What is Market Research
Market research is any set of techniques used to gather information and better understand a company’s target market. Businesses use this information to design better products, improve the user experience that attracts quality leads, and improves conversion rates.
Why is market research so valuable?
Here’s why research matters…
- Obsessing over target users is the only way to win.
- Analytics gives the ’what,’ but research gives the ‘why.’
- Research beats assumptions.
Objective of Market Research:
- Who are the target customer?
- What is their main goal?
- What is their main barrier to achieving this goal?
Market Research Methods
- Primary research – With primary research, organizations execute original studies to gather new, specific, first-hand information about their target market. These studies can be in-house or carried out by third-party research agencies or consultants. Primary research methods include focus groups, interviews, and surveys. The information gleaned from these methods is highly targeted, but the process can be time consuming and expensive.
- Secondary research – Secondary market research involves the exploration of pre-existing data sources, such as industry reports and sales data. It is less targeted as this information is usually more general and available to everyone, whether free or for a fee. However, gathering data from secondary sources is generally a faster and cheaper option than conducting primary research.
Primary Market Research Methods
The following are the most common:
- Focus groups – Focus groups are facilitated group meetings, generally of about 10 to 12 individuals who represent a segment of a company’s target market. Participants go through a discussion about a subject the company wants to learn more about.
- Personal interviews – Personal interviews are similar to focus groups, except conducted on a one-to-one basis. While focus groups tend to lead to a broad, generalized discussion of a topic, person-to-person interviews can be both more targeted and specific, depending on how open-ended the questions are.
- Surveys – Surveys can be a great way of narrowing down information previously gotten from focus groups and/or personal interviews. Findings can be more accurately tested with surveys that have more closed-ended questions with specific options or yes or no answers.
- Observational research – Observational market research involves observing how participants interact with a company’s offering in a comfortable environment, either their own or a planned one. There are many ways to conduct observational research. In-person or online sitting.
Common Secondary Sources for Conducting Market Research
- Competitor Analysis
- Government publications and reports
- Industry publications and commercial reports
- Internal sales data
How to know which market research type should use
- Qualitative research – is exploratory and general research. Data is typically gathered through focus groups, interviews, etc with open-ended questions where people’s opinions about a product or service can be explored. The data gathered is typically unstructured and subjective.
- Quantitative research – seeks more quantifiable facts, figures, and statistics. It is often done via a survey, the results of which can be analyzed with statistical methods. Unlike qualitative data, quantitative data is more structured and objective. Quantitative research can be used to really pinpoint trends from information previously gained from qualitative research
Market research example: how Smallpdf turned their market research study into business results (in 6 steps)
Step 1: Smallpdf used on-page surveys to gather data
They ran a survey asking key questions to determine who their users were and what problems they were trying to solve with Smallpdf. The team stopped when they received 1,000 replies.
Step 2: they created simple user personas based on their survey data
Smallpdf found that many of their users were administrative assistants, students, and teachers, so they designed a plan to study these users.
Step 3: they performed observational research on students and admins
- Covert observation of students: watching them work in university libraries and cafeterias.
- Overt observation of administrative assistants: contacting them first to ask if she could watch them work, then spending time watching them perform PDF tasks.
Step 4: Smallpdf analyzed their data
They used the following research tools to wrap up head around the data and explore the next steps.
- Flow model: Smallpdf mapped out a flow model to understand the challenges admins face as they work to satisfy their own internal and external customers.
- Affinity diagram: they grouped data points into broad categories in a visual diagram to see how common certain trends were in their data.
- Customer journey map: they mapped out a typical customer journey to better understand how users interacted with their product.
Step 5: they implemented changes
Based on what Smallpdf learned about the challenges that one key segment (admins) face when trying to convert PDFs into Word files, they improved their ‘PDF to Word’ conversion tool.
I won’t go into the details here because it involves a lot of technical jargon, but they made the entire process simpler and more straightforward for users.
Step 6: Smallpdf tested the results
According to the Lean UX model, product and UX changes aren’t retained unless they achieve results.
Smallpdf’s changes produced:
- A 75% reduction in error rate for the ‘PDF to Word’ converter
- A 1% increase in NPS
- Greater confidence in the team’s marketing efforts