Market research consists of systematically gathering data about people or companies—a market—and then analyzing it to better understand what that group needs. The results of market research are then used to help business owners make informed decisions about the company’s strategies, operations, and potential customer base.
Market research can help businesses run more efficiently and market more effectively. Ahead, you’ll learn how to do market research for your business, whether you’re breaking into a new market or developing a product.
What is market research?
Market research is the process of gathering data about people or companies and analyzing it to figure out what they’re looking for. Using market research, which is usually summarized in a report, you can make better decisions about your company’s strategy, operations, and potential customers. There are two main types of market research: primary and secondary.
Primary market research
Primary data is first-hand information you gather yourself, or with the help of a market research firm. You control it. Common ways to do primary market research include surveys, interviews, focus groups, and observations.
Doing your own research has its benefits. You’ll learn exactly what customers want, because you’ve asked them directly. Information is fresh, and you can understand the nuances of your customers, like taste preferences or pricing.
Secondary market research
Secondary data is pre-existing public information, such as data shared in magazines and newspapers or government or industry reports.
Say you’re a fashion brand expanding its product line to sustainable options, you’d use secondary research to understand market potential. You’d read market reports from Mintel or Nielsen Company to understand consumer demands for sustainable products.
Why is market research important?
Reduce risks for entering new markets
Misjudging market demand for a new product leads to big financial losses. Market research lowers that risk by providing insights to inform your go-to-market plan, such as:
- Market size
- Income range
- Employment rate
- Location
- Pricing
- Market saturation
Gathering this information beforehand helps you understand opportunities and challenges for getting new customers. It also helps you understand emerging trends to stay competitive and identify new growth opportunities.
Understand the competition
A competitive analysis helps you understand the business landscape of a new market and uncovers gaps your business can fill. By analyzing your competitors’ offerings, marketing strategies, and customer feedback, you can create a plan to differentiate yourself in a crowded market.
Make your business customer-centric
Market research reveals the needs, preferences, and behaviors of potential customers in a new market. For example, if you were expanding into South Korea, you’d want to take into account that shoppers value fast delivery times, readily available products, and the best price possible.
Armed with this information, you’d want to create a seamless mobile shopping experience with quick load times and quick delivery to appeal to the local market.
Types of market research
Surveys
Surveys consist of a list of questions that can be shared with an individual by phone, in person, on a card or paper, or online using a survey software like SurveyMonkey or Qualtrics.
Ask customers a series of questions to better understand how they feel about a product’s features, or about the experience they had.
Focus groups
Bringing together groups of people with a common characteristic, such as age, hobby, or buying habits, to better understand their likes and dislikes is a focus group.
Focus groups typically consist of eight to 12 people and a moderator who poses questions for the group to discuss. They are useful ways of getting feedback on a new product, new features, or new ad campaign.
Observation
When the researcher gathers information simply by watching how a subject interacts with a product, the technique is observation. This is often used in comparing preferences for several types of products.
In-depth interviews
Another market research technique is the one-on-one interview with an individual, during which probing questions are posed to better understand that person’s thoughts, opinions, challenges, and product preferences.
Secondary sources
Secondary research is often a good place to start when conducting market research to better understand industry trends and broader shifts.
Some of the most useful sources include:
- Industry associations and trade groups
- Trade journals specific to your industry
- Government reports, such as the census or annual federal procurement results
- Industry analysts
- University faculty members
You can also analyze competitor websites and materials to uncover what convinces potential customers to buy from them.
How to conduct market research
1. Choose your focus
Start by defining what you want to achieve from your research. You might want to:
- Understand a target audience
- Develop new product features
- Create a brand identity
- Improve customer experience
If you’re launching a new line of eco-friendly packaging, for example, your focus might be to understand customer attitudes toward sustainability.
2. Determine your research methods
Choose how you’ll capture the data based on your objectives and budget. Combine qualitative research (like interviews and focus groups) with quantitative data (like surveys) to understand attitudes and perceptions.
Maybe you’ll decide to conduct a focus group with environmentally conscious consumers to explore their feelings about packaging materials.
