Market research and market reports
A business that understands its customers and their buying habits can:
- sell more effectively
- compete with other suppliers
- target new customers
- identify new opportunities
There is a wide range of data available, which can help you build up a picture of general trends and your customers' buying habits. This includes both published data, and information you can collect yourself.
This video explains how to use market research to gain knowledge about your marketplace, your customers and their behaviour to target them better:
Customer research: what you need to know
Carrying out customer research on loyalty, satisfaction and service can make a big difference to your business. If you know how your existing and potential customers make their buying decisions, you can adapt your sales methods to fit their needs.
Who are your customers?
Knowing demographic information about your customers can help with your marketing and sales plans. Consider factors such as:
What do they think?
Knowing what your customers think of your products and service and how they rate you against your competitors will enable you improve your business' offering. To target your customers successfully, you should know as much about their buying habits as possible. Consider the following aspects of your customers:
- buying behaviour including when and how they buy
- opinions about your brand
- opinions about competitors
Market trends and competitor intelligence
Understanding market trends is important if your business is to make the most of its opportunities and remain competitive. You also need to understand your competitors and be aware of what they are doing in order to predict their next moves and exploit any weaknesses.
Try to get answers on:
- Demand for your product or service - is it growing or shrinking?
- What are the current general economic and market trends?
- How customer requirements and buying behaviour could change in the future.
- What new products are in your competitors' pipeline - could they make yours look outdated?
- How competitors are changing - what are their plans?
- What do competitors offer and what prices do they charge?
- How do your competitors advertise and promote themselves?
- Is there any forthcoming legislation which could affect your market?
Primary and secondary market research
Once you have identified the information you need, you can start to gather it. Sources of market research may be 'primary' or 'secondary'. It is a good idea to first conduct secondary market research, then do your own primary research.
What is primary market research?
Primary market research is either conducted by your business or by a research agency you have hired. It is also known as 'field' research. It is tailored to find the specific information your business needs. You could use it to test customer opinion on your new product or learn how your audience perceives your brand.
Some examples of primary market research include:
- focus groups
- examining your businesses own data eg sales and inquiries
- customers' online behaviour
What is secondary market research?
Secondary market research comes from information already gathered by external organisations. It is also known as 'desk' research. It provides general information about the market and isn't based on your own business. There are many free sources of secondary market research. The research may be detailed and useful, but it isn't tailored to your specific needs.
Sources of secondary market research include:
- your local business reference library (such as Invest NI's Business Information Centre)
- your trade association
- your local council or chamber of commerce
- the Northern Ireland Statistics and Research Agency (NISRA) for information on the economy, population and social trends
- business news, including; online, in local newspapers and in business or trade publications
- commercial publishers of market reports - including KeyNote, Euromonitor, Mintel, Datamonitor, The Economist Intelligence Unit and Market & Business Development
For other useful sources of data, see how to do competitor research.
Three market research pitfalls to avoid
Though there's a lot of readily available market information, you need to be careful how you interpret it.
External data might not be in a format that's easy to use. It may have been collected for other purposes or be from a range that doesn't tally with your target market.
Take care to avoid the pitfalls of inaccurate and misinterpreted data when using secondary market research.
Beware of out-of-date market information. This can be misleading, as the market may have changed significantly since the information was published. It can be particularly hard to tell how recent any information published on the internet is. Some information on the web can be unreliable or biased.
Remember that statistics can sometimes be misleading and mask the true picture. For example, an 'average' income for the population in your area might conceal a high proportion of low earners. This means fewer people can afford your product than it appears.
The same principle applies to your own sales records. One or two major customers could distort the picture.
Most importantly, don't make up your mind in advance. Finding market information that simply confirms what you already believe is easy. However, only a realistic picture of your customers and markets will be useful to your business.
Difference between quantitative and qualitative research
Field research (also known as primary research) can be quantitative or qualitative:
Quantitative research provides statistical information. Forr example, how many potential customers there are and what their average incomes are.
Qualitative research examines people's feelings and attitudes towards your product or service. It looks into what motivates them to make a purchase.
You'll probably need to carry out some of your own quantitative and qualitative field research. This could involve talking, observing or carrying out product tests with customers and potential customers. This can help you to:
- test customers' reactions to a new product, and adapt it if necessary
- investigate attitudes of customers and potential customers
- find information specific to your business or a local market, rather than the market as a whole
- find information specific to your business or a local market, rather than the market as a whole
What qualitative research?
The research normally involves recording and transcribing the interviews or focus groups. The researcher can then analyse the transcriptions. They will look for themes that reveal the participants':
- underlying views
- behaviour triggers and barriers
You can use qualitative research can be used to discover consumers'
- reactions to message and new products
You can also use qualitative research to come up with new concepts.
Examples of qualitative research for gathering marketing information include:
- focus groups
- in-depth interviews
What is quantitative research?
Quantitative research is statistical. Therefore, it's important to use a large enough sample size so your results are meaningful. The larger you sample, the more reliable your data will be.
This type of research is useful for finding trends in:
- consumer preferences
- feelings of importance and satisfaction
- patterns in behaviour
Examples of quantitative field research may include:
- questionnaires with closed questions
- online surveys
- telephone, on-street or postal surveys
Plan your field research
Good planning is essential if you want to get the right results from field research (also called promary research) to gather market information.
First you need to decide how to collect the information you want. Popular methods include:
- A survey, using a fixed set of questions. The most effective way of carrying out a survey is typically with face-to-face interviews, but phone interviews, online questionnaires and postal surveys are also possibilities.
- A discussion - often held in small focus groups or one-on-one in-depth interviews. Discussions are good for qualitative research as they allow you to explore people's attitudes in more detail.
