Why market research is important

Every business starts with an idea. But turning it into a successful venture requires making the correct decisions, and deciding can feel like a shot in the dark. Market research can help you. It’s a tool for ensuring you’re following the right path. This article will teach you why.

What is market research?

Market research is the act of collecting information. The goal is to use them to make better decisions by gathering data on your clients to know their preferences and behaviours. You can do the same with your competitors to get insight into their operations.

Market research is a continuous exercise. You should perform it before opening a company, like creating an online shop or launching an online product. But, you must constantly be researching. With more data, you’ll make better decisions.

Consider that the market is constantly changing. Trends come and go, so you must continually research your niche to stay updated. Remember: if you do the right thing for too long, you’ll start doing something wrong one day.

Why is market research necessary? (The benefits of market research)

Market research costs money and time. You may think it’s best to skip it because your idea is good enough for people to receive it well. This reasoning could endanger your business’ future. Market research is vital for the following reasons:

1. Saves money

Trusting your gut feeling without using data to inform your decisions can backfire. You’ll likely need several rounds of trial and error until you arrive at a good solution. The result is time and money spent without results. Think of ways to make money from your website, not waste it.

2. Solves problems

Every company has problems. Even if your business is unique, odds are its competitors have already faced similar issues. Market research enables you to find out which problems they faced and how they solved them.

3. Informs you about your clients

Knowing your audience is critical for any business. The more you tailor your products to your demographic’s needs, the more likely they’ll approve of it. But it would help if you got as many insights on these people as possible to do this.

4. Keeps your goals in check

Especially when you’re starting a new business, it’s normal to get overly excited about your idea. But, it’s critical to be realistic about your goals to avoid frustration. So, you can research the competition to know what kind of numbers you can realistically expect from a new venture.

5. Boosts creativity

Creativity is about combining different inspiration sources to develop something unique. Market research enables you to see the strategies your competition is using. For example, you can see how your rivals use social media marketing. You can mix them to create something original.

6. Identifies opportunities

You can see them as you learn more about your market and its audience. You may have an idea for a new product to satisfy a need that nobody is tapping into, for example. You can also use it to detect trends.

7. Gives you a window into the future

Market research lets you understand your industry’s past and present. This information enables you to detect patterns and foresee trends. Being an early adopter can pay dividends, and using market research significantly increases your chances of spotting an opportunity to be one.

The role of data analysis in market research

Data analysis is crucial to market research. Data by itself means nothing. You need to analyse it to make a decision. Deciding without examining your gathered information can have disastrous consequences, as you’ll take a shot in the dark.

How to conduct market research

Market research is like any other business endeavour. It’s best to have an action plan before moving forward. So, read below which steps you should take when conducting it.

1. Set a market research objective

Market research is not a goal. It’s a tool for you to reach one. So, before gathering information, you must decide what you wish to accomplish. Look below at some examples.

Example of market research objectives

• Creating a strategy to build an email marketing campaign that increases sales by 10%.
• Understanding the best time to post on social media to boost sales by 5%.
• Ensuring Valentine’s day will boost sales by at least 30%.

2. Create questions

Once you’ve determined your goal, you must break it down into questions. Ask yourself what you need to know to develop a strategy to get the results stated in your market research objective.

Examples of market research questions

• At what time do people open my newsletters?
• At what times are my competitors posting on Facebook?
• What kind of gifts do people age 18-24 buy for Valentine’s day?
• Does my target audience consume content primarily through TikTok?
• How many people interact with social media buttons on a website?

These are only some examples. It’s typical for market research to feature a series of questions that you’d like to answer. Creating an extensive list is good, but ensure each item contributes to your goal—quality over quantity.

3. Develop a strategy

There are many ways in which you can collect data on your clients. It’s essential to choose the one that’s right for your needs. Look at four examples you can use.

1. Questionnaires

Compile a list of questions and send it to your customers. It’s a cheap and quick method to get insights into your clientele. Additionally, you get live results as people give you answers. Once everything is over, you get a report automatically. 

This scenario makes your life easier, as it facilitates the data analysis process. But the drawback to surveys is that they might not be honest. People trying to finish it as quickly as possible may answer whatever, hurting your result’s credibility.

2. Interviews

They can help you prevent the problem above. People are more likely to take their answers seriously if talking to you face-to-face, improving your data’s accuracy. But they’re more expensive and lengthier to conduct. You’ll likely get insights from fewer people.

Interviews also have another benefit. As you talk to people, additional questions may come to your mind. Or the interviewee may start elaborating further on an answer. The result is additional insights you wouldn’t have gotten through a survey.

3. Focus groups

You can invite a group representing your target audience to a meeting. There, you can ask them to use your product, or you can moderate a conversation about it. It’s an approach that can be productive, but it’s best to stay away from it if you’re inexperienced.

Mediating a focus group requires experience to ensure that the experiment or the conversation contributed to your research objectives. 

4. Observation

Observe your users as they use your product. For example, if you own an online shop, you can record each session and see how users interact with your website. 

