Let’s talk about Market Research and the different types of market research. The goal of this article is to help you understand the role research plays in business growth.
Market research is a broad topic, and while we might not cover all of it in this article, Here’s what you’ll learn at the end of our “Market Research” series.
- What Market Research is
- Types of Market Research
- The Importance of Market Research
- What a Market Research Proposal is
- How to Create a Market Research Proposal (+ Template)
- How to Conduct a Market Research
There is so much to cover and for ease, in this article, we’ll focus on what market research is and the different types of research. We’ll cover the other three topics in the next article.
What is Market Research?
A broad, generalized definition of Market Research would be that “It is the action or activity of gathering information about customers’ needs and preferences.”
Sounds simple enough right?
However, this definition does not properly explain what exactly counts as market research, and how this research can impact the growth and success of a business.
According to The Entrepreneur, Market Research is “The process of gathering, analyzing and interpreting information about a market, about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service; research into the characteristics, spending habits, location and needs of your business’s target market, the industry as a whole, and the particular competitors you face.”
Sound like a lot to take in, but the gist of it is that your market research should not only gather data on existing and potential customers, it should also provide information that can help in decision making, which would reduce the risks involved in making decisions that could raise or sink your business.
This means, that for businesses, doing proper research on your market, and the various complements of your market, such as your competitors, your business macro environment, micro environment, and internal environment is necessary.
Market research helps determine the feasibility of a business before pouring resources into it. And for existing businesses, the research would provide information on how best to sustain and grow the business profits.
Types of Market Research
Now that we know what market research is, it’s time to understand the different types of research necessary for businesses.
We can divide market research into several types, the four main types are:
- Primary Market Research
- Secondary Market Research
- Quantitative Market Research
- Qualitative Market Research
However, there are other types of market research, that would fall under at least one of the four types above. Before explaining what the other research types are, let’s explain the four research types above.
Primary Market Research
This is a direct approach to researching and collecting data. In this research type, you collect the data directly from the source either by yourself or by hiring someone to do so.
Methods of collecting data in this research type include:
Surveys and Questionnaires
This research method involves getting feedback from either existing or potential customers through a structured multi-question survey or questionnaire. We can do this, either online, through the phone or by mail/email.
You would need to conduct several emails to several groups to get feedback from different types of customers.
If you do not have the resources to conduct a large survey or to reach a large number of people, then stick to small sample groups. However, do not make all your decisions based on this small group.
Surveys are especially useful for brainstorming tools for getting information on customer sentiment, pricing, product ideas, buying preferences, and purchasing decisions among different customer types.
Surveys can be self-administered. This means that the respondent or examinee reads and answers questions alone. Alternatively, surveys can be administered by a person who records the respondents’ answers.
Focus groups involve getting a group of people together; usually, a small group of 8-12 potential customers, to gather information and their opinion on your product or services.
Focus groups are usually people who fit a target demographic, rather than people from a mix of different demographic your product or service is targeted at.
Like surveys, focus groups can be done physically or virtually as online focus groups are on the rise. However, while free/unpaid surveys are popular participants of focus groups are usually compensated in some way, either with gift-cards, money, coupons, free products, etc.
To maintain order and keep the group focused on the agenda at hand, these groups are led by an objective moderator who would guide the discussion, with a goal of getting participants to discuss the topic among themselves, bouncing thoughts off of one another in a natural group setting.
Interviews are a mix of focus groups and surveys but on a more personalized level. Think of interviews like a focus group but with only one participant and the moderator.
Interviews are better suited for products or service ideas that could be too personal or private for group discussions, for example; personal hygiene products or financial services.
There are different interviewing format depending on the goal of the interview. They can be free-flowing conversations, that is loosely constrained to a general topic, or they can be structured with very specific questions and activities.
Just like the name, Observation research involves watching your potential customers and their behaviors in action.
Observation with some level of interaction between the researcher and the potential customer. OR
Observations can be done either with no interaction with the subject at all, which means watching customers buying products or services similar to yours, listening to what they say as they shop, noticing what they buy and how much they paid. All without interacting with them.
Admittedly, it sounds somewhat creepy. I imagine it would feel uncomfortable for the customers to know there is someone watching them intently.
The greatest benefit of this research method is that it can measure actual behavior, as opposed to user-reported behavior. Which is massively important, as people will often report one thing on a survey, but behave in another way at the purchase point.
This type of research works best for B2C businesses and not B2B businesses.
