Market Research: What It Is And How To Do It
Market research is a process of gathering, analyzing, and interpreting information about a particular market. It takes into account geographic, demographic and psychographic data about past, current and potential customers as well as competitive analyzes in order to evaluate the feasibility of a product offer.
In other words, it is the process of understanding who your business is targeting so that you can better position your marketing strategy.
In this guide you will learn:
What role does market research play in a marketing strategy?
A marketing strategy is a company's overall plan for reaching consumers and turning them into customers.
The key word in the definition above is “game plan”. Entering a market with a product is like starting a new game. Since you are new to the game, you don't know the rules or who you are playing against.
This is exactly where market research comes in. Market research enables you to discover the rules of the marketing game by understanding your target audience. In addition, it allows you to understand who your opponent is by assessing the strengths and weaknesses of your competition.
Research is what marketers do to plan their moves and outperform their competition. It's also what marketers use to identify the strengths and weaknesses of their own marketing strategy.
But is market research the ultimate business oracle? Unfortunately, not. Even companies specializing in market research admit it – here is a quote from one of them:
(…) Market research cannot be assumed to be an exact science as it would be unrealistic and unreasonable for market researchers to predict the exact demand for a new concept, as there are numerous variables that can influence demand outside the task the researcher.
That is why market research with all its meaning is “only” part of marketing and “only” an experiment. It is up to you whether you do your experiment and when you finish it.
Crystal Pepsi, for example, looked very promising during the market research phase but failed to launch (similar to New Coke). Xerox's idea for a commercial photocopier was a no-go in the eyes of research analysts; Xerox did it anyway, and the rest is history.
When should you do market research?
Paul N. Hauge and Peter Jackson point this out in their book “Do Your Own Market Research” three concrete situations when market research really makes sense:
- set goals. For example, knowing the size of the market or defining your potential customers can help you set your sales goals.
- solve problems. Low turnover? Low profitability? Market research helps you understand whether your problems are internal, like a poor quality product, or external, like aggressive competition.
- Support business growth. Understanding how and why consumers choose products will help you decide which products to bring to market.
Another answer to "when" is that Importance of the decision that you have to do. The more important the marketing topic you address, the more useful the market research is.
For example, the launch of a new car is a pretty big event, right? Maybe Ford could have avoided losing $ 350 million on the Ford Edsel if they had done their research. I mean, with the right methods, it shouldn't be so difficult to predict that consumers will think the car is overpriced and ugly.
Market research does not always have to be a large, complex project. The relatively new trend of agile market research enables you to research the market regularly and inexpensively. Here you use bite-sized, iterative and evolutionary methods to react to rapidly changing circumstances and to adapt to unknown market areas.
If you work in startup conditions, especially if you are developing an innovative product, you might also be interested in customer development. With this method, market research is most "agile" and closely integrated into the product development process.
Take Ahrefs, for example. We adhere to agile market research hacks that anyone can use. As you'll see later in this article, we use simple (but effective!) Things like social media surveys, crowdsourcing, in-house competition analysis, or just simply tracking our competitors' prices.
Case in point: We recently asked our marketing colleagues on Twitter how they research the market. It seems that market research comes in all shapes and sizes:
Have you ever done “market research”?
What was that for
– Tim Soulo (@timsoulo) May 3, 2021
Just because someone does market research in a certain way doesn't mean you have to copy that. Know your options and start with the different types of market research.
Whenever the research is being carried out by you or on your behalf and you need to create the data to solve a specific problem, this is known as primary market research.
Examples: Focus groups, interviews, surveys (more on this later in the article).
Main advantages: It is specific to your brand and product or service and you can control the quality of the data.
Whenever you use pre-existing data, for example compiled by other companies and organizations, you are doing secondary market research.
Examples: Third party sources such as articles, whitepapers, reports, industry statistics that have already collected internal data.
Main advantages: Get a macro perspective of your marketplace as desk research involves other market participants and most likely uses a larger amount of data than your primary sources.
Primary research vs. desk research
Primary and secondary market research are different, but by no means contradicting each other. In fact, it is recommended that you use both.