Make notes and see how you can improve the user’s experience or optimize the checkout method to decrease your cart abandonment rate.

If you opt for this approach, you must inform your readers that you’re recording their onscreen behaviour and why you’re doing so. Always be transparent with any data you gather.

4. Collect data

Regardless of the chosen method, it’s time to collect your desired data.

5. Interpret your data

Once you’ve finished collecting data, you need to interpret it. The first step is analysing it. What is it telling you?

Examples of data-driven conclusions:

• 58% of people aged 20-30 consume 60% of their content through YouTube.
• 79% of people open their emails on Tuesday mornings.
• 80% of people believe the best Valentine’s day gift is a personalized item.

6. Make data-driven decisions

Now, your goal is to use these discoveries to improve your business. Here are some examples of data-driven decisions you can make based on the data interpreted in the previous topic:

• Invest in a YouTube ad campaign targeting popular channels with that demographic.
• Starting sending your emails to clients on Tuesday mornings.
• Give consumers the option to personalize their Valentine’s gifts.

7. Implement your findings

Implement the improvements you’ve discovered. Some are as easy as changing the time and day you send a newsletter. You only need to alter a setting in the application you use to send emails to people automatically. Others, however, are more complicated.

Imagine you wish to make changes to a page on your website that’s selling a product. Determining what you want to change and how to do so can be challenging, even with the data from your market research. You can use an A/B test to help you.

What an A/B Test is

An A/B test is an experiment in which you have two different versions of the same page: version A and B. When people access your website, it randomly selects which one they see. The goal is to compare the metrics of both. After all, even things like logo placement can have an impact.

An A/B is an effective way of testing your hypothesis before committing to a full-scale change. It also lets you try it on only some select pages. This way, you lower the probability of hurting your business’ performance if your conclusion is incorrect.

Read more: to check the metrics of your pages, read How to Set Up Google Analytics.

8. Monitor and improve

Market research helps you get better results, but nothing is perfect. There’s always room for improvement. So, it’s critical that you monitor the impact these changes have on your business. Understand them and see how you can fine-tune them to keep improving your operations.

Likewise, it’s critical to have these insights in mind. What you learn in one market research can help you in future projects. But be careful. If the data is old, it’s best to conduct the research again to ensure it’s still accurate.

9. Do it again

Trends change with time. So, you must constantly perform market research to ensure your data reflects reality. As you conduct several rounds of the same study, you can refine it, learning from experience. The benefits are plentiful, like learning how to improve conversion rates.

The importance of reliability in market research

How beneficial market research will be to your business will depend on your data’s reliability. Reliable data paints an accurate picture of reality, while unreliable information can be misleading, causing you to make bad decisions.

How to determine if your data is accurate

1. Sample size

You first need to discover whether you’re using the correct sample size. Use at least 10% of your target audience in your market research. A number below that can lead to unreliable data.

2. Questions

It’s vital to have assistance from a professional researcher. Good questions lead to helpful answers. Bad questions may lead to responses that are irrelevant to you. So, writing a detailed questionnaire is critical for getting accurate data.

The importance of a professional researcher is even greater if you use interviews or a focus group to gather data. These methods require a level of expertise that someone untrained is unlikely to have.

3. Authority

Think about the people you’re interviewing. How much of a close match are they with your target audience? In the urge to get more answers, you may start interviewing people with little relevance, hurting your data’s reliability. This approach will lead to misguided decisions.

4. Timing

You should finish your market research as quickly as possible without compromising quality. If you take too long, it’s possible that the data gathered isn’t relevant anymore.

The difference between data validity and data reliability

You may see both terms when studying market research. Although people sometimes use them interchangeably, they are different. And knowing their difference is critical to avoid misconceptions.

Data reliability is how representative of the reality your data is. While data validity is about if you’ve stored it correctly in your system, ensuring all fields are complete and properly formatted. Your software may fail to compute poorly-entered data, meaning it’s invalid.

The importance of ethics in market research

Trying at all costs to profit from the data you acquired can backfire. You can even face legal repercussions. So, it’s vital to be ethical to prevent these adverse outcomes. Here are three benefits of being honest in your market research

1. Ensures privacy

You’ll collect a lot of data on your clients. Some people can try to buy it. Stay true to your word, and don’t share it with third parties. At best, people will receive unsolicited marketing material. At worse, they can receive phishing emails or other types of threats.

2. Prevents unlawful behaviour

Ensuring privacy isn’t just an ethical matter. It’s also a legal one. Many countries have laws determining whether you can sell the data you gathered and which information you can forward to third parties. You may face a lawsuit if it falls into the wrong hands.

3. Protects from deceptive practices

Regardless of the research method, ensure that people know what information you’re collecting and why you’re doing so. Don’t do anything without consent. For example, you may not disclose to your users that you’re monitoring them to get more data. Don’t do that.

This approach isn’t only unethical but also illegal. And it can damage your brand’s reputation. If people find out that you’re illegally collecting data, you’ll end up in court, and people regaining their trust will be a nearly-impossible task.