Experiment and Field Trials
The last method of primary market research is Experiment and Field Trials. Think of it as a more scientific approach to research.
It involves scientific testing, where specific variables and hypotheses can be tested. These tests can be conducted in controlled environments or out in the field. A good example of experiment and field trials used by marketers is A/B Testing.
According to Optimizely, A/B testing (also known as split testing or bucket testing) is a method of comparing two versions of a webpage or app against each other to determine which one performs better.
Running an AB test that directly compares a variation against a current experience lets you ask focused questions about changes to your website or app, and then collect data about the impact of that change.
Secondary Market Research
Unlike Primary Market research, Secondary market research is indirect and involves using data that has already been collected and organized. These include reports and studies by government agencies, trade associations or other businesses within your industry.
According to The Entrepreneur, Secondary research uses outside information assembled by government agencies, industry and trade associations, labor unions, media sources, chambers of commerce, and so on. It’s usually published in pamphlets, newsletters, trade publications, magazines, and newspapers.
Things to consider when collecting information from secondary sources
- The credibility of the data source
- The time spent and expenses incurred to collect the data
- The nature of the data: The data should be able to answer the issues which the business needs to address. It is pointless to spend money, time and efforts on information that may not be useful.
Secondary data research is less time consuming and expensive compared to primary data research, because you could obtain a large amount of data from various sources in a shorter span of time and for a lower cost than primary research.
Quantitative Market Research
Quantitative research means asking people for their opinions in a structured way so that you have facts and statistics to guide you. We can then analyze the responses to make decisions for improving products and services, that will in turn help increase customer satisfaction levels.
This research type deals with the hard facts and statistical data rather than the opinions, feelings, and attitudes of the individuals.
Here, the data are quantified to draw inferences about the customer’s behavior, attitude and preferences in numerical terms that can be easily interpreted and compared with other data facts.
Method’s for quantitative research includes:
- Personal Interviews
QuestionPro goes in depth to explain this research type, covering issues such as its characteristics, research techniques, methodology and the importance of Quantitative market research.
That said, Quantitative research, aims to quantify a problem, collects data through surveys in different formats (online, phone, paper), audits, points of purchase (purchase transactions), and click-streams.
Qualitative Market Research
Qualitative Research deals with the feelings, attitudes, opinions, and thoughts of an individual to understand their underlying reasons for behavior.
It’s about finding out not just what people think, but why they think it. It’s about getting people to talk about their opinions so you can understand their motivations and feelings.
Qualitative research is done to understand the customer’s perspective such as
- What do they feel about a product?
- What they like or dislike about it?
- What are their expectations from a new product?
- What do they feel about the competitor’s product?
- What are the barriers that influence their purchase behavior?
Bringing it all together, Qualitative research is useful for answering questions such as:
- what customers or prospects think and feel about your product or service;
- how they choose between different products or suppliers;
- how branding, design, and packaging influence them;
- what sort of marketing messages have the most impact, and what turns them off;
- how price affects decision-making;
- whether there is demand for a new product or service.
That said, Qualitative research is exploratory in nature, usually uses data collection methods such as focus groups, in-depth interviews, uninterrupted observation, bulletin boards, and ethnographic participation/observation.
Now that we know about the four main types of Market research, let’s look at the other types of research that can help with Marketing and other aspects of your business.
11 Types Of Market Research & How To Use Them
- Market & Customer Segmentation Research
- Product Development Research
- Product Testing Research
- Usability Testing Research
- Advertising Testing Research
- Customer Satisfaction and Loyalty Analysis Research
- Brand Research
- Pricing Research
- Campaign Effectiveness Research
- Competitive Analysis Research
- Consumer Insights Research
1. Market & Customer Segmentation Research
It’s impossible to market to every type of target audience at the same time. As the saying does, if Market to Everyone, Reach No One.
The goal is to divide markets or customers into smaller groups or personas with similar characteristics to enable targeted marketing. By understanding how people in each category behave, you can understand how each influences revenue.
According to Qualtrics, Market segmentation is the research that determines how your organization divides its customers or cohort into smaller groups based on characteristics such as, age, income, personality traits or behavior.
These segments can later be used to optimize products and advertising to different customers.
Segmentation is done based on 4 factors:
- Demographic(B2C): This is market classification based on individual attributes. Examples include Geography, Gender, Education Level, Income Level, etc.
- Firmographic(B2B): This is market classification based on company or organization attributes. Examples include Industry, Location, Number of Employees, Revenue, etc.
