Market Research What It Is, Why It Matters, and How To Get It Right
Research Intelligence

Market Research: What It Is, Why It Matters, and How To Get It Right

by Liz March , Digital Research Specialist 9 Min.
March 10, 2021 | Updated November 30, 2022

Looking to make smarter business decisions and drive impact? Using market research helps you work more efficiently and achieve your goals.  

In this article, we’ll cover what market research is, the different types of market research that can help you, and how to get it right:

What is market research?

Let’s start with the textbook definition. Market research is defined as the systematic collection and analysis of data about a specific target market or defined segment. It includes information for your business needs, such as supply and demand, competitors, products, and consumers. 

Now, we’re ready to dig deeper.   

Online market research is what you need when you have a new business idea, are inspired to develop or launch a new product, or want to venture into a new market. In short, any time you plan a significant change that involves taking risks, market research rooted in data analysis should be your first step. 

Continuous market research is a critical part of finding answers to questions that inevitably arise during planning, implementation, and optimization phases of your strategy.

Why is market research important?

Market research helps you identify your greatest threats. And it also gives you a clear picture of opportunities you can capitalize on for greater returns on your business investments, or ROI.

Understanding your specific market on different levels and from different perspectives helps you reach well-informed, data-informed decisions. The process can involve multiple phases. But, if you follow a systematic approach using a market research template, your efforts will pay off. 

4 Types of Market Research

Different types of market research

1. Market research for correct positioning 

One of the primary purposes of market research is to assess and confirm your needs and help you position yourself better within the market. The main research question here: Who will find your product most useful and why? 

Examining the size of your audience and the existing demand for your product or services is crucial. This understanding of your target audience allows you to build your product offering and marketing strategy more efficiently.

You also want to learn first-hand where people buy this type of product and how much they are willing to spend so that you can estimate your reachable market share

Another important factor in positioning yourself is understanding your competition and the products they offer. Thorough market research can achieve similar goals to competitor analysis.

To gauge your odds of success, you’ll need reliable information about your competitors’ offerings and market share. Using a platform like Similarweb gives you access to this information, so you can find out details about your competitors and how they address consumer needs. With this information in mind, you are better equipped to develop your unique value proposition.

2. Market research for better forecasting

Another objective for market researchers is to forecast upcoming trends. Data collection over time helps you understand the dynamics of the market. Some markets have strong seasonal fluctuations. Increased shopping during December is an obvious example, but often these shifts are not always evident unless you measure and analyze them specifically. With the data from your historical market research, you can evaluate their impact and the likelihood you will keep seeing these trends. Based on that, you can make predictions about future developments.  

3. Market research for optimizing your business

Market research isn’t merely for those who have something new to offer or are jumping into unknown terrain. It’s also a means to improve your company’s offerings. This applies to existing products, as well as marketing and sales materials or campaigns. 

To conquer the market or outperform the competition, you need to understand two things: What people are looking for and how well you are meeting their expectations compared to your competition. 

With systematic research, you can spot high-potential opportunities. A slight adjustment to your marketing message, your pricing, or customer acquisition tactics in the right direction can make a dramatic difference. A systematic analysis unveils seemingly insignificant discrepancies or weaknesses that you need to optimize.

Finally, market research aims at helping you improve customer satisfaction. After all, loyal customers guarantee a constant flow of business. Proper market research, investigating the opinions, preferences, and values of your target audience can help you meet their needs better and turn potential customers into loyal ones.

4. Market research reduces risk 

The overall goal of market analysis is a distinct understanding of market conditions that help you reach better decisions. Whatever the primary purpose, market research is a means to reduce risk and leverage opportunities – increase your ROI. 

Before making significant changes in your business – whether to a product offering, your marketing strategy, or a more significant amendment – you want to assess your chances of success and set achievable goals. To get this right, you need to anticipate the challenges that lie ahead and develop solutions.  

Let’s look a little deeper into how a well-planned market research strategy helps you achieve the goals we’ve discussed so far. 

7 steps of the market research process

7 Steps for effective market research

1. Make well-informed business decisions

When you make business decisions based on structured data and consider all known factors, you run a much higher chance of succeeding than when you rely on estimations and hunches. 

Sure, you have a pretty good feeling about the market size, the product variety, and the consumer demand if you’ve been involved for a while. But you are viewing the market from a certain perspective, and it’s critical that you discover your blind spots.

With market analysis, you add to your understanding of your industry. By looking at the data, you can compare and evaluate your market more accurately.

How does this play out in practice? For example, when you are developing a new product and contemplating specific features to include, research intelligence can help you figure out the number of existing products with similar features and their popularity with the user. Among other things, it will reveal if customers are willing to pay a higher price, and based on that if you can develop your own pricing structure. Is the demand for the feature high enough, and can the extra income generate enough revenue to justify the expense of developing it? Market research provides the data to answer your questions.   

2. Understand your target audience and market size

Here’s another example of why you should base decisions on relevant research data. Start by identifying common attributes of your target audience in addition to the shared need addressed by your product. 

Let’s say you are offering a brand of bright and glossy makeup colors. Your target audience includes mainly females that like to be seen. Your guess is, they are mostly under 40 and very active on Instagram. A strategically collected data set will reveal the truth and either refute your theory or back it up with numbers.