While primary sources give you a focused micro perspective of your business, desk research tells you how other businesses are doing and how your research compares to larger research sample sizes.
Subspecies of market research
A little more theory for all the marketing freaks out there. Professional market researchers differentiate between the following primary and secondary market research subtypes:
- Qualitative research. Think of interviews, open-ended questions, results in words instead of numbers and graphs. This type of research is used to understand the underlying reasons, opinions, and motivations.
- Quantitative research. Think polls, polls, usually closed questions, results in numbers and statistics. This type of research is used to test or confirm hypotheses or assumptions by quantifying defined variables (such as opinions or behaviors) and generalizing results from larger samples of data.
Overview of market research methods
Let's go over some popular market research methods that you can use and / or outsource yourself.
Internal data analysis
The data you've already gathered in your company is an invaluable secondary source of research data. The more time you have in business, the more data you have on hand.
The best thing about your internal data is that it has been put into practice in real market conditions. So all you have to do is find the patterns and draw conclusions.
Here are some internal data sources that you can use:
- Website data (such as Google Analytics)
- CRM Data
- Previous campaign performance data
- Internal interviews with employees
Interviews enable personal conversations and are ideal for exploratory qualitative research.
In unstructured interviews, you conduct an informal, free-flowing conversation on a specific topic.
In structured interviews, you prepare a detailed, rigorous interview protocol in which you list every question you want to ask that you cannot dissuade.
You can also choose the “middle way” with semi-structured interviews that revolve around predefined topics or questions but allow open discussion.
One piece of advice here would be to always remain neutral and impartial, even with unstructured interviews. It is also helpful to do a pilot test of the interview to quickly spot some errors in your transcript.
Recording the interview can affect the responses, so use it wisely.
In focus groups, 5 to 10 people with common characteristics take part in an interactive discussion with a moderator. They are used to learn how a particular group thinks about a particular problem or to provide feedback on a product.
Well, you may know that Steve Jobs was known to hate focus groups. He is on record and says:
It's really difficult to design products based on focus groups. Often times people don't know what they want until you show them.
If you're trying to create a Leapfrog product like the iPhone, that statement probably has some validity. But most of us don't wrestle with this ambition. We just want to know whether or not customers like a proposed new feature. Focus groups are super useful for this.
Surveys involve interviewing your audience. They are usually conducted online for customer satisfaction and loyalty research and are one of the most popular and affordable market research methods.
Some of the tried and true Use cases of online surveys are:
- Desirability of the product properties
- User satisfaction feedback
- Quantitative analysis of certain problem events
- Identifying points of friction in your customer journey
- Discover the reasons for switching or canceling your service
- In product onboarding to create a customer profile (and for marketing automation)
- Opinion on a recent change
An interesting example of market watch is Crowdsourcing. That's what Ahrefs does to understand what features to build, how important they are, and what customers expect from them.
What is special about crowdsourcing is that it allows users to add their own ideas and rate or comment on existing ideas instead of answering pre-given questions, so this method leaves less room for marketing myopia. You improve your business and users get a better product – everyone wins.
How we collect ideas at Ahrefs
Social media is another great place to look at the market.
How many of you have links in. declared invalid? Terms of Service this year?
– Tim Soulo (@timsoulo) October 8, 2020
Market segmentation is the practice of categorizing a market into homogeneous groups (such as age, gender, company size, country, etc.) based on certain criteria, also known as segmentation variables.
If you think you are making a product for everyone, think again. Not everyone will want to buy from you.
Smart companies choose their target audience carefully. They identify groups of people or organizations that could be valuable customers for the company. In this way, they also discover their non-ideal customers and develop a plan to gradually win over customer segments.
Have you ever wondered why Procter and Gamble created so many, often competing, brands? You guessed it: market segmentation. P.&G simply divides and conquers. Different people have different needs, so they need different products (and possibly brands).
Another powerful, but often overlooked, market research method is the process of understanding your own market environment. Seriously, if there is only one thing you can do to find out what works and what doesn't in your market, it is time to do a competitive analysis.
"Whenever we talk about developing a particular feature, we would definitely research our competitors and see how they do it. "
You will be surprised how much you can learn about and from your competition, and how much of it can be done online. There are certain proven techniques, hacks, and tools for this type of research that you can find in this guide.
