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How does market research help our business?

market research
Business

How does market research help our business?

Understanding market research and its methods!

One of the most challenging things in the world of entrepreneurship is trying to enter a market by providing a new product or service; either when we are beginning to start our business with it or trying to grow it! Usually, providing a new type of product or service to the market would be very costly, especially when we are trying to start our business venture. As a result, if we fail to sell our products to the customers due to different factors such as low demands or the existence of better alternatives we would face lots of losses. We may even fail and go bankrupt! Therefore, to prevent these losses we need to do market research and gather information and data in order to understand whether it is profitable to enter that market or not! If you are looking to start your business with new products/services, or if you are looking to expand your business by providing new lines of products or services then I recommend you read the following article to understand the basics of market research along with learning different methods of researching the market.

Table of content


Market research basics
  • Market research defined
  • The purpose of market research
  • Different types of information in market research
Different methods of market research
Blog at a glance

Market research basics

market research

Before learning about the different methods of researching, let’s learn about the basics of market research by understanding what it actually is and what its purpose is!
Did you know?

The highest failure reason for startups is misreading the market demands. Thus, we can understand the importance of market research here!

Market research defined

So first of all let’s take a look at what it is. As its name suggests, market research means researching the market to find information about the potential customers as well as the competitors. In other words, it is the procedure of collecting data and information through different methods about the market we have aimed for. For this process, we can either do everything ourselves as a business owner, or hire an individual(s) to do it in our company, or we can even outsource it to other people or companies to do it for us.

The purpose of market research

Starting a new business requires an idea with which a particular product or service would be provided to the market. Besides that, when we want to expand our business, we would need to enter new markets and provide new lines of products or services. Therefore, we would first need to research the market to understand if our product or service is demanded by the potential customers from the market or not. The reason behind market research is to understand the feasibility of our idea by analyzing whether the product or service we are going to provide is going to attract people to buy them or not. This is done by collecting useful data from the market in order to learn who is the closest target audience for our products, who are our buying personas, and what are their needs and struggles in that particular market. This would let us know if our product is actually what our targetted market desires or not. In fact, it would help us understand the viability of our idea along with letting us understand how we can enhance our idea and adjust our products to meet the customers’ expectations. On the other hand, researching the market helps us understand who our competitors in the market are. Learning about the competitors and their products along with the methods that they use to satisfy customers’ needs, would give us the right information about which track we should go for and in what way we can improve our products to attract customers. Simply put, the purpose of market research is to collect useful information about the opportunities and threats in the market by understanding our target audience and their pain points as well as our competitors and their products/services!

Different types of information in market research

market research

The main factor in market research is the data and information we collect. There is a specific intent for every research, either understanding people’s desires and expectations, competitors’ strategies, exploring new market trends, and so on. Before collecting the data, we need to make sure what our purpose is, in order to know what type of information we need. In terms of information, we have two main types that each one of them gives us a particular data we would need.
  • Primary information: this is the type of information that is collected directly from different sources by the people who are in charge of the research. In other words, primary information is the first-hand information that is collected for the first time directly by ourselves (or the market research firms working for us) by directly gathering it from real sources. This involves interviewing potential customers or our own customers, conducting surveys, visiting competitors’ places, etc. for example when we want to understand prospective customers’ needs, we can interview them to obtain a primary type of information. Primary information itself has two different types:
    • Exploratory: when we intend to collect general information about the prospective customers or anything else in the market, we would do exploratory research. Exploratory research involves less structured research and interview that is conducted to give us a brief knowledge about the market.
    • Specific: in the exploratory research we may spot a specific point that we would want to gather more accurate data about it. This is where the specific research, which is a more structured and narrowed-down interview with more specific questions, is needed!
  • Secondary information: in contrast to primary information, secondary information is the type that some other people or companies have already collected information we are looking for. Obtaining the data that we need through the internet, magazines, articles, books, and other pieces will be considered secondary information. This is because someone else has already found them and now that we want to use them it would be known as second-hand data. For example, the pieces of information provided by government-based websites or private companies websites about a type of industry or demographics are secondary information for any people who use them in their market research.
A note: primary information usually gives us more definite results while it takes more time and money to finish it. On the other hand, secondary information gives us useful data with much less time and money needed. However, it sometimes provides less detailed and accurate results!

Different methods of market research

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Market research is the process in which we first set the goal for our research, then aim to collect general or specific information about it, and finally do the research. When it comes to doing the research itself, we would have a variety of different methods to choose from and do our research. Here we will learn about some of the most common ones.
  1. Surveys: one of the most notable market research methods is providing surveys. Surveys allow us to collect useful data from our target market’s opinions. Providing physical surveys, online or even email surveys help us gather the information we need about the points we are looking for. There are different types of surveys that can help us in our research, such as:
    1. Questionnaire: that a set of different questions are asked in the survey with either multiple-choice, short, or long answers.
    2. a/b testing: a/b testing market research helps us ask questions from our prospective customers through surveys about two or more different forms of our products or services (different design, features, ….). This will help us understand how would our target audience prefer our products or services!
A note: although, surveys are useful and cost-saving methods for collecting data from the market, sometimes they may not be the precise information from the customers. Therefore there are other better ways of researching that we will go through next.
  1. Phone interview: another way is making phone interviews. This way is a low-cost way to interview people, as we can interview with more people in a less amount of time and we can better take notes about their answers while we are on the phone call. However, this method is not the best way for market research, as we won’t be able to see people’s facial expressions. Facial expressions play a significant role in determining the accuracy of people’s answers, hence, the interview results may not be deep enough to meet all the information that we need.
  2. Focus group: focus group is in fact a group interview that requires gathering a number of people, usually around 10 people who fall in certain criteria of the market such as sharing the same age, interest, lifestyle, job, or any other thing. Then we should ask them some questions based on what information we are trying to collect. Then they’ll answer those questions through discussing and getting comfortable with each other. Finally, this lets us extract the data that we need out of their discussions. Even though this is one of the effective methods for market research, but it may still give us less precise information than face-to-face interviews.
  3. Face-to-face interview: one of the most useful methods of collecting information from the market is to make a face-to-face interview with each potential customer. With this method, we will be able to get more real and accurate information from the customers, as it will be a one on one interview and people can be more real in these situations (than in groups or phone calls, or surveys). This way we can analyze each one of the prospective customers from different aspects. Such as the way they react to the questions, the way they answer them, their facial expressions, etc. Here we can either use questions that are already structured from before or tailor questions based on the replies of the customers, or even a mixture of both.
    1. Online interview: An alternative way to face-to-face interviews, which is a lot more cost-saving, is online video callings. Although it is faster and cost-saving, it may not be as good as the physical one!
All of the market research methods explained above are used to gather primary information. Collecting secondary data involves searching the internet for our needed information, reading articles or books about our industry or market, reading people’s reviews about our competitors on online platforms, etc.
Did you know?

For quantitative market research, the most used method is online surveys. Whereas, in qualitative research, the most used method is online in-depth reviews.

(Statista)

Blog at a glance

Market research is a crucial step in starting a new business or expanding the business in terms of products or markets. Therefore, as an entrepreneur or business owner, we need to understand its definition and purpose along with the different methods that we can choose from based on the type of information we need. For doing the research we can do it ourselves or hire a person for this position. We can outsource it to a market research company to do the research for us. We should just make sure what type of data we need and in which area. We should set the goals for it and then start the research. Anyways, if you are trying to reduce the risks as much as you can in order to guarantee success for your business, make sure you understand the basics of market research.

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