Many businesses that rush into the marketplace without conducting a thorough market research usually have a short lifespan.
This sudden death of businesses occur mainly because business owners fail to conduct proper research before investing time and resources into a new product or service they want customers to patronize.
In this guide, we’ll consider market research, its types, the best way to conduct it, and finally, its benefits. In addition, 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.
What is Market Research?
Market research refers to the techniques individuals or companies use to collect data about the market they intend to explore or improve in. The data they can 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.”
In addition, the purpose of market research or a survey is to understand the market for products or services and the reactions of the target audience to them. Furthermore, market research can be done by having one-on-one interactions with individuals or groups.
Moreover, it can be done by conducting interviews to obtain different opinions about the products or services that are to be introduced. Hence, 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 companies’ methods and tools to collect information from their target audience—usually called samples—that help inform their decisions. The types are as follows:
1. Primary Market Research
In this research method, companies conduct the survey themselves or contract with an agency that carries out on-ground surveys. This process involves collecting data from a target audience, which is usually referred to as “samples.”
In addition, the information they get from these samples is either numerical in nature (quantitative) or non-numerical (qualitative). These companies then analyze this information to determine whether or not the product or service they want to introduce to the market will succeed or fail.
In qualitative market research, some channels are 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 5–10 members, who respond to online surveys. The focus groups can work remotely without the physical presence of the interviewer.
Moreover, this is a very effective method for collecting complex information but is cost-intensive.
ii.) One-on-one interview
As the name implies, the interviewer must personally interact with the correspondent. In this method, the interviewer collects information from a sample of respondents based on the questions they can 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. More specifically, it should be open-ended to allow the respondent to answer the questions without hindrance.
2. Secondary Market Research
In this market research method, companies rely on data and information collected by others, such as government agencies, academic institutions, and media agencies that have been previously analyzed.
These analyzed information helps companies know how to make their decisions. Although it is less accurate and effective than the primary market research methods, it can be used as an additional source of information.
Furthermore, one advantage of this method is that it is inexpensive to collect data and doesn’t require as much time as primary market research.
How Best to Conduct Market Research for Your Business
It’s important that whoever will do the market research knows exactly what to do. Some steps 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
The first step towards conducting effective market research is having a well-defined problem you want to solve through the research.
In addition, you should be able to clearly identify the reason for your research, making it easier for researchers to conduct the survey.
Moreover, the problem you intend to solve should be effectively divided into questions that the sample you’ll choose can answer.
Step 2: Determine the Type of Research
Once you have clearly defined 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, companies use two types of market research methods to collect data. You can 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
Choosing your research type is okay, but you can’t stop there. The next step is to determine your research’s target audience, which as earlier stated is your sample.
In addition, you don’t want to conduct research on the wrong sample, Hence, you should inform your researchers of the specific samples on which they will conduct their surveys and interviews.
Also, consider that not all of the samples will respond to your research questions for different reasons, such as being busy or unwilling. You’ll need to factor in these variables and consider increasing the number of your samples to get a good value for your research.
Step 4: Collect and Analyze Data
After identifying your sample, your researcher will conduct the interviews and gather all the necessary information for the survey. In addition, 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 crucial as it could hamper the rest of the market research steps.
Hence, a professional must be allowed to carry out the analysis meticulously to obtain an accurate result, preventing error.
Step 5: Make the Research Report
Once the results have been analyzed, the next step is to make a detailed report on the research process.
Every activity of the research process should be documented in such a way that the survey result aligns with the reason for the survey itself. Furthermore, the report should begin at the end, telling the final story before returning 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
At the end of the research, you’ll have to decide whether to introduce the products or services to the market if the survey was positive.
However, you can go back to the drawing board and probably reconsider your product or service lines if it was negative. Moreover, you’ve learned much through the process, so it’s time to decide!
Read also: Successful business in Nigeria: How to start and grow one
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 and meticulously analyzes it. For this reason, the information you get is accurate enough to help market research.
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 minimized.
Moreover, the result would be able to guide you and help you make informed decisions about introducing new products or improving on an 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.
Moreover, this will inform you about what to produce, the quantity, the sales and marketing strategies to use, your customer base, and the return on investment (ROI).
4. You’ll Learn about Customer Preferences
By conducting market research, you can draw conclusions about the preferences of your target audience. This can guide you in producing and offering services that are 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
Market research is as important to any company, big or small, as its plans to succeed. However, entering the market with a new product without having done thorough market research will cost you money and resources.
Following through with the steps on how to conduct a market research will give you the opportunity to access the benefits it brings. When you can apply all these, then you’ll succeed in your business endeavours.
