How to conduct market research
You can undertake low-cost and effective market research if you follow a few easy steps.
The following steps will help you gather, analyse and interpret information so that you can make good decisions for your business.
Step 1 - establish the aims of your research
- Decide exactly what you want to know. Is there a demand for your product or service? Will the market continue to buy your product or service if prices increase?
- Identify what constraints (e.g. time and money) might limit the amount and type of research you undertake.
- Set some measures of success that will help you to evaluate the outcomes of your research.
Step 2 - plan your research
- Identify potential sources of information – these may be primary or secondary or both.
- Determine the research methods (e.g. observation, surveys, focus groups) most likely to achieve the best outcomes.
- If undertaking any surveys, consider your sample size and how respondents will be chosen
Step 3 - collect your information
- Keep an eye on your budget during this phase as this is where costs can add up quickly.
- Gather information from the sources you identified in Step 2.
- Be flexible in overcoming practical setbacks, e.g. respondents not wishing to participate, others not at home when you call.
Step 4 - analyse and interpret your information
- Arrange your information (the data) in the form of a table so that you can more easily organise it into relevant categories.
- Be wary of any gaps in the information you have collected.
- Review your data with a view to determining whether it tells you what you wanted to know about your business (identified in Step 1)
Step 5 - act on your information
- If the information is relevant, decide how you will act on it.
- If not, go back to Step 1 and determine what other research you might need to undertake.
There are two main approaches to conduct your primary research:
- This is the gathering of numerical data. Examples of such data include market price, market share and product sales by category.
- Quantitative research often produces a lot of statistics. These are useful indicators and reference for general overview, but use numbers with caution. Consider all of the information you have and dig down in details if possible when you interpret the numbers. For example, an 'average price' in the market does not reflect the higher price that a customer is willing to pay for your premium products.
- This is the gathering of views and attitudes. Ways to collect qualitative data include:
- conversations with customers, online surveys or feedback captured by your frontline sales and customer service team about customer opinions and attitudes on your products and service
- monitoring of competitor activities to find out their latest product releases and customer service practices
- focus group where a group of customers and prospective customers are asked about their perceptions, opinions and suggestions toward a new product, service, packaging or advertisement.
Qualitative research can be used to gauge customer interests, needs and habits, and identify potential opportunities and issues before investing in promotion. Qualitative techniques become more important when you want to grow an existing market or create a new one as markets that are non-existent can't be measured and analysed.