Market research: Definition, importance, and how to get started

Market research gives businesses a comprehensive, data-driven insight into customers, trends, competitors, and more. By conducting market research, businesses can obtain the precise data they need to enter new markets, satisfy their customers, and launch new products with confidence. 

Successful business operations start with effective market research.

Market research is the process of collecting information on consumer behaviors, preferences, category trends, and competitive intelligence. Organizations typically conduct market research to inform product development and go-to-market strategy and ultimately drive business growth.

Market research offers businesses insight into the market, its competitors, and customers. 

It helps answer questions like:

This information provides a clear pathway toward satisfying customer demands, enhancing profits, and launching products.

Related reading: What is marketing research and how you can use it to win?

Market research provides the necessary data-backed evidence to help your business make decisions with confidence. Instead of building a company based on gut decisions alone, market research gives you direct insight into what your audience wants to see.

Here’s why market research is so important.

Every business operates in an ecosystem of partners and competitors. The more information a business has on its competitors and its audience, the more ready it is to disrupt the market. You can investigate your competitor’s success metrics, strategy gaps, and trends with market research.

Market research provides data that businesses can use to better understand its competitors’ strategies. Using this information, your company can craft high-impact campaigns to differentiate from your competitors, improve interactions, and win potential customers. 

Market research enables a business to collect data on its customer base, including insights into what they value about its products and services.

You can create better products and services with market research. And using data collected from customer satisfaction surveys, you can iterate upon feedback to further enhance your products, services, and customer satisfaction.

With this information, marketing and product teams won’t have to go through stages of trial-and-error to enhance their offering. Market research point teams directly to the drivers of satisfaction and loyalty. 

Different customers have unique expectations and desires when engaging with your business.

Market research helps your company identify consumer preferences within your target audience. Market research also allows your business to identify potential gaps in the market. This will help you engineer more successful products and improve profits.

Identifying current preferences and trends enables you to create more effective marketing campaigns and better products. 

Drastic changes in a company’s direction, marketing strategy, and product entail a large investment—dollars or personnel.

Market research serves as essential validation, confirming whether you can proceed or acting as a warning bell indicating the need to pivot your marketing or product strategy.

Whether you’re trying to create persuasive marketing collateral, become a thought leader in your industry, or impress your C-Suite, market research arms you with the facts to back up your arguments and claims.

Market research offers the data-driven backing your teams need to make precise business decisions and demonstrate their value. 

Market research is a broad term that encompasses several different types of information gathering.

To give you a comprehensive understanding of it, we’ll walk through each of the common types of market research, the pros and cons, and how they’re most commonly used. We’ll discuss the differences between:

Related reading: Market research defined: Types and examples

Fundamentally, market research can be broken down into two major categories: primary research and secondary research.

Both primary and secondary market research have their unique benefits, meaning they both have a place in your research programs. 

Related reading: Types and examples of primary research

Quantitative research and quantitative research are two sides of the same coin. The first might uncover a figure, like the total percentage of satisfied employees in your organization, while the latter may uncover the ‘why’ behind that figure.

Researchers can conduct quantitative and qualitative research individually or in combination to gain broader and deeper insights.

Another important factor that sets forms of research apart is who conducts it. 

Depending on your goals, desired turnaround time, and expectations from your market research, DIY vs. full-service market research may be more appropriate for your business.

Related reading: 5 examples of how to grow your company faster with DIY market research

Market research is a nuanced process that requires foresight and some advanced planning. Mapping the research will equip you to successfully launch an initiative, gather insights, and convert data into actionable steps for enhancing your organization.

Here are the steps you should follow when conducting market research.

Starting a market research project from scratch can feel intimidating. To focus your research, you should lay out the business question and research goals you’re looking to achieve. 

The business question is a short summary of the problem you’re solving and the context of how it fits into your business. Business questions are high-level goals or challenges that tie directly to business objectives that can help you make informed decisions. 

A business question might involve:

The research goal is an outline of the specific facts or metrics you hope to learn with your research. In other words, your research goals are what helps you answer your business question, you can map research goals to that question. 

Writing strong, relevant research goals is important because they will translate to specific survey questions later on.

To outline how to set effective research objectives, here are some hypothetical business questions and research goals.

Once you’ve established a business question and research goal, you should document them in a research brief. 

A well-written research brief will tell anyone who’s interested exactly what you’re studying (and what you will not be) to make sure everyone is on the same page. 

If anyone wants to suggest something that’s not part of your experiment, your research brief will help you show why you need to stick to the plan.

When you’re conducting market research, your ultimate goal is to understand the behaviors and perceptions of the target population you’re interested in. 

