Conducting market research, or product research, can seem daunting, but it doesn’t have to be. Here we lay out the options you have to conduct product research based on your goals and business needs.
But before we dive into the processes and best practices, let’s talk about what market research is and why it’s so important.
What is Market Research?
According to HubSpot:
Market research is the process of gathering information about your target market and customers to verify the success of a new product, help your team iterate on an existing product, or understand brand perception to ensure your team is effectively communicating your company’s value effectively.
This process helps you view a wider picture of where your product can fit in the competitive landscape, which means it will probably take weeks or even months to complete. Market research will also help inform your marketing strategy when you begin to take your product to market.
Market research can be completed at any phase in the product development cycle. However, we recommend starting it sooner rather than later so it can inform your product development. Also, if you serve multiple markets, start small, such as in one market, to research and test out a new product before expanding into other markets.
Because you can create niches and appeal to vastly different customers through the use of global, online tools, your market research should be targeted. Your brand can’t serve all people at all times, so it’s best to be strategic and intentional when you are doing your market research and product development.
What Types of Market Research are There?
When it comes to types of market research, you’ll typically hear two schools of thought. Even though they are usually discussed separately, these schools of thought actually overlap and work together.
Quantitative and Qualitative
According to Attest, “Quantitative research focuses on things you can measure,” such as trends in data, and qualitative research gives you context and motives for those numbers.
For example, quantitative research can tell you how many people are in the market to purchase a product like yours for the past five years, but qualitative research can tell you why those people were in the market for that product and why the numbers changed over those five years.
And it’s important here to remember that correlation doesn’t always equal causation. By this we mean: think of all the pivots and all the businesses that were rendered nearly (or fully) non-functional during the COVID-19 pandemic. These brands weren’t all failures, but there were outside factors that affected the market negatively for that short span.
As you do your quantitative research, remember that numbers tell a story, but they don’t always tell the full story. Don’t forget to keep digging.
Primary and Secondary Research
Primary research focuses on what you know first-hand about your audience and how you can solve their problems, such as internal data and conversations with your customers, and secondary research focuses on gathering third-party information from public and commercial sources. Together, you get a fuller picture of your audience’s needs and how you can serve them.
Market Research Tactics
There are many ways you can conduct market research. Depending on your goals, you may want to use multiple tactics.
- One-on-one interviews
- Focus groups
- Observing your customers using your product or a similar product
- Buyer persona research
- Market segmentation research
- Pricing research
- Competitive or SWOT analysis
- Usability testing
- Brand awareness research
- Campaign research
- Customer satisfaction research
If you’re creating a survey, limit your questions to five to maintain the audience’s attention. Start with closed-ended questions (i.e. answers are “yes” or “no”) and end with open-ended questions (e.g. why did you start searching for a product like this?).
According to Hotjar, surveys are the most common form of market research, interviews are the most insightful, focus groups are the most dangerous, and observation is the most powerful. They recommend only pursuing focus groups if you have had previous experience doing so or if you hire an agency to do so since there are many pitfalls that can happen during that process. Instead of focus groups, they recommend observing your customers using your product or a product like it if yours is not ready for testing.
When it comes to observing your customers, you can either ask them if you can watch them interact with your product or you can study them “in the wild.” If you are performing product testing or your product is not used every day by a lot of people, then you will likely have to ask your buyer personas to observe them.
Many companies launching a new product often ask their top current customers to try out their new product before pushing it to market. This process usually involves observation or a survey, depending on where the product is sold.
If you are selling an everyday product, then you may be able to observe people using your product in their everyday lives.
Conduct Market Research in 9 Steps
You have a lot of options and limited time. Let’s dive into the steps to conduct market research that works whether you’re working on a startup, trying to launch a new product, or repositioning a product that isn’t performing as well as you hoped:
- Determine your research goals
- Develop a competitive or SWOT analysis
- Create buyer personas
- Choose one buyer persona to engage
- Prepare research tactics for buyer persona group
- Perform research tactics for buyer persona group
- Gather public and/or commercial data
- Analyze your data
- Take action
Please note that these steps don’t have to be completed in this order. We recommend this order based on best practices and how the information builds during every step, but you may need to skip steps and go back to them based on your business’s unique needs, time, and budget.
1. Determine Your Research Goals
Before you can dive into market research, you need to know why you’re conducting the market research to begin with.
Are you looking to verify your product ideas?
Launching your very first product? Launching a proven product into a new market? Launching a new product in an already-successful business?
Are new competitors coming into your market?
Are you trying to narrow in on a price point?
According to Patriot, it’s helpful to determine whether your market research will be for internal, external, or both purposes because it tells you how much and what kind of data you need to collect and analyze throughout your research. For example, if you’re trying to get funding to get your startup off the ground, you will need to research different things than if you are launching your third product line from your business’s budget.
What are you hoping to learn and achieve? What do you know already? What assumptions do you need to prove or disprove?
2. Develop a Competitive or SWOT Analysis
With your goal in mind, you’ll want to do some research on your competitors. Pick three or four of your top competitors (or maybe new competitors in your market) and analyze their Strengths, both their Weaknesses and yours, your Opportunities, and their Threats (SWOT).
This analysis will help you figure out what competing products they have, what target audiences they serve, how their business threatens yours, and how you can not only provide a better product but also how to market that product effectively.
You can view our competitive analysis process here for tactical inspiration.
3. Create Buyer Personas
If you already have internal data, this is the time you want to pull it out.
Look at your previous customers. Who buys your product? Do you know why they buy your product? What types of customers continue to buy your product over and over again, if applicable?
Combine internal data with competitive research to develop buyer personas. Are there other target audiences that your competitors reach (or don’t reach) that you could reach with a new product or marketing campaign? Your research may drive you to consider selling to potential customers you haven’t considered before.
Make sure you go beyond demographics when creating your buyer personas. See if you can dive into why each buyer persona would purchase your product.
4. Choose One Buyer Persona to Engage
For the purpose of your market research, narrow down your list of buyer personas to one for this research effort. You can always go back to learn more about your other buyer personas, but, for now, focus on one to streamline your research process.
5. Prepare Research Tactics for Buyer Persona Group
Whether you want to send a survey to previous customers, observe your buyer persona in the wild, or use another tactic or set of tactics, start planning it out. Create your process and develop your questions.
6. Perform Research Tactics for Buyer Persona Group
Next, send out your survey, conduct interviews, or perform your research tactics.
Note any takeaways you glean during this process.
7. Gather Public and/or Commercial Data
You’ve already mined your own business for data, so it’s time to collect data from public and commercial researchers. This way, you expand your data pool while saving a lot of time.
Here are places you can collect additional data:
- The Bureau of Labor & Statistics
- The U.S. Census Bureau
- Pew Research
- State and local commerce websites
- Trade journals
Some of these sources provide data for free while others charge for it.
8. Analyze Your Data
It’s time to analyze the data you’ve collected throughout your research process. Start by looking for themes in the data and answers.
Is there room in the market for your product?
Have you figured out how to differentiate your product from other competing products?
Is there a high demand for your product?
Is the need for your product growing?
Is the price your audience is willing to pay going up or down?
Make sure you analyze the data through the lens of your original questions and goals.
9. Take Action
Once you’ve analyzed the data, it’s time to do something about it. In many cases, you will have determined whether or not to move forward with a product launch. In other cases, you may have found better ways to position and market your product to meet the needs of your audience and to sell more products.
What have you learned that can help improve your product and business processes? Put those changes into action.
We hope this guide has encouraged you to perform your market research in-house before launching your winning product. If you would like to delegate some of the market research processes to our shared marketing department, check out our membership packages.