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What is market research? The ultimate guide

mar·ket re·search

noun

  1. the action or activity of gathering information about consumers’ needs and preferences.
    “the company has just completed market research on a new type of organic toothpaste” (Oxford Dictionary) 

What is Market Research?

Market research answers the all-important question of why. User analytics show you how customers behave, but neglect to provide further explanation. Market research uncovers the motivation – why consumers do what they do. 

Through market research, you’ll discover the unknown unknowns and confirm or deny assumptions. Effective brand strategies aren’t made with guesswork or generalized best practices. You need an understanding of your unique audience, competitors and market forces to make the best decisions for your brand.

Consumer behaviors will often surprise you. You can’t (and shouldn’t) rely on your own perspective and knowledge to reflect public opinion. Understanding how a wider range of individuals experience your product or service provides the necessary insight to succeed in a competitive industry.

Why is Market Research Important?

Market research helps brands step up marketing, sales, communication and product development strategies based on the unique characteristics of target consumers. Marketing your brand to the right audience with the right messaging ensures that your product or service doesn’t get lost in translation. 

Market Research Purposes

  1. Product insights – Market research is often focused on understanding your target audience’s needs and how they experience your products or services. These insights can support product development and positioning strategies. 
  2. Consumer insights – Research can also uncover the unique values, behaviours, motivations and concerns of your customer base. These insights enable your brand to address these factors in your marketing and sales strategies.
  3. Forecasting – In the process of trying to better understand your customers, you will often stumble upon important consumer trends. Equipped with this knowledge of how markets are shifting, your brand can take steps to future proof the business and predict demand.
  4. Competitor benchmarking – Through comparative research, you can uncover where your brand stands among competitors. Market research reveals brand strengths and weaknesses in the context of an entire industry.

Market Research Methods

Primary Market Research

Primary market research is the process of gathering information from consumers directly through online or in-person means. This form of analysis can be qualitative or quantitative, with most research incorporating elements of each. 

  1. Surveys – Surveys are the most common form of qualitative research. These questionnaires ask respondents a series of open or closed-ended questions. They’re low-cost and simple to conduct across a large number of respondents. Closed-ended survey data is easy to analyze and can help you define what is happening, while open-ended responses provide further context that helps you understand underlying reasons and motivations.
  2. Interviews – Interviews are an opportunity to have a face-to-face conversation with consumers from target demographics. Although more expensive and time-consuming, interviews allow for follow-up questions and in-depth responses. In contrast to surveys, this method allows you to observe non-verbal responses like body language and emotion.
  3. Focus Groups – Focus groups bring together multiple individuals from target markets. A moderator facilitates the conversation to understand how the group feels about a brand, product, user experience or ad campaign. Focus groups can be expensive to conduct and often present biases such as moderator style or a dominant member. The dynamic of the group and moderator will impact what people say and how they interact.
  4. Observation Session – During an observation session, an outside observer will watch a target consumer use a product in a natural environment. Brands can see customers engage without the influence of a moderator or interviewer. This approach produces objective, organic insights but can inhibit the development of an in-depth understanding that is possible through conversation. 

Secondary Market Research

Secondary market research is publicly available information published by a range of independent third party entities, including:

  1. Public resources – Information from sources like government agencies and public libraries are a free method of market research.
  2. Commercial resources – Sources like newspapers, magazines and journals are not typically free, but still provide a low-cost means of research. Trade organizations and other companies also offer paid secondary market research resources.
  3. Educational resources – Many universities and educational institutions conduct research projects that may be relevant to your brand. Often overlooked, educational institutions produce more research than commercial businesses. 

Types of Research 

Exploratory – Exploratory research is open-ended with the purpose of identifying issues, challenges or themes. Through unstructured interviews and open-ended questions, important nuggets of insights flow out naturally. This investigative strategy is typically not hypothesis-driven with researchers most interested in uncovering authentic insights about consumers.

Specific – Specific research is the next step in the equation. Once exploratory research uncovers a problem, specific research digs deeper. Questions become more structured and uniform across respondents to gain deeper information on predetermined topics. 

Both exploratory and specific approaches are necessary to conducting effective market research. 

Market Research Steps

  1. Understand your goal – The first step is asking, “Why am I doing this research?” Defining the area of research provides direction and a baseline understanding of your end goal. 
  2. Know the target audience – You can ask the right questions, but if you’re not targeting the right audience, it’s all for nothing. Your research needs to target the demographics who will purchase your product. The larger the sample, the more representative it will be.
  3. Collect data – Through the chosen means of research (often a combination of methods), collect data from potential consumers.
  4. Analyze responses – You have all this data, now what do you do with it? To find meaning within the data, you must interpret the results by correlating responses to different metadata points like age, gender and location. Using a combination of quantitative and qualitative analysis methods will enable you to turn your research into actionable insights that drive business outcomes. 

Using Relative Insight for qualitative analysis

Relative Insight helps you turn your market research data into insights that drive actions and outcomes. Our comparative text analysis software quickly and effectively combs through qualitative data to help you understand the attitudes and behaviours of consumers. Through comparison, Relative Insight analyzes language sets side by side to uncover the significant linguistic differences and similarities. 

Our software can analyze any data source such as survey response data, focus group transcripts and observation notes. Relative Insight’s approach eliminates the need for manual coding and helps to avoid hypothesis-driven bias by analysing qualitative data in a quantifiable way.