Market research. It’s a term you’ve heard plenty of times before, but what does it actually mean?

By definition, market research is the process of gathering, analysing and interpreting information about a market, a product or service that’s being offered in that market, and the customers who that product or service is aimed at.

Market research takes an in-depth look at the characteristics, spending habits, location and expectations of your business’ target market, alongside the industry as a whole and any competitors.

Why should I carry out market research?

Accurate and thorough information is the foundation of all successful business ventures. It provides a wealth of information on prospective and existing customers, your competition, and the industry in general.

Market research provides relevant data to help solve the marketing challenges that you’re most likely face. This is a fundamental part of the planning process, as it sets you up for any hurdles and gives you the chance to plan how you’ll overcome them in advance.

Types of data used in market research

There are two types of data involved in market research: primary and secondary.

Primary information is research that you carry out yourself, or hire someone to do for you. Secondary information is research that’s already been compiled, such as government reports, case studies, and data gathered by other businesses in your industry.

With primary research, you gather two basic types of information: exploratory and specific. Exploratory research is open-ended, helps you define a specific problem, and usually involves detailed, unstructured interviews in which lengthy answers are gathered from a small group of respondents. Specific research, on the other hand, is more precise and helps solve any problems that exploratory research has identified. Interviews are structured and formal.

When conducting primary research, first decide how you’ll question your targeted group. Will it be by email, telephone, or face-to-face interviews?

If you choose to send an email questionnaire, keep the following in mind:

  • Make sure questions are short and to the point
  • Address the questionnaire to specific individuals
  • Keep it brief – ideally no more than two pages
  • Send it with a cover letter that explains why you’re carrying out this research

A good way to increase your response rate is to offer an incentive, such as 10% off your next purchase when you complete the questionnaire.

Phone surveys are generally the most cost-effective way of conducting market research. If you opt for this method, these guidelines are a good place to start:

  • Write a script and memorise it rather than reading it out. This will sound more natural and authoritative.
  • Confirm the name of the respondent at the beginning of the conversation.
  • Avoid pauses – you want to maintain the respondent’s attention.
  • Ask if a follow-up call is possible in case you require additional information.

As well as being cost-effective, speed is another advantage of telephone interviews. A rate of five or six interviews per hour is typical, but experienced interviewers may be able to conduct more. Phone interviews also can cover a wide geographic range relatively inexpensively.

Face-to-face interviews are hailed as one of the most effective forms of market research. You can carry out personal interviews either in a group or one-on-one. Both have their advantages.

  • A group survey is mostly used by big businesses. Group interviews or focus groups are useful for getting information on product ideas, buying preferences, and purchasing decisions among certain populations.
  • An in-depth interview is a one-on-one interview. Focused interviews are based on questions selected ahead of time, while non-directive interviews encourage respondents to address certain topics with minimal questioning.

Secondary research uses existing information from government agencies, industry and trade associations, media sources and so on. Secondary sources include:

  • Public sources. These are usually free, and often offer a lot of good information
  • Commercial sources. These are valuable, but usually involve cost factors such as subscription and association fees.
  • Educational institutions. Often overlooked, these are valuable information sources.

However you choose to carry out market research, just make sure that you don’t skip it. It’s vital for the success of your business that you understand the market you’re pitching to, the industry you’re working in, and the people you’re looking to make customers.