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How to Do Market Research: The Must-Have Guide

By Elise Moores Reviewed By Mike Lucas
By Elise Moores
By Elise Moores Reviewed By Mike Lucas

Every business move involves risk, but data and insight can help you make smarter decisions.

Conducting market research can help you do the following:

  • Determine your target market.
  • Find out which factors influence the purchasing behavior of your target audience.
  • Learn the pain points of that target market and what makes it tick.
  • Create smarter marketing strategies and save valuable time.

Use this guide on how to conduct market research to get started.

Colorful abstract image of a man and woman under a magnifying glass with a lightbulb and question mark over their heads.

What Is Market Research?

Market research involves collecting data about your target customers, competitors and industry. By gathering and analyzing data, you can learn what the market wants, what types of people are drawn to a particular product or service and the level of opportunity in your target market.

It’s key when you want to introduce a new product or service, make changes to an existing one or expand into a new market. It can also be helpful when you’re experiencing a decline in sales and want to figure out why.

What’s more, market research gives you a realistic view of whether or not your idea is viable, and it helps you execute more efficient data-driven strategies.

Colorful abstract image of a face and various documents with arrows and question marks are shown under magnifying glasses.

Follow These 7 Market Research Steps

1. Identify the Objective

Before you begin your market research, identify a goal or problem you want to address.

Here are some examples of questions you’re looking to answer with your market research:

  • Why is there a need for my product or service?
  • What are my ideal customers’ characteristics and demographics?
  • What events will prompt my target customers to buy?
  • What are their buying habits?
  • Why do sales of my product or service decrease at certain times of the year?
  • How much are customers willing to pay for my product or service?
  • What will make people buy from me versus my competitor?

What you want to discover from your market research will inform the methodology, sample and questions you’ll ask.

2. Collect Data from Your Target Audience

One way to collect specific and relevant data is to go directly to customers, your primary source for market research.

Here are some ways to collect data firsthand:

  • Focus groups
  • Telephone calls
  • Questionnaires
  • In-depth interviews

You could hire a market research company to help you with your market study, or you could spend the time and money to do it yourself.

If you’re not in business yet, you’ll want to interview people who are similar to your target customers, like those of a competitor.

Look at customers of businesses like these:

  • Similar in size to yours
  • Customer base in the same area or type of business
  • Relatively similar age to your business

If you’re already in business and launching a new product, interview existing customers for insights.

3. Determine Where to Do Market Research Elsewhere

There are other sources you can tap to collect data that addresses your problem or goal as well as get a general idea of your target market. Of course, thanks to technology, a wealth of resources are just a few clicks away. That said, your local library, college or chamber of commerce are other places you can turn to when you’re deciding where to do market research.

Here are some more options to consider:

Government Agencies

The U.S. Bureau of Labor Statistics (BLS) offers general demographic information and broad trends and is free to access. Look up the following on the BLS website:

  • Consumer Price Indexes
  • Consumer Expenditure Survey
  • Occupational Outlook Handbook

The U.S. Census Bureau is another good resource for market information, including the following:

  • State and Metropolitan Area Data Book
  • Product Update
  • County Business Patterns
  • Economic Census

Another helpful website is the U.S. Small Business Administration’s Office of Entrepreneurship Education.

Local government agencies, including at the city, county and state levels, can also be a solid source of information.

Industry Organizations and Trade Associations

Use research reports related to your industry and target market. Some companies will publish their research for free on public relation websites, while other industry reports may require a fee for viewing. Also look into your industry trade associations, which likely have research available for free.

Market Research Databases

Additionally, there are market research databases and online platforms that sell consumer and industry reports:

  • Statista
  • IBISWorld
  • Mintel

How to Do Market Research Online

While many of the sources we’ve already mentioned can be easily found online, there are also online tools that can give you helpful insights into your website users and internet audience.

For example, you can use Google Analytics to see trends in online visits or Google Trends to see what’s popular with consumers.

If you have a Facebook page, look at Page Insights to see your visitors’ ages and locations.

Your email marketing tool can also show you who your most engaged subscribers are. Use insights like these to target the right people to collect data from in your market research efforts.

Take advantage of online survey tools too. You can conduct these using free platforms such as Google Forms or SurveyMonkey.

4. Gather Data and Perform Market Research Analysis

Whatever issue you’re trying to address in your research, aim to gather as much data as possible with every interaction. That means, before a survey respondent dives into an online questionnaire with prepopulated choices, ask for background demographics so you can match up responses with backgrounds. Do the same with in-person interactions.

Draw Conclusions Using Quantitative and Qualitative Analysis

The information you gather will inform your market research analysis, which can be quantitative or qualitative. Quantitative analysis is focused on numbers, while qualitative analysis is focused on the why and how of customer behavior. Often, both types of analyses are helpful to include in every type of market research program you conduct.

For example, you can email a questionnaire and use quantitative analysis and graphs to convey the percentages of respondents who answer questions similarly. Keep in mind, if you’re using a questionnaire with suggested answer choices, you should still allow for fill-in-the-blank feedback on every question. When you gather quantitative data, you should be able to draw broader conclusions.

If you’re conducting an in-depth focus group, record answers and use qualitative analysis to identify common insights. If you’re talking with customers via interviews or focus groups, you’ll likely be able to glean common issues your market is facing.

  • Market Research Method Example

    One common tool used to analyze small business market research is a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. You can use this analysis to map out trends you’ve identified when conducting market research.

5. Track Your Progress After Conducting Market Research for Your Small Business

Keep track of market research by creating summary reports. These help you track your progress and identify trends in research.

Include the following:

  • Market research goals
  • Characteristics of your interview sample
  • Summary with key points you learned in the analysis
  • Recommendations and next steps

6. Apply Insights Gathered From Your Market Study

After your initial market research, you may have insights you can apply right away. For instance, you might discover a new product isn’t a good fit for your target audience or that expansion into a certain area doesn’t make sense. You may be faced with new questions that require more research before making a decision, or learn about a new opportunity worth exploring.

7. Continue Gathering Insights

Never stop researching how you can make your business better and meet the needs of your customers. What you find out in one round of market research will likely lead to more questions, the answers to which will help you keep refining your business.

Start Working Through the Market Research Steps

It’s no surprise that market research is a $47 billion industry in the U.S. Knowing what your customers want and need (and what they don’t) and why is essential to business success.

While some market research methods can get expensive, you can always use free methods, such as email surveys or social media polls, to keep a pulse on your customers.

Want more tips like these? Visit our sales and marketing blog.

Elise Moores Managing Editor at Fast Capital 360
Elise Moores is the Managing Editor at Fast Capital 360, reporting on all things small business. She distills complex topics into consumable bites so you, the business owner, can make better decisions.
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