3. Collect the data
Depending on your research methods, you might need to prepare questionnaires, conduct interviews, or analyze data courses. You can conduct the process in-house or outsource it to a third party to help speed things along.
4. Analyze the data
Now it’s time to turn that raw data into insights. Identify any patterns or trends that answer your objectives. For example, you may analyze and identify the percentage of customers who prefer sustainable packaging over traditional options.
5. Report your findings
Prepare a report that includes key insights, data, and recommendations based on your findings. Go beyond stating the findings and explain what they mean for your business. What can you conclude about your market, audience, or product?
For example, if your research finds high demand for eco-friendly packaging amongst the 25-to-34 demographic, you can conclude a targeted marketing campaign to this group could increase sales.
Market research templates and guides
Behind every successful business is solid market research. But the hardest part is knowing where to start, and that’s where the following templates come in. These guides can help you stay on track and prepare for your market research process.
- Shopify’s Market Research Competitor Analysis Template: Contains a free template to help you find your product market fit, so you can sell successfully right away.
- HubSpot’s Market Research Kit: Contains an instructional guide, SWOT analysis template, focus group template, survey template, and more.
- Qualtrics XM: Qualtrics XM offers a collection of pre-made customer, product, and brand survey templates with a free account.
Online vs. offline marketing research
| Online | Offline | |
|---|---|---|
| Data collection methods | Surveys, polls, online focus groups, web analytics, social media listening | Interviews, observations |
| Reach | Wide, diverse, global reach | Limited to specific locations |
| Cost | Affordable | Can be expensive |
| Quality | Lower response rates; potential for poorer data quality | Potentially higher quality data; more in-depth responses |
Online marketing research involves using digital platforms and tools to collect data from your audience. It includes surveys, polls, online focus groups, web analytics, and social media listening.
The benefit of online research is that you can reach a wide audience quickly and at an affordable price. Because it’s done online, it’s convenient for both researchers and participants. However, online marketing research has some drawbacks, like low response rates and poor data quality. People may not give in-depth explanations or observations if they don’t sit in front of you.
In offline research, data is collected through in-person methods, such as interviews or observations. This allows researchers to examine people’s nonverbal cues and emotions in greater detail. However, offline research is expensive to conduct and analyze, and in-person methods may also limit sample size and diversity.
How market research helps with competitive analysis
Knowing what your competitors are doing makes it easier to break into the market (or stay ahead of it). If you’re starting an ecommerce business, market research can help you:
- Identify industry trends
- Create a benchmark against competitors
- Determine competitive pricing strategies
- Find gaps in the market
All these elements inform your competitive analysis, whether you’re developing a new product or entering a new market. In this way, you can uncover areas where competition is intense and gain leverage over your competitors.
Market research examples
Bartesian
Before launching a premium cocktail machine into a new category, the team at Bartesian had to identify a common problem: how hard it was to make great-tasting cocktails at home without any professional skill.
It was a problem the founder, Ryan Close, struggled with himself, as he explains in a Shopify Masters interview.
“I could never get [drinks] right, so I understood it was difficult to make great tasting cocktails at home if you’re not a bartender,” Ryan says.
For his market research, Ryan carried a prototype of the machine around the country, getting in-person feedback. He’d go to trade shows and networking events to talk with people, ask about their pain points, and find out what they’d be willing to pay for his cocktail-making machine. These events helped give Ryan the market research needed to launch Bartesian.
💡Read more about how Ryan Close launched Bartesian
Beardbrand
Beardbrand has become a popular men’s grooming brand since its launch in 2012. In 2023, it was estimated to have generated $25.7 million in revenue. Its founder, Eric Bandholz, took an informal approach to market research rooted in his personal experiences.
He identified the potential for Beardbrand through several key insights:
- Observation: Noticing an increase in beards and mustaches, and a general interest in male grooming in urban areas, Eric recognized a growing trend that had yet to be fully capitalized on.
- Community engagement: By being an active member of the beard community and blogging about beard care and lifestyle, Eric immersed himself in the target market. This direct engagement provided him with firsthand insights into the needs and wants of his potential customers.