- Observation, to investigate what people do rather than what they say. For example, look at how shoppers react when they pass a particular point-of-sale display.
- An experiment - you might, for instance, run a blind taste test of your soft drink against your competitors' products. Alternatively, you could lend your new product to a customer and ask for feedback.
Once you have decided how you'll gather the information, you'll need to work out how to make it happen. Budget how much time and money will be needed, as the time involved will normally be significant.
You'll need to design your research. For example, drawing up a questionnaire or deciding how you'll run a focus group.
Then there are the logistics. If you want to carry out street interviews, make sure your researchers have the required local authority licence and identity card. If you want to run a focus group or conduct face-to-face interviews or product tests, where will you hold them? Where will you find the participants? And who'll run the session?
Consider carefully whether you have got the skills in-house to do this. If not, it's probably a good idea to get a market research agency to do your research for you.
Six tips for successful primary market research
The way that you conduct your primary field research will have a significant impact on the quality of the results. Below are the key points to remember when conducting your research and interpreting your results.
1. Ask the right questions: If your questions are badly phrased then they may produce misleading results. Avoid closed questions which encourage the answer "yes" or "no". A stationery shop that asks customers if they intend to buy pens in the next year will find out just that - but they won't discover what type of pens, eg specially engraved pens or cheap biros.
2. Talk to the right people: A survey at a railway station, for example, will get answers from commuters, but if you're targeting people who stay at home with young children, this won't be representative of your market.
3. Talk to enough people: A survey, for example, of two people won't get you enough information. Some market research professionals suggest asking at least 150 people in order to get a complete picture.
4. Keep research impartial: It's easy to encourage people to give the answer you want. For example, by asking leading questions or smiling at the 'right' answer. Discussions, where you're not working from a list of set questions, are particularly easy to distort. And in a focus group, individuals with strong opinions may influence the views of others.
5. Interpret results with care: You need to make sure you draw the right conclusions from your research. Bear in mind that people may distort answers in the hope of affecting what you do. For example, they might say they would be interested in a product "if the price was lower". Qualitative research - where you're investigating feelings and attitudes - can be particularly difficult to interpret.
6. Be realistic: It can be tempting to pick out results that confirm what you want to hear, and ignore the rest. But ignoring negative results could damage your business. Be prepared to modify your plans if necessary.
If you don't have the time or skills to carry out research yourself, consider using a market research agency. Consider the question, should I use a market research agency?
Should I use a market research agency?
Though you may be able to do your own field research, it may be better and more cost-effective to outsource the job to professionals and use the services of a market research agency. Read more about outsourcing.
Benefits of outsourcing field research
The advantages to your business are:
- Market research professionals are likely to get better results. They have experience in designing survey questionnaires, running focus groups and asking the right questions.
- Customers may find it easier to be honest with an outsider, particularly if they have a complaint.
- Customers may worry you're trying to sell them something if you conduct the research yourself.
- You may find it difficult to be impartial, particularly if people criticise your business.
Finding the right market research agency
For small-scale field research, your best option may be a freelance researcher. A market research agency won't usually take on projects with a budget below £3,000.
As well as recommendations from business contacts, you can search for a market research agency in the Research Buyers Guide.
Before taking on a market research agency or a freelance researcher, investigate their reputation. Ask for a list of previous clients and contact them for feedback. Check the agency or researcher has relevant experience and consider how comfortable you'd feel working with them. And get a clear idea of fees for the services you want.
Check the agency's researchers or freelance researchers fit the image of your business. If they'll be carrying out street interviews, confirm they'll have the required local authority licence and identity card.
Make sure you provide a thorough and clear brief. This needs to cover areas such as the business objectives behind the project, the information the research should uncover and how you intend to use the results.
Five tips for effective market research
Tips to improve the quality of your market research – from using field research and market reports to interpreting the data
A business that understands its customers and their buying habits can sell more effectively. They can compete better with other suppliers. Understanding the market helps you target new customers and identify new opportunities. Follow these five tips for better market research.
1. Identify the information you need - Understanding market trends is important if your business is to make the most of its opportunities. Keeping on top of trends helps you remain competitive. You also need to understand your competitors and be aware of what they are doing to predict their next moves and exploit any weaknesses. See understand your customers' needs and understand your competitors.
2. Use market reports and other data - Support is available from a range of sources. For example, Invest NI's Business Information Centre offers free access to extensive market research. They use company databases and worldwide market reports.
3. Use field research - Popular methods of field research include surveys, interviews and direct observation. The way that you conduct your field research will have a big impact on the quality of the results. Ask the right questions, talk to the right people, talk to enough people and keep research impartial. See difference between qualitative and quantitative research.
4. Interpret the information - Be careful how you interpret market information. External data might not be in a format that's easy to use. It may have been collected for other purposes. It could be from a range that doesn't tally with your target market. Also beware of out-of-date market information. See three market research pitfalls to avoid.
5. Consider using a market research agency - If you don't have the time or skills to carry out research yourself, consider using a market research agency. This is an option if you have budget available. Always provide the agency with a thorough and clear brief. You should include the project's business objectives, what the research should uncover, and details on how you will use the results. See should I use a market research agency?
Identifying business opportunities through market research - Forest Feast (video)
Ann Woods, Forest Feast, explains what market research databases and techniques they use to help identify new business opportunities.
Forest Feast is a dried fruit and nut snacking company. Their products are aimed at the premium end of the market for both domestic and overseas customers.
Here, Ann Woods, Product Development Manager explains what market research databases and techniques the company use to identify new business opportunities.
Ann discusses how Forest Feast uses market research for innovation and what challenges they have faced.