s a tempting myth. You may need to answer questions that your customers don’t even know to ask if you want to deliver something that completely changes the marketplace.
But here’s the thing; Apple does do market research. They are very careful with their brand and how they manage it. Their big ideas may not be market researched, but the design, the execution and the user experience are tested to death and back again. They may have come up with something customers had never seen before, but they made sure it was something customers wanted to use - and that’s how they can charge over a grand for a phone with a big screen on it.
Here’s the truth: market research helps. It identifies gaps in the market for new products, and new markets for existing ones. It helps startups find their niche, and established firms stay relevant. Most businesses are doing it all the time - just in a low-key, informal way that needs the right approach or the right partner to kick it into high gear. Market research works, and it’s been working for four and a half thousand years. The tactics and the tech may change, but knowing your market is fundamental for growing a business - and it always will be.
Market research starts with knowing your own business - who you sell to, and how well. Find out what you know with our Marketing 360.