- Participation in events: Attending the 2012 West Coast Beard & Mustache Championships in Portland, Oregon, was a pivotal moment. It was here Eric realized the existence of a like-minded community that was underserved in terms of products and content tailored to their interests.
- Using social media for feedback and ideas: Eric leveraged social media platforms, especially Tumblr, to gather product ideas and gauge community interest. This approach allowed for immediate feedback and helped shape the product offering.
Before officially launching Beardbrand, Eric experimented with blogging about beard care products and engaging with the community. This phase acted as an informal market test, providing insights into the market’s receptivity to various products.
Troubadour
Abel Samet and Samuel Bail started Troubadour after unsuccessfully searching for a high-performing weekender bag. This personal experience highlighted a gap in the market for bags that were both aesthetically pleasing and functionally equivalent to sports gear—lightweight, waterproof, and comfortable.
They did market testing by initially offering their products to friends, family, and colleagues, which allowed them to gather valuable feedback. The brand continued to collect qualitative feedback from customers on their likes and dislikes about the bags, as well as quantitative data on sales and returns to understand needs and buying behavior. This allowed them to innovate and expand, taking calculated risks that paid off.
📚 Read: 10 Lessons Learned From Troubadour’s 10 Years in Business
Qualitative vs. quantitative market research
Qualitative and quantitative research are two fundamental approaches to doing market research.
Qualitative research
Focuses on understanding concepts, thoughts, or experiences through subjective data. It explores the howand why of customers’ behaviors through open-ended questions and discussions. It can involve interviews, observations, and textual analysis to develop a more detailed understanding of the participant.
Quantitative research
Rooted in quantifying a problem through numerical data, like statistics. You’ll normally use quantitative data to generalize results from a larger sample population. These include surveys, questionnaires, and experiments with fixed questions or conditions.
Even though these two approaches are different, you can combine them to conduct a mixed methods study. This helps further validate your findings and get a better understanding of the issue at hand.
Conduct your own market research today
Understanding industry shifts, changing consumer needs and preferences, and legislative trends, among other things, can shape where a business chooses to focus its efforts and resources. That’s the value of market research. Use the templates and market research techniques above to improve your process and grow your business.
Read more
- What Is a Key Performance Indicator (KPI)? Definition and Guide
- What Is Direct Mail? Definition and Guide
- What Is Media Planning? Definition and Guide
- How To Create a Digital Marketing Strategy
- What Is Guerrilla Marketing? Definition and Guide
- What Is Telemarketing? Definition and Guide
- What Is a Trade Show? Definition and Guide
- How To Create a Buyer Persona (With Examples)
- Website Builder & Website Maker by Shopify
What is market research? FAQ
What are the 4 types of marketing research?
- Exploratory research
- Descriptive research
- Causal research
- Predictive research
What is an example of market research?
An example of market research would be a company conducting a survey to learn more about their target audience’s preferences and buying habits. They might ask questions about age, gender, income level, and what types of products they purchase. The research would then inform the company’s business and marketing strategy.
How often should market research be conducted?
Businesses can conduct market research on an as-needed basis. If you are launching a new product or entering a new market, you’ll do market research to support the initiative. Some businesses do market research on an annual basis to stay competitive.
What are the 4 main purposes of market research?
- Identifying and understanding the target market: Market research helps organizations better identify and understand their target market. It can provide insights into customer demographics, preferences, needs and motivations.
- Product/service development and innovation: Market research helps organizations identify and develop new products or services that meet the needs of their target market. It also helps them understand how new products or services can be positioned in the marketplace.
- Market entry and expansion: Market research helps organizations plan and execute successful market entry and expansion. It can help them identify target markets, assess market potential and evaluate the competitive landscape.
- Brand and reputation management: Market research helps organizations maintain and improve their brand and reputation. It can provide insights into customer perception and help organizations differentiate their brand from competitors.
How much does market research cost?
How much market research costs depends on the research method used. For example, face-to-face interviews are more expensive than phone interviews. The sample size required is also a factor. The larger your sample size, the more expensive it will cost. On average, you can expect to pay between $20,000 and $60,000 for a round of market research from a marketing research firm.