Identifying your target audience before conducting market research ensures you gather relevant, accurate data, tailor your approach, optimize resources, and develop effective strategies.

To do that, you need to know who your target audience is. Here are some characteristics that you could use to define your target audience: 

Now, if you’re a well-established company, you probably already have a good sense of who your target market is and the attributes that define it. 

Knowing who you need to target with your market research and how you plan to do it will have implications for how you resource your project. 

Try to answer the following questions before getting started: 

With market research, there are times when you want to target a broad audience and times when you want to target a narrower group of people.

Related reading: 5 types of market segmentation and how to use them

The method you use to reach the people you need to gather data from depends on who you want to contact. 

Rest assured there are a variety of options for getting in contact with the right people.

1. Leveraging existing contacts

Your existing contacts could be your friends, family, coworkers, customers, website visitors, and social followers. These are all people to whom you already have access. 

In most cases, you have some way of contacting them to invite them to take your survey. Common ways of surveying existing contacts:

2. Reaching a specific group of people

When you have a specific target market in mind, you may not directly have access to the people you need to contact. Let’s say you have a product that’s specifically for small dogs. 

If you think about the US, pet owners are a subset of the adult population, dog owners are a subset of pet owners, and small dog owners are a subset of all dog owners. If you want to understand the packaging appeal of your product, it makes sense to target this relatively small population.

There are two ways of targeting a narrow population, like small dog owners.

3. Choose from pre-profiled targeting options

Tools like SurveyMonkey Audience offer businesses access to an audience of over 175 million people with advanced targeting options. 

SurveyMonkey asks our audience several questions to build up persona profiles of every single member on our platform. We ask questions related to:

Check out the targeting options we have available for your next market research project. 

Don’t forget to double-check the balancing options. Even when you’re targeting a narrower group of people, you want to ensure the proper demographic balancing. That way, you won’t end up with only female small dog owners instead of a balance of male and female small dog owners.

4. Use custom screening questions

When the available targeting options don’t get you the exact target audience you’re looking for, you can write your own screening questions to disqualify people you don’t need. 

For example, if we only had a targeting option for dog owners, but you wanted to survey small dog owners, you could use a screening question to disqualify dog owners whose dogs are over a certain weight.

When you use screening questions in your survey, you’ll need to estimate the associated qualification rate (also sometimes called incidence rate), which is the percentage of respondents who make it past your screening questions and go on to take the rest of your survey. 

This will help us calculate the total number of survey invites to send so you get the total number of completed responses you ordered.

It’s important to understand how targeting options and screening questions work together. For example, you could use targeting options to specify dog owners and then use a screening question to weed out large dog owners. 

That way, only small dog owners take your survey. When estimating your qualification rate in this case, it would be the percentage of dog owners (who you targeted with the targeting options) that you think own small dogs (who will qualify past your screening question).

Selecting your research method is a crucial element in designing and launching a market research effort. The type of research you choose directly influences the results, making this decision vital.

While there will likely be one or two methods that align with your project goals, it’s also useful to remember that you can focus on several research methods at once. You don’t have to double down into only one method, as each can garner valuable, distinct forms of data.

Market research surveys are a powerful tool that allows a business to rapidly gather large quantities of data. Sending out a set of closed-ended questions helps enable statistical analysis of the responses. However, the flexibility that additional open-ended questions bring allows surveys to cover all the bases you need when launching market research. 

The main advantage of using market research surveys is that they are one of the fastest ways of gathering data. Businesses can send out an email with a link to complete the survey to its customers, rapidly reaching a large pool of responses.

However, businesses should be aware of the potential for bias in its questioning when creating a survey. Be sure to write good survey questions that avoid bias and don’t lead your audience to certain answers.

Here’s how businesses can get started with surveys:

Get started with market research surveys on SurveyMonkey for fast, customizable, and expertly crafted surveys. 

Focus groups bring together a small and carefully selected group of individuals who share similar characteristics.

Focus groups excel when your business wants to gather in-depth opinions, reviews, comments, and ideas related to your market research. You could discover customer motivations or a deeper level of understanding that allows you to identify important information related to your market research.

However, it is difficult to make focus groups statistically representative. Focus groups typically have up to 10 participants who may not capture your target market’s breadth of diversity. If you rely too much on this market research method, you may expose your company to bias.

Start focus groups by following these steps:

Related reading: Focus groups and surveys for customer and market research

Interviews are another common form of market research method. In interviews, you host conversations with customers to gather in-depth qualitative information related to your research. The interviewer’s goal is to understand the opinions and feelings a customer has about your product, services, and more.

