Unless you are in a government backed monopoly that has no customer related performance requirements, then undertaking market research is important to your business. Market research brings the insights a business needs about the outside world into the business, so that it can make evidence-based decisions. 

Without valid evidence from market research on which to make decisions companies, business is relying on opinion and politics to make decisions. Although we are all capable of making great decisions based on our personal experience, our experience is often limited: our interpretation is often biased. If there were a graveyard for business, it would be overflowing with businesses that felt they did not need to understand their market, because they felt they already knew what drove buyer behaviour. When the risk is small then experience based decision-making is the right way. When risks are significant enough to affect a business and people’s employment, then there is no substitute for doing market research, and doing it right. 

Insights come from insightful thinking. Insightful thinking comes from disciplined thinking. Your thinking in market research needs to be both logical and creative.   

In this article, we step you through how to approach doing your market research and the key decisions that you need to make along the way.

  • What is market research?
  • What is the difference between market research and marketing research?
  • Do you need to do market research?
  • What are the types of market research and why it matters?
  • What are the types of method and when to use them?
  • What steps do you need to take to undertake actionable market research?

 

What is market research?

For many managers, market research is synonymous with doing surveys and focus groups with consumers. Although these two approaches are common, market research is much more than this and, as the name implies, it is about understanding market behaviour. Because market research is often commissioned to help a business increase their sales, market research is often focussed on understanding what defines a market and what drives buying behaviour. In consumer markets, this often means understanding who the consumer is and why they buy.  For many businesses market research is synonymous with consumer research.

At a broader level, market research is about doing social science within an applied economic framework. This is why market research is often about behavioural economics. What separates market research from just collecting information or asking people questions, is that it takes a systematic approach to collect data and analysing it in a way that provides insights that reliable, accurate and valid. To do this, a lot of the time in the market research process is spent on trying to reduce sources of bias and using applied theory from economics, psychology, statistics, and other fields to increase the chances of finding actionable insights. 

 

Market Research vs Marketing Research vs Consumer Research

Although the terms are sometimes used interchangeably, market and marketing research are separate types of research. Market research is the study of markets, while marketing research is the study of marketing. The confusion in calling market research ‘marketing research’ can occur because the research is often done for a marketing department. In applied research, marketing research might is done when doing competitor research that focusses on their marketing activity. Although also used interchangeably, consumer research is by definition narrower type of research, since it focusses on only on the consumer.  Often the term consumer is used to mean customers, shoppers, patients or sometimes even used to refer to businesses.

 

When to do market research?

If a decision is risky, the consequences are large and have a long-term impact, and you don’t have the needed information to make the right choice, then market research is needed. Like any business decision, managers should take a cost-benefit analysis approach to decide if the likely return on investment in doing market research warrants the costs. This cost-benefit analysis does not have to be a formal process. By thinking through what you need and why, and the likely costs you will not only have a stronger case for undertaking the research but also a clear idea of what information you need to make the right decisions. Some decisions when clearly defined, show a clear course of action without the need for additional information.

What are the costs? Apart from the direct costs of doing the research, you should consider the costs of not doing the research. These costs include potential lost revenue or profit from making the wrong choice, and corporate or brand reputational risk of the alternatives may also be important to understand whether to invest in undertaking research. In advertising research, reputational risk can play a significant role in choosing the right strategy.       

When you need to do research, it needs to be done right. Because market research is generally seen as providing independent evidence, when it is poorly undertaken it can lead long-term consequences to the business and your career.

 

What are the types of market research?

Often when people think of types of research, they think types of methodology. Before thinking about what type of methods you are going to use, it is important that you know what type of market research you need to undertake. The type of research you conduct will determine whether or not you will achieve your objectives, and what type method you need to use and the analysis framework that you need to apply. Below are the three main types market research.

Exploratory Research. Exploratory research is often seen as strategic research, since it is about uncovering the who, what, when, where and why of your market, that provides the basic information needed for communication development, product development, strategy development (blue ocean) and other marketing decisions. Because any assumptions that you used in this type of research can have a large impact on what you uncover, these assumptions need to be clear in the design and reporting. Exploratory research tends to follow an inductive and abductive reasoning approaches and, as a result, it tends to rely on desktop and qualitative research. However, quantitative research is sometimes used in exploratory research. Understanding consumer rituals is a type of exploratory research.    

Evaluative Research. Evaluative market research is testing research and tends to have a tactical orientation. With evaluative research, you want to know is something had an impact and, if so, what was the impact. Customer experience surveys, campaign evaluations, communication testing, brand asset evaluation, and product testing are generally this type of research. Because evaluation is about testing and then projecting the result to your customer base or market, quantitative research is mainly used for this type of research. However, the target group is small, and the nature of impact can have a wide variation between individuals, like in social, government and business-to-business research, then a case study and qualitative research methods are used.  

Forecasting Research. Research about the future needs a different framework to research focused on the present and past. Depending on the time horizon and type of scenarios, forecasting research is used for both strategic and tactical research. When the forecast is about potential sales or the impact of a new product or advertising campaign, your forecasting research is an extension of evaluative research that applies a volumetric mindset to your analysis. Unlike pure evaluative research, forecasting needs to account for the types of things that drive change and demand, to estimate both their likelihood and magnitude. Short and medium-term forecasting often emphasis quantitative research and analysis, while long-term forecasting relies more on qualitative research when asking people about their intentions, or beliefs about the actions of others. Long-term forecasting can also draw on quantitative modelling skills.

