Customers are the foundation of your business. In order for your company to succeed, you need to understand them and their relationship to your products and services. That is where market research comes into play.
According to the Small Business Administration, market research is “the process of analyzing data to help you understand which products and services are in demand, and how to be competitive.” That data can include valuable intelligence about your marketplace, your industry, your competition – but especially and most importantly, about your customers and how they feel about your company and its offerings.
In short, market research helps you understand three things: your industry, your competition, and your target market. You can use it to:
- Identify customers’ (and potential customers’) habits, trends, plans, opinions, needs and wants
- Determine if your company and/or its offerings meets customer needs
- Find potential new customers based on demographic traits such as age, gender, income, education level, and even geography
- Determine the best ways to market and advertise to different types of customers
With the above insights, market research can yield numerous business benefits, including:
- Reducing business risks
- Spotting current and upcoming problems in your industry
- Identifying new sales and profit opportunities
Market research provides critical information about your market and your business landscape. It can tell you how your company is perceived by the target customers and clients you want to reach. It can help you understand how to connect with them, show how you stack up against the competition, and inform how you plan your next steps.
Market research generally involves two types of research techniques:
Primary research involves going directly to a source to ask questions and gather information.
Secondary research is research that has already been compiled, gathered, organized and published by others.
There are two major types of data you can collect in market research. Both can be valuable for different purposes.
Quantitative research is all about numbers. It uses mathematical and data analysis to shed light on important statistics about your business and market.
Qualitative research isn’t so much about numbers as it is about people – and their opinions and perceptions of your business.
There are a variety of ways to collect data. The method you choose depends upon how geographically dispersed your target customers or clients are. Are you a business in a local community, or do you sell to or serve customers nationally? It also depends on your budget, and the resources you have to run the research – whether you’re doing it yourself or hiring a research agency.