Interviews differ from focus groups as your company has more control over the specific points that the interview follows. In focus groups, the larger number of people could lead to generalized discussions. On the other hand, you can control the interview environment. As the interviewer, you can ask follow-up questions to understand a person’s viewpoint.

Interviews are best when you need to gather hyper-specific qualitative data. Especially if someone is unlikely to share their feelings in a group, an interview is a great research method to use.

The downside of interviews is that they are incredibly time-consuming. In the space of the 30 minutes it can take to run one interview, you could have gathered 100s of survey responses. Equally, your interviewer must have training before launching these discussions. If not, they could add layers of bias to the conversation, which could impact your results.

Follow these general steps to start the interview process:

Using public data for market research is another effective way of rapidly gathering data. As this data is already available to you, it is another fast method of gathering information. Governments, leading industry figures, and public-facing entities will typically release public data regularly, either throughout the year or once per year.

Public data is useful as it provides a cost-effective, accessible, and reliable source of data for your market research. Especially when taken from government sources or notable companies, the data is normally well structured, free from bias, and accurate.

However, when working with public data, you don’t have any influence on its structure. You might be lucky and find exactly the data you need. But, in most cases, you will only have access to a similar dataset that may relate to but not answer your questions.

Start using public data by following these steps:

Another market research method you can use is competitor analysis. This form of research is where you look at your top competitors, identifying areas where their strategies may differ or align with your own. You can gather detailed information on a competitor’s services, active marketing campaigns, current pricing models, brand image, and target audience.

Competitor analysis is effective as it allows you insight into how similar companies in your industry are breaking into the market. Not only does this provide context for what is working, but it can also suggest where you could differentiate from your competitors. Competitor analysis is a vital segment of market analysis. It helps you to understand where you stand in the wider industry.

However, competitor analysis can also be misleading. While many tools can help businesses to better understand its competitors, they’re not flawless. Your company may spend lots of time and resources finding information on your competitors, considering how limited your access to data may be.

Here’s how to conduct effective competitor analysis:

Related reading: How to conduct a competitive analysis with the help of surveys

Market research does not stop at gathering data. Conducting data analysis involves systematically examining and interpreting data to uncover patterns, trends, and insights that inform decision-making.

Here is what you should consider before analyzing your data:

Before you start diving into your results, you’ll want to ensure that you’re working with a complete, clean dataset. If you do these things first, you’ll have even more confidence in the findings you deliver to your stakeholders.

If the demographics of your sample do not match those of the population, you might consider weighting your results. Weighting is an adjustment technique used after data has been collected to make sure the demographic profile of your respondents matches your population. 

Weighting involves custom calculations with statistical software to fix any lopsidedness in your sample by giving more weight to underrepresented groups and less weight to overrepresented groups.

Collecting data over time can be immensely useful to a business. Tracking things like market trends, consumer perceptions, brand awareness, and competitive intelligence can provide valuable indicators that companies need to adapt to.

Whether that’s your first wave of a tracking survey or the first month of an always-on survey, the baseline is what you’ll be benchmarking against as you collect more data. Once you have a baseline, the next time you run your survey, you’ll be able to understand if things have changed or stayed the same.

In our sparkling water brand tracking study, we decided on quarterly waves. Here’s what the awareness results look like from the first two waves.

Here are a few things to consider when analyzing data trends over time:

Statistical significance shows whether one group's answers are substantially different from another group's answers by using statistical testing. 

When a difference between sample groups is statistically significant, it means you can be confident your results represent a real characteristic of the population instead of random variation in your sample. 

Statistical significance is useful in market research when applied to differences between respondent groups (e.g.: male vs female) or between waves of a tracking study.

Related reading: Calculate your statistical significance

A practical rule of thumb is to check if the change between one group and the other is outside the margin of error based on the sample size. If the change is greater than the margin of error, it’s likely a statistically significant change. 

You can check your margin of error using a margin of error calculator or use the table below as a guide. As a general rule, the margin of error gets smaller as the sample gets bigger.

Here’s an example: Let’s say you surveyed 400 people, and find that your brand awareness is 50% in Wave 1 and 53% in Wave 2. This change of +3% is within the margin of error of +/- 5%, which means we cannot conclude that brand awareness has grown between the two waves.

While statistical significance can tell you what is statistically different, it does not necessarily mean that the difference is meaningful for your business. As the interpreter, you must determine if the statistical significance is important.

Beyond using the sample size and margin of error to estimate whether results are significantly different, you can use statistical testing to know for sure. Statistical testing is commonly built right into survey software. 

With SurveyMonkey, you can use stat testing with comparisons and cross-tab reports. Alternatively, you can use calculators to do your own stat testing on groups of results.

