6 Steps to Conducting Market Research
By Indeed Editorial Team
Updated December 30, 2021 | Published April 3, 2020
Updated December 30, 2021
Published April 3, 2020
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Understanding the purchasing decisions of consumers is important when developing and promoting a new product. This is why conducting market research is an effective strategy to determine what changes to make to your product before selling it to customers. Through the use of surveys, you're able to research your competitors and gain insight into what buyers are looking for in their products or services.
In this article, we explain what market research is, the types of market research you should use and how to do market research.
What is market research?
Market research occurs when a company is determining how successful their potential product will be by gathering statistics and feedback from consumers. Current business owners or employees may use market research when they're planning to release a new product. This helps them gain insight into how much their current target audience may like the product.
You can collect market research from your company's target audience, your competitors' audience and current customers to understand why they're buying certain products. You can also use it to evaluate their wants and needs as a consumer. This research allows you to learn where these consumers are researching products and how they make their purchasing decisions.
Types of market research
When performing market research, your business should use multiple sources to gain enough insight into industry trends as well as past and current buyer behaviors. The main types of market research your business can conduct include:
This is research you gain directly from consumers in your product's industry. Primary research involves communicating with consumers in person, through phone surveys or online polls to better understand the needs and purchasing patterns of these current or potential buyers.
There are two main types of primary market research methods, which include:
Exploratory research: This is usually the first step companies take when conducting market research. It focuses primarily on why customers buy certain products and the qualities they look for in the product or service they choose. It can also help you better understand what they may like about your product and what improvements you can make. Exploratory research is an effective way to help you understand the industry challenges you may face when selling your product.
Specific research: Typically the second step when performing primary market research on your product is specific research. You can use this to dig deeper into the feedback from your consumers. After identifying the challenges in your industry or improvements to make, you can segment a smaller group of consumers and ask them to detail the challenges your product may face and their suggestions to overcome them.
Businesses often use a majority of secondary research to perform competitive analysis. You can conduct this type of resource by gathering records, data and statistics that are available to you. Common sources people may use when conducting secondary research can include:
Internal sources: If your new product is similar to a product you sell, you can refer to your current business information like sales data, trend reports or market statistics. Review all of your financial documents such as retention rates, the performance of current and older accounts and revenues made for each sale.
Public sources: This is free, basic data you gather on your market and industry. You can visit areas like the library or search online to find this public data from places like the Bureau of Labor and Statistics and the U.S. Census Bureau.
Commercial sources: Many of these sources are market reports you can access from various research agencies. They provide in-depth details of information on your business' industry.
Benefits of market research
Performing market research for your business may take significant time and money. Many marketing and business professionals find it to be a worthwhile investment. Different benefits that come with conducting market research are:
Easily understanding what influences consumers' purchasing decisions
Gaining an understanding of how successful your product can be around a specific group of people
Having a newfound knowledge of where consumers are researching different products
Explaining what consumers want and need from their products
Allowing you to build an effective marketing strategy catered toward your target audience
Informing you of how consumers interact with other brands and businesses
How to conduct market research
Follow these steps to learn how to effectively conduct market research that provides strong results for your company to analyze:
Determine your buyer personas.
Choose people to research.
Write down research questions to ask your participants.
Conduct primary research on the people you've selected.
Perform your secondary market research.
Draw a conclusion based on your findings.
1. Determine your buyer personas
You first want to conduct primary research to understand what customers are looking for in a product and why they make certain purchasing decisions. The best way to uncover this is by determining who your target audience and buyer personas are. Buyer personas are fictional characters you create that represent both current customers and potential customers.
Developing buyer personas helps you better understand who the audience your speaking to is so you can center your marketing material around their wants and needs. When building your buyer persona, you should include characteristics like age, gender, job title, income and any personal or business-related challenges they're facing that your business can solve. It's often best to create multiple buyer personas as multiple audiences may use your product.
2. Choose people to research
Now that you have selected who your buyer personas are, you can use these representations to find people who fit a majority of your buyer personas' characteristics. This should be a wide variety of potential or current customers who can provide strong input on your product. Possible people you can choose are:
Customers who have recently purchased one of your products
Someone who has visited your store or sampled your product and chose not to purchase it
Consumers who have recently bought a competitors' product
Followers on your social media pages who haven't purchased your product
Once you've decided who you'd like to research, you can reach out to them via social media or email. Explain that you're trying to gather important information about your company and need their feedback. Ask if they would prefer participating in a study, online poll or phone interview to better understand which method your participants prefer.
3. Write down research questions to ask your participants
After you've gathered an appropriate amount of participants, plan the questions you'd like to ask them. As you think of possible questions, try to keep each one open-ended to encourage participants to provide in-depth answers. This makes it easier for you to know what your product needs to improve.
For example, if you were conducting primary market research for a music software company, examples of strong research questions can include:
What is your name, age, job title, income amount and the highest education you've completed?
When did you last purchase a music software product?
What company did you purchase from?
What made you choose this product?
Do you have a subscription to this service?
What features do you like most about this product?
How can service be improved with this product?
What type of research did you conduct when choosing a music software product?
4. Conduct primary research on the people you've selected
Once you gather your questions and subjects, you can conduct your market research. Decide what kind of research you'd like to perform. This can be a phone survey, online poll or in-person study. If you're starting a new business, it may best to conduct an in-depth study to get as many questions as possible.
If you're selling a new product for your current business, you can send surveys to your existing customers and your competitors' customers. This helps you realize how well your current products are performing and what changes need to be made for the new release.
When inviting people to conduct a study or complete a survey, you should provide an incentive that persuades the person to participate while showing your gratitude. This can be a gift card to a restaurant, a discount on your product or a thoughtful thank you card.
5. Perform your secondary market research
When you finish your primary market research, you can begin your secondary market research. Find businesses that sell similar products as you or who release content like yours. Build a list of these competitors and note your industry. Research competing companies within your industry to learn more about why consumers purchase these products, why they're performing well in their industry and what features people believe they can improve.
6. Draw a conclusion based on your findings
Be mindful of the data when building and promoting your product. Take your findings and create graphs, charts and other presentation forms to more easily understand the data. This helps explain to your team what product improvements to make and what your company is currently doing correctly.
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