Analyze business data
Secondary research data is relatively cheap, quick to obtain, and easy to use. Think of market reports, industry insights, and loads of research data that someone has already collected and analyzed so you don't have to.
The most reputable sources are Gartner, Forrester, and Pew. Also, check to see if there is a trusted commercial data source specific to your niche.
Pages like G2, Capterra and Trust Pilot also count. Not only will they give you an overview of your industry, but they'll also find some real gems in the reviews of your users and your competitors. Ahrefs regularly uses this data source internally and externally, for example for this section of our landing page Ahrefs vs. Semrush vs. Moz:
Advantages of market research – a comparison
Let's briefly summarize the above 7 different methods of market research according to their key benefits.
How to conduct a market research process in 5 important steps
So now we know what market research is, why and when it is done, and we have learned about all the major types and methods.
Let's see how we can use this knowledge to carry out any kind of market research in 5 steps. As an example for market research, I will tell you some of my previous experiences with a 3D Printing works.
- Identify the market research problem
- Choose the sample and research method
- Record the data
- Analyze the data
- Interpret and present conclusions
1. Identify the research problem
This is where every research project starts. You will also find that market research generally follows the pattern of the scientific method. First, you need to determine what exactly you are researching.
Do you have a question about your company that you would like to answer? Maybe you see an opportunity in the market. Or maybe you have observed something strange in your product use and have a hypothesis that you want to validate? Include this in the first step of the market research process.
Let me share an example.
In the past I have been marketing to a number of companies, and one of them was a 3D Printer manufacturer. Early on, I stumbled upon two problems with this company.
First: One of our market segments was saturated with similar products of similar quality at significantly lower prices (classic, right?). Second: more and more 3D Print manufacturers seemed to be moving away from the hobby segment to move into the professional segment with more expensive products, but we stayed in the hobby /Home improvement Niche. So we were too expensive for hobbyists, but too hobbyists for customers who could afford it.
The hypothesis I wanted to check was that if the market trended toward more professional use cases of 3D Our company should follow this trend with pressure. In other words, I wanted to check whether a shift in brand positioning to the professional / premium sector was feasible.
2. Select the sample and research method
We have already covered the main types and methods of market research. You should already know the differences between primary and secondary research, or whether qualitative or quantitative methods are best for your needs.
As you sample your research, this refers to that part of the total data source in question that you are going to use. For example, if you want to conduct a survey of your customers, the sample refers to the selection of customers that you include in your survey. There are several ways to choose a pattern:
- Use the entire data source. Of course, it's not a pattern in and of itself. However, if sending out a survey to all of your customers is doable (and sensible), this is an absolutely great choice.
- Choose a random sample. Systematic sampling is the easiest way to choose a random sample. Here you select every x / nth individual for the sample, where x is the population and n is the sample. For example, if you want a sample size of 100 out of a population of 1000, choose all 1000/100 = 10. Population member.
- Do not use random samples (the most biased).
- Convenience sampling: Selection of respondents who are available and willing to take the survey.
- Targeted selection: Select respondents who you think are representative or have other important characteristics for research.
- Quota bar sampling: Choose any quota of respondents, e.g. 10 non-paying customers, 10 paying small businesses, and 10 paying large businesses.
Back to our example. As a method of testing my hypotheses, I chose a mixture of:
- Primary data:
- Surveys to all of our resellers. We wanted to see whether they had also experienced a paradigm shift in the market and which customer segment they encountered most. We also wanted to know how they see the longevity of this trend and whether they might be interested in a higher quality version of our product.
- In-depth interviews on the phone with our resellers, led by our sales team. We used targeted selection Here. Our sample consisted of resellers with whom we had the best relationships (we knew they'd love to share).
- Competitive analysis. We were mainly interested in market participants trying to break into the professional / industrial segment so this was our sample (targeted selection). We were interested in things like: What functions have you built into yours? 3D Printers, what was their brand positioning, what was their pricing, what language they used to communicate with their target audience, etc.
