When you are planning on introducing a new product to the world, the only way to find out if it’s going to be profitable or not is by conducting market research. In fact, if you ask any successful entrepreneur, they will tell you that this is the only way to start developing any sort of product.
That is, because, in today’s market, customers are the ones holding the power. If they don’t like the product, no matter how much thought and effort you put into it, it’s simply not going to be successful. Releasing a product without proper market research is like driving from point A to point B with no directions. You can try to find the way, but you will either fail, or it will take you a long time to get there.
This is why, to make things easier, we have put together this guide on how to properly conduct market research. But first, you need to understand what market research is. So, without further ado…
What is market research?
To put it simply, doing market research means finding information about your target audience, developing a buyer’s persona and determining whether or not the product is fit to satisfy their needs. You can do market research either to use it as a blueprint for developing a business plan or to test your current plan.
Market research will tell you a number of valuable things, such as where and how your target audience is searching for products, what are the industry trends, as well as what are your customers’ pain points. By understanding all of these things, you can tailor your product to fit the market, as well as understand how to market your products, in order to reach customers.
Main types of market research
There are 5 main types of market research that you can do, all fitting into two categories: primary research and secondary research. We will be discussing them one by one, so you can decide which one better suits your needs.
Primary research means looking for first-hand information about the market and customers. You can do primary research by using focus groups, online surveys, or phone interviews. This is useful when you need to start building your buyer persona and want to start segmenting your market, as it reveals the challenges that buyers confront with. Usually, you can do primary research in two ways:
· Exploratory research: this helps you find out potential problems that customers have and is usually the first type of research developed.
· Specific research: after you identify specific issues and opportunities to tackle them, you can do specific research on a more segmented audience, to identify what the best way to cure their pain points are.
This englobes all the data and public records you can find, which helps you draw conclusions. Here, you can use trend reports, statistics from inside the market and sales data you may have on your own business. Usually, secondary research helps you better analyze competitors. The three types of secondary research sources are:
· Public sources: this is the most accessible information you can find, as it is often free, or very inexpensive to gather. Usually, government statistics are the most common source.
· Commercial sources: these are usually market reports that contain industry insight, and are usually done by research agencies. This is why, to get access to information, you usually have to pay for it.
· Internal sources: this is the type of information you can usually find in-house, such as customer retention rates, average revenue per sale, or other data you may have on hand inside your own company.
How to conduct market research
Now that you know exactly what market research is, let’s dive into how to actually perform it. In total, there are 6 steps you need to go through, for successful research.
Defining the buyer persona
The buyer persona is a generalized representation of who your ideal customer is. This way, you can understand who your target audience is, what they like and how to reach them. When sketching the buyer persona, you need to take into consideration characteristics such as age, gender, job title, location, family size, monthly or annual income, as well as challenges they may face.
Identifying a representative sample of your audience
After defining your buyer persona, it’s time to choose a small number of people (usually no more than 10), to survey. Ideally, you should choose individuals that match your buyer persona perfectly, or as close to that as it can get. Try to choose participants that have tried your product, as well as people who use a competitor product.
Engaging your research participants
If you choose to work with a market research company, they already know everything about research sampling design and how to select and engage research participants, but if you want to do it on your own, the best way to get in contact with people is either through social media or by looking at your own client list. Contact them and ask if they are willing to answer a few questions.
Preparing research questions
Even though discussions with participants need to be natural and open, you still need to put together a conversation guide, to help you remain on the right track and draw out all the necessary information. Keep in mind that most, if not all of your questions need to be open-ended, in order to avoid getting one-word answers. Simple yeses or noes won’t reveal any valuable information.
Identifying primary competitors
In order to identify your competition, you must know your product, as well as the market, very well. Keep in mind that this is not only a matter of Company A against Company B. Sometimes, you will also discover that a branch of a company can be a direct competitor.
Summing up your findings
After gathering all the information you can find about your customers and the market in general, it’s time to combine notes and draw out a summary of everything you discovered. To make it easier, you can also recur to diagrams.
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Founder Dinis Guarda
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