Marketing Glossary / Market Research
Companies are the most knowledgeable about the customer segments they serve and the needs their existing products or services fulfill for those customers.
But what happens when a company wants to expand into a new market, launch a new product line, or expand beyond their current capabilities?
This is where market research comes into play, and while it doesn’t provide a crystal ball or perfectly match the eventual consumer behavior, it does provide a systematic approach to understanding consumer behavior, identifying market gaps, and predicting future trends.
In this guide, we’ll look at what market research is, its benefits and limitations, common types of market research, and how to conduct market research from start to finish.
Market research is the process of gathering, analyzing, and interpreting information about a market, about a product or service to be offered for sale in that market, and about the past, present, and potential customers for the product or service.
It is an essential way to better comprehend the market landscape, including the factors and trends influencing it, before developing and launching a new product or service.
This information-based process extends beyond just knowing who your customers are. It deals with the detailed understanding of their needs, preferences, and behaviors, coupled with valuable insights about the competition and the general environment of the industry. The collected data provides rich, invaluable insights that can guide every facet of a business, from product development to marketing strategy, sales approach to customer service protocols, and beyond.
At its core, market research is a tool for informed decision making. Whether the goal is to launch a successful new product, improve marketing strategies, or identify new market segments, market research provides information that can help businesses make informed, data-driven decisions.
Market research helps businesses identify new opportunities. It can reveal gaps in the market, consumer pain points, or emerging trends that businesses can capitalize on. By staying attuned to the current trends of the market, companies can seize opportunities faster and stay ahead of the competition.
Market research also enables businesses to understand their customers’ preferences, needs, and behaviors. This insight is invaluable in developing products, services, and marketing messages that resonate with the target audience.
Market research also helps companies evaluate the competition. It provides insights into competitors' strategies, strengths, and weaknesses. This knowledge enables businesses to differentiate themselves, highlight their unique selling proposition, and stay competitive.
Finally, market research serves as a benchmarking tool, for businesses to assess their performance against competitors and industry standards. It can help identify areas of improvement and track progress over time.
Effective market research can be extremely time-consuming.
The process of designing research, collecting data, analyzing the results, and generating actionable insights can be lengthy. This can be particularly challenging for small businesses or startups where speed is a competitive advantage.
Depending on the scope and methodology, market research can be expensive. Costs can quickly multiply, particularly with research that involves methods like focus groups or extensive surveys. Budget constraints may limit the extent or frequency of research a business can conduct.
Given the evolving nature of most markets, data may quickly become outdated, reducing its relevance and applicability. Regular updates to market research are necessary to keep up with these changes.
While market research aims to provide objective insights, the interpretation of data is subject to personal bias or subjectivity. If the data is not interpreted accurately and impartially, it can lead to flawed conclusions.
Finally, market research tends to be limited in scope, neglecting other important aspects. For instance, if a company focuses solely on customer feedback, they may overlook other factors such as emerging market trends or competitor activities.
There are two fundamental paths a business can take - primary market research and secondary market research. Each offers unique advantages and can be used in different scenarios based on a company's specific needs.
Primary market research involves the direct collection of data from original sources. It's firsthand information gathered specifically for your research purposes. This type of research often aims to answer specific questions about your market, product, or customers.
The methods for primary research are diverse and can include surveys, interviews, focus groups, and direct observations. For example, a company might conduct an online survey to gauge customer satisfaction, or host a focus group to test a new product concept.
Primary research tends to be more specific and targeted than secondary research, often providing insights that are directly applicable to the business conducting it. However, it's typically more time-consuming and expensive to conduct, given the need to design the research, collect the data, and analyze the results.
Secondary market research involves using data that's already been collected by someone else. This could include information from industry reports, government databases, newspapers, online articles, and so on. The data is usually general and un-tailored to a businesses’ specific needs or questions.
Secondary research can provide a broad view of your industry or market. It can be a good starting point to understand the landscape and identify trends. It's also typically less costly and time-consuming than primary research, since the data has already been collected.
However, the downside of secondary research is that the data might not be as specific, up-to-date, or relevant as a business might need. It may not answer specific questions, and the business may have less control over how the data was collected or its accuracy.
Both primary and secondary market research have their place in a company's research strategy. While primary research provides detailed, specific data directly applicable to a business, secondary research offers a broad overview of the industry or market at a generally lower cost and time investment.
There are quite a few different methods for gathering information about a target market, competition, or industry trends. The techniques used can range from personal interviews to online surveys, and each has its unique advantages and potential drawbacks.
Here's a closer look at some common types of market research methods:
Each of these market research methods has its place and can be chosen based on the research objectives, the target audience, and the resources available.
Often, a combination of these methods can provide the most comprehensive insights into a given market.
While different methods of market research will require different approaches, the following core process can be applied regardless of the research methodology.
Embarking on market research begins with a clear understanding of the goal. What insights is the research aimed at uncovering? Objectives could include understanding customer needs, identifying potential market segments, measuring a marketing campaign's impact, or assessing a brand's market position. Well-defined objectives ensure focused and relevant research, leading to actionable insights.
The next step involves determining the most suitable research method. Will the research involve primary data collection, or will it rely on secondary data? The decision also encompasses choosing between qualitative research, which explores the reasons and motivations behind behaviors, and quantitative research, which quantifies data and typically applies statistical analysis. Each method offers unique strengths and should be selected based on specific objectives and resources.
The next step focuses on collecting data. The tools employed for this task depend on the chosen method and could include surveys, interviews, focus groups, or using existing databases for secondary research. The quality of the data directly impacts the quality of the insights, so it's essential to be thorough and meticulous in this phase.
After data collection comes the process of transforming the data into meaningful insights. This step involves analysis and interpretation. Quantitative data may be processed using statistical methods, while qualitative data generally requires interpretive techniques to identify patterns, themes, and insights. It's crucial to align interpretations with the research objectives to ensure the obtained information serves its purpose.
Ultimately, the goal of market research extends beyond gathering insights—it's about applying them to improve business operations. How can findings from the research inform strategies and decision-making processes? Perhaps the insights will pinpoint a new market opportunity, enhance products or services, refine a marketing strategy, or provide a better understanding of competitors. The proactive application of insights to shape business decisions is critical.
LinkedIn provides direct access to over 1 billion professionals, offering businesses a unique and invaluable platform for market research.
In addition to organic options like LinkedIn groups, polls, targeted searches, and more, LinkedIn Marketing Solutions offers additional ways to conduct direct research quickly and at scale.
For example, businesses can use LinkedIn’s ad targeting tool to do high-level market research before even spending a dime on an actual advertising campaign.
Regardless of how businesses use LinkedIn, the platform provides in-depth analytics, making it easy to review market data, audience behavior, and so much more.
