It’s easy to overlook market research when you’re fired up by a new idea, but if you do, you’re sending a product out into the market on the basis of guesswork.
Market research gives you insight into who you’re selling to, the competition, and what the market conditions are. If you’re already active in the industry, you might feel you know all this already. But an innovation is by definition something new.
What does your target audience look like? What price will they be willing to pay? What do they think of existing solutions? What will the typical sales cycle look like and who will it involve? What do they think of your brand currently, and does it align with your new product?
Market research will give you answers to these types of questions and help ensure you don’t waste resources on developing something you’ll struggle to sell.
What is market research?
Let’s start at the beginning. Market research is a key stage in new product development. It describes the process of gathering information about market needs and preferences. It will allow you to enter the market with more insight. It’s all about identifying opportunities and understanding the desired market.
It will help you:
- Observe what is happening in the market
- Remain relevant and competitive in your industry
- Identify your users’ needs, identify risks and potential opportunities
- Understand how customers feel about your product before the final commercialisation stage
It’s important to conduct market research as users’ habits are forever changing and competitors are also likely to be innovating and finding new ways to increase their market share.
Types of market research
There are two main types of market research:
Primary market research focuses on using data that you yourself have collected. This generates raw data that you explore to draw your own findings. Primary data is typically achieved through interviews, surveys, and focus groups.
Unlike primary, secondary research is completed using existing data. It involves searching – usually online – for information that can inform your insight. It can include searching reports, datasets, articles, forums, competitor websites, and any other source of information.
Confusingly, your secondary research often comes before your primary research.
Market research stages
Here are the different market research stages that will help you understand your market better:
Buyer persona research
A persona is a semi-fictional representation of your ideal customer. This research will help you understand what their challenges are and what they want from your product. Identifying customers will allow you to begin researching consumer insights.
Gathering consumer insights will give you a more nuanced understanding of your target customer. Focus groups are a commonly used method. Typically, a group of six to ten people will gather to generate feedback on the product (in this case the prototype) or a future marketing plan. During the focus group, a moderator will ask predetermined questions to discover genuine thoughts and presumptions. You could run more than one focus group to generate a wider sample, after all – it’s a big market out there. Other consumer insights can be achieved by interviews, surveys, online forums, and social media tracking.
Competitor research will allow you to understand the market and industry and monitor what has worked for similar products. It’s also a chance to identify what you can do to differentiate yourself from competition. Secondary sources such as articles and advertising can be reliable sources of competitor information. You can also use primary research to get insight into what people think of your competitors.
Analyse your findings
Once you feel you have a strong understanding of the market, it is time to summarise your findings. Findings can be simplified into the following steps:
Themes and observations
Looking for key themes and observations will allow you to establish the most interesting and useful findings from your research. With consumer insight research, themes can be identified with strong word repetition. Analysing frequent language shows popular themes and provides insight into the market.
Producing statistics based off data helps to identify further action required. For example, if you find 10% of your customers preferred a competitor’s product over yours, this is an opportunity to find out why. Having statistics will allow you to easily understand the data and develop next steps. Be aware of data that seems ‘’too good to be true’’ – it often is. When conducting your primary and secondary data, ensure the sample size captures enough data to generate an accurate picture.
Make a market research report
Once you have analysed the data, it’s time to summarise your findings and identify the next steps. One way to do this is to produce a market research report. A typical report includes:
- Background: why did you carry out this research?
- An industry overview: what is your position in the industry?
- The participants: what was the most interesting data you found from them?
- What are your competitors’ strengths and weaknesses?
- What gaps and opportunities are there in the market?
- What are the key themes and statistics?
- What are the next steps?
A market research report helps to reduce risk by having a better understanding of your customers and the market. By identifying the next steps, you’ll be able to put your findings to work.
If this all seems a little overwhelming, then why not attend our free market research workshop Become your own market research expert on 9 February?
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