- Secondary data:
- Wohlers industry report, everything 3D Printed by Gartner and the like, reports by 3D Print service providers and basically loads of reputable data that we could find (Convenience sampling).
- Internal data: Customer satisfaction problems and only general current customer profile based on Google Analytics and Facebook data.
3. Enter the data
Once you get to the heart of your problem, method, and sample, all that's left to do is collect the data. This is the step where you send out your surveys, conduct your interviews, or look for industry insights.
One piece of advice: choose your market research tool carefully. it has a huge impact on the amount of work you will have to do to analyze the data. For example, Google Forms automatically creates graphs from quantifiable data (and it's free).
Here is the data we are going for that. have collected 3D Printing house:
- Primary data:
- Reseller survey data (both quantitative and qualitative).
- Interview data for resellers (qualitative data).
- Customer satisfaction problems (qualitative data collected across all customer support channels, we analyzed about 200 problems and inquiries).
- Competitive analysis data (from about 10 competitors).
- Secondary data:
- We managed to collect 3 comprehensive, independent industry reports, some smaller reports from others 3D Print shops and dozens of data like statistics and notable insights. We pulled out data like: 3D Printer manufacturer's market share, market growth over time, market segmentation, key 3D Printing applications, 3D Print acceptance by region, sales figures of the main players.
- All demographic, sociographic and psychographic data about customers and website visitors that we could find in our internal data.
4. Analyze the data
Now that you've gathered your data, the next step is to look for patterns, trends, concepts, or frequently repeated words – depending on whether your method was qualitative or quantitative (or both).
Simple research that is carried out on a small sample can be analyzed relatively easily or even analyzed automatically, as with the Google forms mentioned above. Sometimes you need expensive and more difficult to master software like Tableau, NVivo, PowerBI or. use SPSS. Or you can use Python or R for data analysis (if you have a data analyst or data scientist on board, you're in luck).
To continue with the example, Google Forms made it easy for us to spot patterns in surveys by automatically calculating quantitative data. The most time consuming part was reading through all of the answers and manually looking for patterns (I wasn't aware of any tool at the time that could do the job). Both sales and marketing teams worked on analyzing some of the qualitative data to have more than one point of reference.
When it comes to researching the competition, creating some kind of data structure makes the job more comprehensive (and more reasonable). We classify the data of our competitors in certain categories, such as B. Products & Services (including prices), target market, benefits, values and brand message. We also used what is called a brand positioning map, which looks like this:
Analyzing secondary data was probably the easiest part as the data we needed was already presented in ready-to-use graphs, statistics, and insights. We just had to search the content to find answers to our questions.
5. Interpret and present conclusions
Analyzing the data is not enough. You have to put your data together in a communicative and actionable manner for the decision makers. It is best to include in your report: all of your information, a description of your research process, the results, conclusions and recommended actions.
In summary my 3D Print sample, I hypothesized that our market is going through a major shift and that the company should follow this trend. The research we conducted positively confirmed this hypothesis:
- Our resellers received more and more inquiries about professional / industrial use cases and machines. As you can imagine, the budget of these types of customers was significantly higher than that of hobbyists, but so were the expectations.
- Our resellers have indicated that this phenomenon will continue. They also expressed interest in a new one 3D Printer tailored to the needs of their more demanding customers.
- Our customers grew out of their habits as early adopters and wanted something that was easier to use, plug-and-play and simply worked reliably. Printer tinkering was something only hardcore manufacturers were interested in.
- The companies we are interested in have already adjusted to the professional / premium market with their range of products and intelligent marketing communication.
- We also found a ton of other interesting data that we used later. For example, we found that educational institutions were an equally interesting segment alongside engineers and designers.
Our initial market research took about two months. We also came back to it whenever we had the opportunity (or need) and repeated it to see if we were on the right track.
Was it worth it? Let me tell you this: it saved the company. Our research showed that this was the final call to reposition the brand and product. Our original target segment has gradually been dominated by companies with which we could not compete.
It took us some time to embrace key stakeholders and implement the conclusions across the company (we ended up getting it right). As a result, we have increased sales, increased customer satisfaction and put ourselves on a more profitable growth path – a win-win situation for everyone. We even went so far as to merge with another manufacturer to cut the time to reach that sweet market spot.
