Market research exists to guide your business decisions by giving you insight into your market, your competitors, your products, your marketing and your customers. By enabling you to make informed choices, market research will help you develop a successful marketing strategy.
Market research helps reduce risks by allowing you to get product, price and promotion right from the outset. It also helps you focus resources where they'll be most effective.
Market and marketing research
There are two main types of market research - quantitative research and qualitative research. Quantitative research focuses on coming up with numbers: for example, what percentage of the population buys a particular product. It's gathered using surveys and questionnaires. You can do simple quantitative research yourself by talking to your customers. More in-depth quantitative research can be used to identify markets and understand customer profiles - vital if you're launching a new product.
Qualitative research gets behind the facts and figures to find out how people feel about products and what factors affect their buying decisions. Researchers use questionnaires and focus groups to gather this intelligence, while interpreting the results is a skilled job.
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You can also do desk research with existing surveys and business reports. Much information is available online and from industry organisations, and some of it is free. This information provides data on market size, sales trends, customer profiles and competitor activity. Your customer records also provide a wealth of information, such as purchasing trends.
For forecasting, it can help you assess key trends to anticipate how the market may change. This is a vital step towards identifying new market segments, developing new products and choosing your target market.
Market research needs to be a regular planned part of your strategy. Even as an established business, you need to stay in touch with your customers' needs as well as market trends and your competitors. It measures the effectiveness of your own marketing, giving you information about attitudes to everything from packaging and advertising to brand awareness.
Planning your market research
On a tight budget, you can take a do-it-yourself approach to market research. For example, if you're considering taking on a shop, you can check the levels of passing traffic at different times. Taking time to talk to your customers or potential customers is invaluable, too - this free market research can be very revealing.
However, to get the intelligence to make sound commercial decisions, you'll need a more sophisticated approach. For instance, if you carry out a market research survey, you'll need to plan the best way to conduct it and how to interpret the results. What customers tell you to your face may not be the unvarnished truth, while your ability to interpret results is likely to be compromised by your own feelings.
For a truly balanced approach, you should work with a professional market researcher, such as an agency or a freelance consultant. If you're looking for detailed quantitative work, you will probably need to work with a company. However, a freelance market researcher can be cost-effective for a survey or focus group. Professional market researchers are skilled in asking the right questions and interpreting the results, producing objective results that you can act on with confidence.