What is market research in business?

Every successful business to understand prospective and existing customers, the competition, and the industry thoroughly. That’s why it’s a good idea to conduct market research to give your business its best chance. 

This guide will discuss market research and what it means to a small business by answering the following questions:

• What is market research?
• How does market research help my small business?
• How can I conduct market research?
• What type of information can I get through market research?

Market research is the process of determining the need for a product or service by looking into the current industry, target audience and competitors. Conducting market research allows you to discover your target market and get opinions from consumers about their interest in what you offer.

Market research enables you to take the guesswork out of how people will see your business and make well-informed decisions about marketing, product development, and so on. Companies carry out market research for different reasons depending on the stage of their growth. 

A few reasons to conduct market research include:

• Determining the feasibility for a new business: if your market research reveals that there’s little or no demand for your product or service, it might not be worth pursuing. 
• Identify potential new markets: conducting market research could help you discover a group of customers you haven’t targeted yet. 
• Stay on top of marketing trends: this way, you can develop strategies that will help you stay ahead of competitors by attracting customers using new tools and methods. 
• Ensure optimal product placement: market research helps you find the optimal time, place, and way to introduce your solution to the market.
• Improve and innovate your business: researching the market allows you to identify issues with a specific part of your business so you can deal with them before they become too significant.

One essential purpose of market research is that it helps you identify and prepare for likely challenges your business will face. Having a plan for overcoming obstacles is key to creating a resilient and thriving business. 

For example, strategies like market segmentation (identifying specific groups within a market) and product differentiation (creating a unique identity for a product or service) are impossible to develop without market research.

You can use two types of methods when conducting market research:

This is first-hand information that you gather from original sources. While primary research is often more expensive and time-consuming than other methods, it’s the best way to get exactly the information your business needs. 

The most popular primary research tools are:

• Customer surveys: send questionnaires to prospects and existing customers to find out what they think about your business, new product, brand, and so on.  
• In-depth customer interviews: ask customers directly about their pain points, interests, needs, and desires related to your business to determine their need for your solution.
• Focus groups: this method can make customers feel more comfortable speaking up since you encourage them to discuss their thoughts with others like them.
• Observation: simply observing and making notes of how people interact with your business and solution can be an excellent way to determine where you can improve. 

Secondary information is data that others have already gathered and published online or offline. These sources include newspapers, journals, reports, reviews, etc. Secondary research is a much cheaper and faster way to gather information for your market analysis. Although, since someone else gathered the data in the material, you have limited knowledge and no control over how they collect the data. 

The most popular secondary research sources are;

• Government reports and studies
• Trade or industry-specific publications
• Television and radio
• Academic papers and educational resources
• Online, or offline reviews
• Online articles
• Case studies

Another excellent source for gathering secondary information is the business section of your local public or university library. Services vary depending on the library. That said, they usually host a wide range of government publications, directories, plus magazines and newspapers. Going through these sources can give you unique insight that you wouldn’t have found through a simple Google search. 

Market research allows you to gather two types of information: qualitative and quantitative. Both give you the crucial insight you need to make well-informed decisions for your business. 

This is about understanding how people feel about certain topics concerning your business. When gathering qualitative information, you can ask customers what they think and why they make their choices. For example, what feeling inspires them to purchase something and what puts them off? 

The best ways to collect qualitative information are through interviews, focus groups, direct observations, and other methods where people’s thoughts, feelings, and behaviours come to light. 

This type of information is based on statistical data and is typically more structured. Gathering statistical data involves looking at numbers and statistics to give you a clear view of the market. For example, you might find out that 65% of customers would be interested in your new product offering, while 15% are indifferent, and 20% wouldn’t be interested. 

The best way to collect quantitative information is through closed questionnaires or by researching statistics online. 

Market research is key to creating a successful business. Another important move is implementing a system that makes it easy to manage the financial side. 

Countingup is the two-in-one business current account and accounting software that allows you to manage all your financial data in one place. Enjoy features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights. With Countingup, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

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