3. Choose the most suitable sales approach and marketing strategy

Market research can also help you reach the right decision regarding where to advertise. After analyzing the data, you’ll know which social media networks are most popular with your target audience. For example, you may discover fashion brands your target audience prefers, a specific movie genre, or anything else that can provide ideas for your marketing campaigns.

The statistics about your target audience will also include data related to purchasing behavior. You can identify buying habits, such as how much time and how many interactions it takes your average customer to reach a buying decision or which types of campaigns your audience responds to best. 

4. Use what you learn from the competition

Most of your relevant data will come from your competition. If you plan to offer something that’s new for you but already out there in the market, learn from others’ mistakes and successes. If your goal is to evaluate and optimize, collect competitors’ data, and compare it to yours. See what works for them, find their weak spots, and see how you can improve on them.  

5. Gather information about customers’ preferences

Market research is your best way to get information that isn’t naturally visible to you, but that may significantly affect your business. Just think, the fact that your users don’t complain doesn’t necessarily mean they are all delighted with what you offer. Many will keep their criticism to themselves, and you will never know unless you purposely investigate. The fact that your coupon offering or free trial period generates valuable leads doesn’t prove it’s the optimal strategy. You won’t know unless you research and analyze.

6. Work systematically, use a template

For any research to yield actionable results, you need to work according to a system and record your findings. Luckily, there are templates that you can adapt to your own needs that make the process smoother. Market research templates enable you to follow a systematic approach for an otherwise time-consuming and costly process. 

Here are some templates you can use in your market research:

  1. Market Research Survey Template
  2. SWOT Analysis Template
  3. Market Size: TAM, SAM, and SOM
  4. Competitive Analysis Framework
  5. Trend Analysis Template 

Download your FREE market research templates

The two main types of market research and how to use them

Market research is divided into two main types: primary market research, which is research you conduct on your own, and secondary market research, which is research that was done by someone else. Both types can include quantitative and qualitative research. As the terms suggest, one uses numbers and metrics to analyze quantitative parameters, and the other focuses on the assessment of quality.

Primary market research 

  • Web Metrics
    Use analytics software that provides traffic and engagement metrics to understand how audiences behave. 
  • Observation
    To observe how users behave and navigate your site, you can install software that records visits and creates heatmaps. Such tools are useful for qualitative research regarding your UX/UI and, at the same time, quantify the findings.
  • Customer surveys
    Survey questionnaires and polls can be distributed to any number of customers through email, SMS, your site, or social media. They let you collect both qualitative and quantitative data from respondents using predetermined or open-ended questions
  • Focus groups
    You select a small number of people for a group discussion. A moderator leads the session with questions and records the conclusions. This is a form of qualitative research, and you would use it to get in-depth information.
  • Face-to-face interviews
    Another qualitative assessment method is one-on-one interviews. Consumers representative of your target audience or a segment of it are selected to answer questions about a specific research topic.  
  • Phone calls
    To involve a larger number of people and get more answers, you can conduct surveys over the phone. These interviews would be less specific and include fewer questions.

Secondary market research

  • Government reports and census data
    Annual, quarterly, and other periodic industry reports are a rich source of data to tap into. Government organizations publish statistics in areas of trade, eCommerce, and finance. 
  • Academic papers and educational resources
    University research is a source of high-quality information. This is useful for in-depth background information on a broad scale. 
  • Online articles and case studies, public, and commercial sources
    Industry-specific publications can be a valuable source of information for market segmentation, providing you with data and insights on market trends as well as on a specific market segment or niche. 

Level up your market research

Tools for your market research

Here are some online tools you can use to collect information for your digital market research:

  • Google Trends
    Google Trends is a valuable resource for quantitative research data about market tendencies and user behavior.
Snapshot of Google analytics

Screenshot taken from Google Trends, March 8, 2021

  • Similarweb
    Get the most reliable and comprehensive online data for your market research. With Similarweb’s market research tool, you see all your web metrics in the market context. Choose the metrics you want to understand and the specific competitors you want information about.

Similarweb PRO snapshot

  • Hotjar
    The digital tool lets you observe and record user behavior on your website. It also creates heatmaps of your pages so you can analyze how visitors navigate.
  • SurveyMonkey
    Create your own online survey with this free tool. SurveyMonkey provides templates for questionnaires and lets you distribute them through your various channels, then collect and interpret results.
  • YouGov
    This platform offers its users daily with thousands of data points and statistics on consumer attitudes, opinions, and behavior.
  • Pew Research Center
    This non-profit organization conducts and publishes public opinion polling, demographic research, content analysis, and other data-driven social science research. 
  • Living Facts
    The site provides current statistics about the American population, including demographics, social and health issues, opinions, and more. 

Bottom line

When you conduct market research before making important business decisions, you can be more strategic in your approach. Continuously monitoring your progress keeps you in control and makes it easier to take risks. Download the template and start conducting market research now. 

If you want to use almost real-time data, you can try Similarweb here.

Want to learn more on this topic?

Check out our related content on digital market research:

Level up your market research

This blog post was written with Ruth M. Trucks.

The post is subject to Similarweb legal notices and disclaimers

 

FAQ

What are the benefits of effective market research?

Effective market research helps businesses understand and improve their position while also identifying potential threats and opportunities, and spotting emerging trends.

What’s the difference between primary and secondary market research?

Primary research is research you conduct on your own that uses numbers and metrics, and secondary research is research that was done by someone else with a qualitative focus. 

This post is subject to Similarweb legal notices and disclaimers.

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