What is market research?
Market research involves learning about your:
Why research your market
Market research is essential for starting and running a successful business. It gives your business direction and helps you stay on top of what your customers want.
Market research is useful to assess:
- the viability of a business or product idea
- whether you can grow into a new market or location
- industry or economic influences
You can also use your findings to:
- start a new business
- write or update your marketing plan
- measure the success of your marketing plan
How to do market research
To run a successful business, you need to learn about your customers, your competitors and your industry.
Market research involves asking the right questions, in the right way, to the right people. This gives your business directions and helps you stay on top of what your customers want, and how much they're willing to pay for it.
When you undertake market research, you can use your findings in two ways:
- Start a new business and write your marketing plan.
- Measure the success of your current marketing plan.
Market research involves asking the right questions, in the right way, to the right people.
Follow these 5 steps to research your market:
1. Define your research objective
The first step in the market research process is to define your research objectives. Ask yourself:
- What is the key information you would like your research to uncover?
- What do you want to know about your customers or your market?
By defining your research aims, you'll be able to keep your research focused and effective.
For example, you might want to decide whether to launch a new product or service. Your research process would then be to assess whether the market will accept your new product or service, and how much they'll be willing to pay for it.
2. Develop your research questions
Once you've identified an objective, come up with a list of research questions for your market, customers and competitors. For example:
Questions for your market:
- What are your market's key demographics (for example, as age and gender)?
- If you're starting a new business or product, how will your entrance affect the market and customers?
- Does the region where you operate have a stable economy?
Questions for your customers:
- Who are your target customers and how do they behave?
- Where are they located?
- What's the profile of an ideal customer for your business?
Questions for your competitors:
- What's the profile of a typical competitor for your business?
- What are your competitors' main strengths?
- What are your competitors' main weaknesses?
Read industry reports on the IBISWorld website as a starting point.
3. Gather your research
There are 2 types of data collection, and both are based on asking questions:
- Qualitative information is more investigative and involves a fewer number of respondents (focus groups and in-depth interviews).
- Quantitative information is used to draw specific conclusions and involves a large number of respondents (surveys and questionnaires).
Ways to conduct research
Some common methods for data collection include:
- telephone polling
- mailed questionnaires
- online surveys
- personal interviews
You can conduct a simple 'yes or no' survey over the phone, but might need a face-to-face meeting to understand personal choices such as colour preferences.
There are some cheap ways to conduct online surveys, such as:
- SurveyMonkey, or
- by creating forms using Google Docs
4. Interpret your findings
This step is about organising your results and interpreting your findings. Basically, what have you discovered?
Keep your research objectives front-of-mind when organising and grouping your data. Look for ways you can improve your data organisation – this will make it easier to come to a conclusion down the track.
Here are some tips for data organisation:
- Identify any major trends – consider using lists, tables, diagrams and mind-maps to organise your data.
- Use your marketing plan to analyse your data to determine strengths, weaknesses, opportunities and threats (SWOT). You can do a SWOT analysis as part of your business plan.
One of the most important steps in the market research process is interpreting your findings. What is the research telling you? By answering this question, you'll be able to understand what the research has uncovered.
5. Draw conclusions and make decisions
Once you have your findings, ask:
- What do your findings mean for your business?
- What are you going to do about it?
Any conclusions you reach should align with your research objectives and your goals for your business.
Review all the data collected:
- Ensure there aren't any gaps in your data.
- Examine the major trends or problems in your industry or market.
- Analyse any strengths, weaknesses, opportunities and threats.
- Use your research to decide on the tactics that will make up your marketing mix.