When you get your market research results, you’ll likely be looking at aggregated answers for the entire sample you collected. Looking at how individual segments of your population respond to your market research is one way to uncover insights that could be critical to your analysis.

Here are a few segments of your sample you could look into: 

Once you know what segments could be interesting to dive into, there are two ways to approach segmenting your results for deeper insights:

Take this example from our sparkling water brand awareness study conducted via survey. Across brands, awareness was higher for women than men. Brands like La Croix and Bubly saw larger differences by gender than brands like Schweppes.

When segmenting your data, be aware of the base sizes you end up with. If you only surveyed 300 people total, segmenting your data by US state would leave you with a handful of responses from each state (at best). This would make it much harder to draw significant conclusions from those responses.

Finding a clear, logical story within your data is the single best way of making an impression and catching the attention of your stakeholders.

Here are seven things to keep in mind as you craft your data story:

1. Set up your story

By now, you’ve become familiar with your research. But, not everyone you’ll present it to will be. You should set up the story to ensure stakeholders understand the context before you present your findings and recommendations. Storytelling frameworks can help you come up with an outline for your presentation.

One framework you can follow is SCQA. The framework was first introduced by Barbara Minto, The Pyramid Principle: Logic and Writing in Thinking. 

The SCQA acronym stands for: Situation, Complication, Question & Answer. 

2. Layer in business context

If you follow the SCQA framework, this will come naturally. 

When presenting your research to stakeholders, business context helps you answer the “so what?” question. You need to demonstrate why your research matters, why stakeholders should care, and how the findings/recommendations can help the business.

3. Find powerful stats

No one’s going to be overly impressed if you’re throwing up percentages in the single digits. The powerful stats are the ones that support your claim with large numbers. This is because once you exceed the 50%-mark, you’re talking about the majority. 

If the data that supports your story isn’t a captivating statistic, try reframing it. 

Instead of “10% of Americans would feel safe as a passenger in a self-driving car”, try “90% of Americans would not feel safe.” Note that in cases where you’re conducting a structured analysis (e.g.: building a scorecard), reframing stats won’t work.

4. Focus on the “why”

In many cases, your existing business data will describe the “what.” But, when you collect consumers' voices and opinions using market research, you can uncover the “why.” 

Step back and see if your presentation answers both the “what” and “how”, as well as the “why.”

5. Keep it simple

You’ve done a lot of digging into your data, and while a lot of the findings may be interesting, they might not all be relevant to your story. 

Only include the results that contribute to or add color to your story and recommendations. You can leave some data out of your presentation if it distracts your audience from taking away what matters.

6. Choose the right visualization technique

SurveyMonkey research suggests that 42% of people found data visualized with charts, graphs, or infographics more enjoyable than data in a sentence or presented in a table. 

Here are the most common chart types and when to use them:

7. Make it human

At the end of the day, the goal of market research is to explain human perceptions and behaviors. The more you can bring real examples into your story, the more tangible the results will be to your audience. 

One way to do this is to pepper in quotes from your open-ended responses. You can also mix qualitative information (e.g., interviews, customer support cases, etc.) with your quantitative results. This strategy will bring your data to life and make your points that much more compelling.

After collecting data, crunching the numbers, and drawing up an actionable plan, you’re ready to present your findings to stakeholders. Getting buy-in for your recommendations and motivating others to act can be a challenge. 

The following two strategies work well when aiming to inspire stakeholders into action:

Additionally, it’s important to understand the limits of what you can propose. No matter how interesting your plan may be, if it's unfeasible, it won’t happen.

To win your stakeholders, you have to make your recommendations realistic and aligned to the overall business strategy. 

Ensuring that your recommendations meet these criteria will enhance the probability that your stakeholders opt to make your ideas a reality.

Across the board, market research can help your business push toward a data-driven future. A great example of this in action is Sakura of America. 

Sakura utilized SurveyMonkey market research solutions to conduct an investigation into how the North American market approaches product development and design. Based in Japan, the majority of Sakura’s original research focused on the Japanese market.

SurveyMonkey offered a detailed insight into the target market, uncovering valuable insights into market size, competitive landscape, product positioning, and direct feedback from SurveyMonkey customers.

Sakura pinpointed new research and development initiatives that had the potential to succeed in the North American market.

Market research is an effective tool that every business should utilize to its fullest. Say goodbye to making guesses and move toward a fully data-backed system that gets your business where you want it to be.

SurveyMonkey offers extensive support and fully managed market research initiatives. Whether you’re sending market research surveys or accessing SurveyMonkey Audience, our global survey panel, we have a solution for you.