In retrospect, none of our close competitors survived. They haven't adapted like us, and we owe it all to market research.
Whatever you do, avoid these Common market research mistakes:
- Bad sampling.
- Ambiguous questions.
- Leading or charged questions (questions that show bias or contain controversial assumptions).
- Unclear or too many research goals.
- Mixing correlation with causality.
- Ignoring competitive analysis.
- Allow biases to affect your research (confirmation errors are arguably the most common and dangerous).
- No regular data tracking.
Online market research tools and resources
Market research goes back to the 1930s and is probably even more “deeply” rooted than in the 20th century. Everything you could do back then can now be done better, faster, and cheaper thanks to these online tools and resources.
SEO Tools – market research with Ahrefs
I've put together 3 quick wins that can help you with your market research – and that's just a taste of what you can do with Ahrefs.
1. Brand awareness
At the beginning of the 20th century, you had to hire market researchers who would spend days or even weeks asking people, "Have you heard of Brand X". Today you can easily look up the search volume for that brand.
For example, let's say you run a brand that manufactures drones and you want to review the brand awareness of your competitors in France. Go to the Ahrefs Keywords Explorer, enter the brands names, select "France" as your market and in no time you will have:
Brand Keyword Volume indicates the brand awareness of that brand in a given market. You can also keep track of this data by running this search regularly to see if there have been any significant changes over time (e.g. from a recent campaign).
2. Functional demand
The next breakthrough feature for electric cars concerns batteries, charge time and charge costs (and not the autopilot). How should i know
Well I have Ahrefs open Keyword Explorer, typed in "electric cars" and went to the ask to find out what people are looking for. This gave me an idea of the problems electric car owners have (and which potential owners are worried about). You can easily do similar research for your niche.
3. Understand the language of your market
Gerald Zaltman, in his popular book How Customers Think, suggests the idea that one of the biggest misconceptions in marketing is that consumers think in words.
On the other hand, when consumers google something, they have to think in words. And when we address these consumers, we also have to think in words. The question is: what words?
Let's say you want to enter a new and innovative market in the United States, for example the synthetic fermentation milk industry, also called animal-free dairy products.
For you, this set of words "animal-free dairy" can be the center of your business and marketing efforts. But let's see what others think. Let's use Keyword Explorer to see how many people in the US search Google for just that term:
Oops! Apparently your product category has a disappointingly low level of awareness. Does that mean you are doomed? Not necessarily.
Let's try other words. Words that mean something different but are still closely related to your new product.
Now we're on to something. People are more likely to search for “vegan dairy products” and “lactose-free dairy products”. Not the same, but closely related. However, look at the difference in search volume.
Words make a big difference. And Google knows that.
The only reason you could put all these three sentences in one bucket was because you knew the relationship between these words. The problem is that your target audience may not be aware of this connection; they may not even know that this type of product exists. This quick analysis of the search volume shows that you want to make this connection with content marketing, for example.
By creating higher volume content around related keywords, you can potentially get more organic traffic than just focusing on the keyword that identifies your product category. Look, even if you think the main benefit of your cruelty-free product is something that has nothing to do with lactose, such as: For example, animal-free production, you may want to address the lactose intolerance problem in order to appeal to people with this condition.
But that's not all. You may have noticed "Low Lactose Cheese" in the lower right corner. This refers to the nifty feature of Ahrefs' Keyword Explorer called "Parent Topic". Parent topic indicates that Google is viewing a particular keyword as part of a broader topic.
When we click on this parent topic, we uncover even more search requirements:
We see that the search for the topic “low-lactose cheese” exceeds the topic “vegan dairy products” by almost 300% US. By uncovering this overarching topic, we also received 879 potential keyword ideas (some of which have even higher search volumes, such as "lactose-free cheese").
Would you like to discover even more topic associations? No problem. You can dig deeper into this research by using other features of Ahrefs' Keyword Explorer. For example the Rank also for The report lets you see which other keywords (and topics) the top 100 ranking pages for your target keyword are also ranking for.