Sometimes a market research project will include more than one type of research, which may require multiple stages of research. For example, in a study for a healthcare product, we started with exploratory research to uncover the factors that affected current buyer behaviour. This research was then followed by a product evaluation, and development of scenarios that forecasted sales and uptake based on different sales, marketing and competitor reaction assumptions. However, if you only have one stage of research, then you will need to focus on one dominate type and use this to inform your method choice and all other stages of your research. 

 

 What are the types of method used in market research?

Market research, like all other research, is typically split into a two-by-two matrix of primary and secondary research, and qualitative and quantitative research. In their simplest form, primary research is research in which you collect the data, while secondary research is when someone else has collected the data. Literature reviews, using industry and government data is all secondary research. It was primary research when it was first collected. Primary research tends to be more expensive and time consuming than secondary research, but not always. Spending days, weeks or months finding the right data, analysing it and reporting takes time.   

Your choice of primary or secondary research will often depend on the availability of relevant data for your market research project and budget

Quantitative research uses numbers to explore a phenomenon, while qualitative research uses words in its exploration. Or put another way, quantitative research codifies what is being studied so that we can understand it in terms of quantity. Qualitative research describes the presence and quality of what is being studied. Qualitative research often uses less structured personal interviewing techniques with a small sample size, while quantitative research varies greatly between data that is captured using non-survey approaches, like sales data, and surveys that use structured interviews. 

Your choice of method is often determined by how well you understand the nature of what you are studying. If you do not have a good understanding, then qualitative research provides the flexibility to change your questions as you learn and adapt to a specific situation. If you have a clearer understanding about what you are studying, then the more structured and codified quantitative research approach makes data capture more efficient. If you need both approaches, you may need to conduct you research in multiple stages using a mixed methodology approaches to combine the benefits of both approaches.

Another key difference when choosing between quantitative and qualitative research how you want to generalise your results across the market. For generalising your results you need quantitative research. This does not mean you cannot infer from your qualitative research, but it does mean you can not make statements about the frequency or relative strength of different things.     

The choice between qualitative and quantitative may also reflect the decision-making culture of your organisation. Some decision-makers only see quantitative research as providing the right proof for making decisions, while others see the more personal nature of qualitative research as giving the truth.

 

What are the steps in doing Market Research?

Professional market research follows an eleven-step process. You may find some descriptions with fewer steps. However, these descriptions combine steps or miss them entirely. In this section, I’ll step through the process. Shown below are the ten steps of the market research process that we use. When writing a market research brief, similar steps are used.

The 11 Steps of the Market Research Process

    1. Clearly define your business problem
    2. Determine your research objectives and information needs
    3. Understand your constraints
    4. Define the target market for the research
    5. Determine your analysis framework
    6. Select the right methodology
    7. Design your research instruments
    8. Collect and process the data
    9. Analyse your data
    10. Develop actionable recommendations
    11. Tell the insight story?

 

The first step is having a clear understanding of why you need to do market research. By clearly understanding your problem, you can determine what information you need to make your decision. Before designing your research approach, you need to understand your constraints. The biggest constraints are often time, money, capability and capacity. Other constraints may relate to government regulation, material availability, or availability of staff. All decisions, strategies and designs have underlying constraints. This does not mean your market research design is flawed from the outset; it is how we work with and take advantage of constraints that determine the success of your project. 

The next five steps are operational steps. Whom will you interview and how will you measure or investigate the topic? Your analysis framework is the blueprint for what information you can capture and what later analysis is possible. Your analysis framework will also define what method is most likely to provide you with the right information. This framework comes from exploratory research, understanding your business model and behavioural science theory. Your framework will also layout what you need to include in your research instruments. In a survey, a research instrument is your questionnaire; in an interview, it is the interviewer guide. Then you collect the data, or if you are doing secondary research, you find the information.  

Before analysing your data, you always (always!) need to process the data into a form that you can analyse. This maybe transcribing and coding interviews, ensuring the quantitative data is categorised as the right type for analysis (nominal, ordinal, interval, ratio), creating of analysis groups, etc, etc. For some types of analysis there are tools you can use to automate the cleaning and processing. The better you design your market research, the less time you will need cleaning and processing your data.          

The final two stages of the research process are the interpretive stages of uncovering insights from your data, and then sharing the results. Market research analysis can become overwhelming. I’ve worked on studies that have run for several years across several countries, have used multiple data types and have datafiles with thousands of variables. Where do you start? You start at the beginning. Your analysis should reflect the research objectives and information needs from the project, the nature of your target market, and the analysis framework that you initially designed. Often the objectives and information needs for a project will evolve, so it is critical that you document any change.

Although creativity is needed in all stages of the research process, especially when there are significant constraints, from the end-client perspective, the last three stages also involve a most creativity. In the last three stages you often need to uncover complex details but explain them in a simplified way that engages your audience, and motivates them into action.  

On the surface, market research can appear to be a very simple process of just asking someone what they think. However, the more you want to make sure what you are doing uncovers useful insights and motivates decision-makers into action, the more you will need a well-considered and disciplined approach to your research. 

Remember, insights come from insightful thinking. Insightful thinking comes from disciplined thinking. Your thinking in market research needs to be both logical and creative.