- Psychographic(B2B/B2C): This is market classification based on attitudes, aspirations, values, and other criteria. Examples include Lifestyle, Personality Traits, Values, Opinions, etc.
- Behavioral(B2B/B2C): This is market classification based on behaviors like product usage, technology laggards, etc. Examples include Usage Rate, Benefit Types, Occasion, Purchase Decision, etc.
When conducting a market segmentation research, what we’re really doing is asking survey questions aimed at capturing needs, values, attitudes, behaviors, and demographics. A B2B company might also want to investigate firmographic data such as company size, revenues, and product category that are relevant to the industry in question.
The goal of marketing segmentation research is to provide you with data that allows for more efficient and effective marketing tactics.
2. Product Development Research
Market research for product development involves using customer knowledge to inform the entire process of creating or improving a product, service, or app, and bringing it to market.
Data from your surveys, focus groups, polls, questionnaires, observations can be used to inform the entire development process. From the conception of the product/service idea, to the formation of the product/service, to the introduction of your product/service into the market.
Innovation isn’t easy, many new products fail. However, by conducting market research before creating or launching a product/service you would be able to minimize the risk of a new product or change failing as it enters the market.
How to use Product Development Research: There are different market research methods, depending on the goal of the research.
A researcher could present focus groups with product concepts and listen to their opinions, conduct interviews to learn more about their pain points or perform user testing to see how they interact with an app or website.
3. Product Testing Research
A detailed understanding of how your product meets or doesn’t meet your customer’s needs is crucial both to product development and marketing, so these types of market research need to be conducted throughout a product’s life.
Successful product testing should:
- Give insight into how viable your product/service is by investigating competing and substitute alternatives as well as customers’ willingness to embrace new products/services.
- Determine competitive advantage as well as possible threats from similar products/services.
- Identify the products with the highest revenue potential.
- Clarify what improvements should be prioritized before a product launch (or re-launch).
- Pinpoint which product features (both existing and potential) are most important to your target audience.
- Help produce marketing messages to change or enhance existing perceptions about your products/services.
4. Usability Testing Research
Usability testing research is focused on understanding how customers use your products in real time. It can involve physical products, like a new washing machine, or digital products like a website or app.
Usability testing is helpful when you need to detect problems or bugs in early prototypes or beta versions before launching them. It typically costs far less to test a product or service beforehand than to pull a flawed product from the market.
According to Typeform, There are several types of usability tests, which vary based on whether you’re testing a physical or digital product.
- Journey testing involves observing the customer experience on an app or website and monitoring how they perform. This type of study can be done online.
- Eye tracking studies monitor where people’s eyes are drawn. Generally, they are conducted on websites and apps, but can also be done in stores to analyze where people look while shopping.
- Learnability studies quantify the learning curve over time to see which problems people encounter after repeating the same task.
- Click tracking follows users’ activity on websites to evaluate the linking structure of a website.
- Checklist testing involves giving users tasks to perform and recording or asking them to review their experience.
5. Advertising Testing Research
Ad testing is simply the process of vetting your ad concepts with a representative sample of your market. You can test a complete ad, or even portions of your ad to make sure you get the most value for your advertising budget.
Like product testing, testing your advertising campaigns can save you valuable time and resources. By taking potential campaigns directly to your audience and gauging their response you can focus on creating result-driven advertising.
For more information on Advertising Testing, read Qualtrics article on Ad testing.
6. Customer Satisfaction and Loyalty Analysis Research
Customer satisfaction research is a type of market research that measures customers’ experiences with products or services, specifically looking at how those meet, exceed, or fail to live up to their expectations.
However, Satisfied customers aren’t necessarily loyal customers, but consistently measuring customer satisfaction is a great way to increase customer retention.
This type of research is aimed at identifying key drivers of satisfaction and measuring the likelihood of customers to continue using a company’s products and services.
A successful customer satisfaction research should help you understand what your customers like, dislike, and feel needs improvement.
You can use this type of market research to look at quality and design of products, speed and timeliness of delivery, staff and service reliability, knowledge, friendliness, market price, and value for money.
There are several ways to measure customer satisfaction, most commonly using surveys.
- Net Promoter Score (NPS) surveys can help you measure customer loyalty.
- Customer Effort Scoring (CES) measures how satisfied people are with customer service or problem resolution.
According to SurveyGizmo, the goal of customer satisfaction and loyalty analysis research are:
- Determine what factors influence loyalty, advocacy, and repeat purchases, including product/service attributes, company operation, customer service, price, etc.