This market research quick win ties in with the broader subject of keyword research. If you have even more keyword ideas to discover and analyze, check out our keyword research guide.
Customer relationship management software is used to manage and track interactions between a company and its customers and prospects. It usually works in tandem with (or has integrations for) sales or marketing automation software. When used correctly, it is a veritable cornucopia of market knowledge.
As I mentioned earlier, this is one of those primary sources of data that you can use to discover patterns in your customer behavior or customer characteristics. Popular options are Hubspot, Salesforce, Intercom, but there are a lot CRM Software out there so check out a software comparison how G2 to see what best suits your needs.
User feedback tools
This type of tool allows you to do our survey research method mentioned above online.
Create targeted, user-specific surveys and analyze answers with tools such as Google Forms, SurveyMonkey, Typeform or Qualaroo.
Sending your typical email with a survey isn't the only option, Qualaroo lets you view surveys, for example:
- In your digital product
- In your SaaS product
- In your web app
- In your mobile app
- On your website
- On your mobile website
- On your prototype.
- On most public urls. Competitive sites too
Need more No problem, try SurveyMonkey's market research solution. It draws on the agile market research models we discussed. They have 14 online solutions to help you stay on top of things, including customer segmentation, market dynamics monitoring, branding, creative analysis, feature importance, finding the right price for your products, and more.
So you think you have a tough business challenge? This daring gentleman is trying to … disturb eggs. Extremely difficult, but doable with market research by your side.
Website / app analysis
Tracking your website or app traffic is absolute marketing foundation. Just look at some of the data dimensions that Google Analytics offers:
Sounds familiar? Yes, that sounds like good old market segmentation. Here's the best: it's free, quick to do, and based on your primary data.
If you have never delved deeper into Google Analytics or similar analysis software (e.g. Matomo, Woopra), here are some questions this marketing technology can answer for you:
- What do users look for when they are on my website?
- What is the difference between customers who have made a purchase and those who have not?
- What are my top-selling countries?
- What are my best selling products?
If you're already using Google Analytics, check that you're not making these Google Analytics tracking mistakes.
User experience research tools
Often used by UX Designers, but just listen to the value propositions of these tools:
Sounds a lot like our market research methods again, doesn't it? And it's no joke, thousands of companies use these tools.
With user experience tools, you can get user feedback and insights into your products, prototypes, websites and apps.
Testing is based on the tasks your test takers perform. You can either use your own user base or define a custom base with your services. You will receive written reports and even recorded videos that you can incorporate into your market research and ensure that you are properly seizing this market opportunity.
Ad scheduling tools
That's right – the Facebook, LinkedIn, and Twitter ad planner that you already use to run ads can give you a glimpse into the numbers behind the market segments you are interested in.
30+ men with higher education who are interested in technical devices? No problem. Female C-suite decision-makers from Europe? It's all there.
The availability of this type of data may vary depending on the target market. For example in the US The Census Bureau provides a free resource for searching the country's census data. You can filter the data by subject, year, geography, survey or industry code. You can also access pre-made interactive spreadsheets (which you can also download) or simply explore specific regions of the country using their maps.
Business intelligence tools
With business intelligence tools like Tableau, Looker or Sisense you can connect to any data source for data cleansing, statistical operations and data visualization. They are designed so that you can gain insights into your data and communicate effectively with your stakeholders. It's like SQL in combination with R, but you do not need any programming knowledge and you get a user-friendly interface.
Because these tools are full of functionality and typically expensive, they are overkill for small businesses with basic market research needs. Often times you will find that the tool you are already using for your research methodology has some data analysis and visualization capabilities. And if not, you can always import your data into Excel or Google Docs and use Google Data Studio for a shareable interactive presentation.
Other notable tools and services
Market research is not an easy task. If this makes you feel intimidated, you are not the only one. But don't be afraid of it. The benefits of conducting even sporadic market research can have business benefits that you simply cannot ignore. You won't become a market researcher overnight, but the good news is you don't either. You can go the agile route (like Ahrefs), use affordable self-service online tools and resources, or even outsource your research. As long as you base your marketing game plan on valid data, you will dramatically improve your chances of success.
Any questions? Ping me on Twitter.