How to Do Market Research in 4 Steps — 2021 Guide

Most businesses carry out thorough research on the product or service they’re going to offer but don’t pay heed to the interest of the audiences’ who would be buying the products.

If you’re looking to build and promote your business, understanding your target audience is vital. And the key to gaining all this information and knowledge is market research.

When you’re starting a business, one of the vital things you need to do is get to know your customers. If you wouldn’t know and understand your customers, solving their problems and needs would become all the more difficult. To get answers to these unknown elements, you need market research.

Before we get into how to do market research, let’s understand its meaning, benefits, and methods.

What is Market Research?

The act or process of gathering information about your potential customers is called market research. It helps you understand the target audience and their taste.

Apart from that, it helps in reducing potential risks and improves your marketing and sales process. All in all, market research allows a business to serve its customers better.

Benefits of Market Research

For all those wondering if market research is necessary for a business, the answer is yes. Here are some of the benefits of market research.

• Helps create plans
• Reveals market opportunities and small business ideas
• Helps in understanding your competitors
• Enhances chances of survival
• Facilitates forecasting of revenue
• Helps in identifying threats
• Increases the chances of staying relevant

Market Research Methods

Here are the methods that you can use to conduct market research:

1. Interviews

You can talk to your potential customers either virtually or in-person by interviewing them. Get your body tone and questions right, and you’re good to go. Interviews can also be one of the most insightful methods of market research.

2. Surveys

It is the most commonly used market research method. Moreover, surveys allow you to collect a lot of data effortlessly and economically by asking customers a series of questions. Plus, you can analyse the data without much trouble.

3. Observation

In this market research method, a company member usually takes notes while observing how customers interact with their product or service. It’s great for brands looking to see individuals interact with their product in a natural setup.

However, it doesn’t involve any direct interaction or exchange of words with the customers.

4. Focus Groups

Focus groups comprise a selected group of people who fit the target market of a business.

There’s also a trained moderator, who’s job is to lead a conversation surrounding the product or service and the user experience. Doing it right is expensive, and that’s why a new small business should avoid it.  

Now that you know the benefits and methods of market research let’s get into the process. If you’re a small business owner looking for business growth, this guide has been curated for you. It’d help you better understand your competition and identify a business opportunity.

How To Do Market Research in 4 Simple Steps?

1. Identify Your Target Market

The first and foremost question every business must ask themselves is who’s their target market or target audience. To efficiently conduct market research, you’d need to identify the audience you’re trying to reach. It’s essential to ask yourself questions like:

• Who’ll benefit from your product or service?
• What group of people or niche would be interested?
• How can you connect with them?
• How will your product solve their pain points?  

There’d be certain traits that’ll be common in your target audience. These could be age, geographical location, income levels, job title, education, or gender. Such traits are popularly known as demographic traits.

However, there is another set of traits. They are called psychographic traits and focus on psychological factors like priorities, motivations, and beliefs.

People who have similar beliefs and motivations share psychographic traits. More often than not, the target market is a blend of groups with both these traits.

Another significant aspect of identifying your target market is market segmentation. It involves dividing your target market into different groups. Each market segment might buy your product for distinct reasons, and you can customise your product or service for each segment.

How to do it: You can use emailed surveys or Facebook surveys and interviews to understand your target audience.

2. Reach out and Talk To Your Potential Customers

After identifying your target audience, it’s time to reach out to them. Talk to your target audience to find out what they value in your product or service. This way, you would also get to understand what they expect from your brand.

Primary market research is beneficial in this step. It’d allow you to understand the concerns of your target audience and gain vital information. Primary market research would also let you gain first-hand insight into your target audiences’ home and work environments.

As most small businesses and companies skip this step, doing so would provide you with an edge over your competition. But remember to record your conversations for future ease.

However, if you want to use online surveys or use Facebook polls, go ahead by all means. But remember that it wouldn’t have the same impact as one-to-one communication.  

Although compiling focus groups can be slightly expensive and time-consuming, you can use it for this step if you have the funds.

3. Check Out The Size of The Market and Your Competitors

Once you have validated your target market after identifying it, you need to research market size and your competitors. The size of your product’s market needs to be big enough if you’re looking to sustain your business for a long time.

And competitor research is essential to understand the market better. By following this step of market research, you’d become aware of what other people are offering along with the price. To appeal to your audience, you must study the general value propositions and USPs of your competitors.

Plus, a new small business can set its product price according to its competitors’ price and even undercut its pricing to beat the competitors. In this way, companies can also understand the offers their target audience is responding to and what extra services they expect.

And to figure out if your market is big enough, you can use the attributes you described in the target market step and figure out how many people fulfil it. But if your market already has established competitors, it’s best to do industry research.

For instance, if you’re looking to start a smartphone business, understanding how much individuals buy from the current offerings would give you a sense of the potential market size.

How to do it: You could read trade publications for your industry online or search industry reports.  

4. Compiling and Documenting the Data

The final step in the market research process is compiling and document the data and findings. How you plan to use this data would determine how formal the final reports turn out.

If you want to share your data internally with your business partners and employees, you should create a comparatively informal market research report. But in case you’re looking to lure investors, you need to compile a formal report.

Ultimately it’s vital that you correctly organise and sort out your findings. Moreover, relating this information to the buyer’s persona is also essential.

Conclusion

Carrying out constructive market research early on in the life of your small business can help you avoid mistakes. Ideally, it should get started before you start churning out marketing content.

Whenever approaching a crucial business decision or growth opportunities, turn to market research, and you’ll be just fine. Doing regular market research would allow you to be in sync with the latest trends. Also, it would enable you to fulfil the unique demands of your target audience while providing you with new business ideas.

Moreover, it’d provide you with vital information about future trends and reaffirm your understanding of the market. Just follow this simple 4 step guide for market research, and get researching.

Also read:

1) Capital Gains Explained: Definition, Types, Exemptions & Tax Saving
2) PoS Machine: Types, Benefits for small businesses & more
3) Foreign Direct Investment(FDI) 101: A Complete Guide
4) Business Idea: How to Sell Furniture & Home Decor Online?
5) OkCredit: Simple, Paperless & Secure solution for businesses

FAQs

Q. How long do surveys usually take to administer?

Ans. Administering an online market survey usually takes 2-10 business days, depending on the sample size.

Q. What is the most effective method of market research?

Ans. Talking to people is the most effective method of market research. Getting information and data first-hand is excessively impactful and beneficial for every small business.

Q. What exactly is market research?

Ans. Determining the viability of a product or service via the target audience is called market research.

Q. How effective is market research for a small business?

Ans. If you follow the steps accurately and use your data and findings well, market research can be very efficient.