- Carefully monitor overall satisfaction, recommendation likelihood, and defection likelihood over time.
- Provide early warnings about emerging gaps in product/service performance, customer service, and processes that might lead to customer defection.
- Help identify areas of the product or service that need improvement to meet changing needs.
- Guide the creation and/or ongoing development of customer loyalty and retention programs.
- Signal when organizational changes need to be made to improve operations and customer retention.
7. Brand Research
Brand research helps with creating and managing a company’s brand, or identity. A company’s brand is the images, narratives, and characteristics people associate with it.
We can use brand research at every stage in a business’s lifecycle, from creation to new product launches and re-branding.
There are at least ten types of brand research:
- Brand advocacy: How many of your customers are willing to recommend your brand?
- Brand Awareness: Does your target market know who you are and consider you a serious option? By conducting regular, well-designed brand awareness surveys you can keep tabs on how effective your marketing campaigns really are.
- Brand Recognition: When presented with a list of brands, does your audience recognize yours as a reputable option? Can a customer spontaneously recall your brand, or do they think first of a competitor?
- Brand positioning: What is the best way to differentiate your brand from others in the consumer’s mind and articulate it in a way that resonates?
- Brand loyalty: Are you retaining customers? Loyal customers can become evangelists, but you need to consistently track loyalty levels to determine how often this transformation is happening.
- Brand penetration: What is the proportion of your target market using your brand?
- Brand Identity: What do people think of as your company’s identity or differentiating qualities? Brand identity is what you as a marketing team create. It’s important to determine whether these efforts are being successful.
- Brand perception: What do people think of as your company’s identity or differentiating qualities While brand identity is created by the brand itself, a brand’s image is based on the customer’s perception alone. Tracking disparities in these two can reveal gaps in your marketing efforts.
- Brand value: How much are people willing to pay for an experience with your brand over another?
- Brand Trust: In an era of data breaches, keeping tabs on your levels of brand trust is key. If your brand doesn’t appear trustworthy, you will have difficulty retaining customers.
8. Pricing Research
Surveys that ask customers to choose between different products with unique features and price points, typically done via conjoint analysis, can help you identify what features are most valuable to your audience and what they’d be willing to pay for them.
A conjoint analysis survey presents respondents with full descriptions of various products and asks them to choose which among the presented options they would buy.
Combined with some basic research on your competitors’ pricing, these insights can give you a distinct advantage in pricing your products and services.
9. Campaign Effectiveness Research
We do this type of market research to evaluate whether your advertising messages are reaching the right people and delivering the desired results. Successful campaign effectiveness research can help you sell more and reduce customer acquisition costs.
People see up to 5,000 advertising messages each day. We are constantly bombarded with ads whether we go, whether offline or online.
This means that means attention is a scarce resource, so campaign effectiveness research should be used when you need to spend your advertising dollars effectively.
Quantitative research can be conducted to provide a picture of how your target market views advertising and address weaknesses in the advertising campaign.
10. Competitive Analysis Research
Competitive analysis research allows you to assess your competitor’s strengths and weaknesses in the marketplace, providing you with fuel to drive a competitive advantage.
Every business has competitors, whether directly or indirectly. Competitive analysis is an integral part of any business and market plan. Whether you’re just getting started, moving into a new market, or doing a health check of your business, a competitive analysis is necessary.
Choose a few of your main competitors and analyze things like their marketing strategy, customer perceptions, revenue or sales volume, etc.
Secondary sources such as articles, references, and advertising are excellent sources of competitive information; however, primary research, such as mystery shopping and focus groups can offer valuable information on customer service and current consumer opinions.
11. Consumer Insights Research
Consumer insights research does more than tell you about who your customers are and what they do. It reveals why customers behave in certain ways and help you leverage that to meet your business goals.
To create a strategic marketing plan, you need to know your customers. This type of research would help you understand your customer’s needs and personalize your marketing.
Consumer insights research should be specific to your business—it’s about getting to know your customers and your target market. We can use various market research methods, such as interviews, survey research, social monitoring, and customer journey research.
Here are some data types that you could get through consumer insights research:
- Customers purchase habits
- Interests, hobbies, passions
- Personal and professional information
- How they consume media and advertising
We’ve covered so much already, and yet there is still so much to learn about market research such as why it is important to your business, what a market research proposal is and how to create one.
In the next article, we will cover all these and walk you through the process of creating a market research proposal.