How to do Market Research: The Market Research Process
Like many things, having a plan and following a set process for your market research will ensure that you get the best results. If you are planning on making decisions off the back of the market research, it is important that your results are sufficiently accurate and representative of your target audience. Following the steps below will help to keep you on track.
How to do market research for a startup…
Objectives / hypotheses – Before you actually start conducting any research it is essential that you think about exactly what it is that you need to know and why you are doing the research. You should have clear, written objectives which, when complete, will allow you to move on to the next stage of starting your business. As a starting point, there are a number of key questions that market research can help you answer, such as:
- Is there a market for my product or service and are people willing to pay for it?
- How much are people willing to pay?
- Who does my product most appeal to?
- Who are my major competitors?
You should also think about why you want to know this information, in the example above it may be so that you can iterate you product to address these points and differentiate from the rest of the market.
Another way to set out the objectives is to think in terms of hypotheses. You may have made assumptions about your product or service and you should use market research to test whether these assumptions are true or not.
- For instance: I think people prefer Logo A over Logo B
Small businesses are increasingly taking this Lean or Agile approach to building a company, continually testing hypotheses and iterating their product based on the feedback of their customers.
Think about how you will get the data – Next you have to think about the best ways for you to get the data you need in order to answer your questions. Depending on your specific need, this may involve a mix of primary and secondary, qualitative and quantitative data.
Returning to our previous examples, if you want to know how to price your product competitively, you may be able to look relatively easily on Amazon to see what your competitors charge for similar products. However, finding out what logo your potential clients prefer from a selection may be better suited to an online survey. If you want to find out why people like or dislike something you might be better off conducting some interviews.
Write a questionnaire – Once you’ve decided how you will capture the data you may need to produce a research questionnaire. A questionnaire is a useful tool even if you are only looking to gain qualitative insight, as it will guide the conversation with interviewees and make it easier to compare two sets of responses.
Find respondents – Identify the type of people that you want to answer your questions. This will have a significant impact on the interpretation of your results. If you have a specific target audience in mind, find ways to get the questionnaire in front of them. If you don’t, make sure the questionnaire goes to a broad selection of people from different backgrounds, this will allow you to build up a picture of how people from different demographics respond to your questions.
Run a test – Conduct a couple of interviews or send out your online survey to a sample of your target audience. When we are conducting research on behalf of a client, we always send the questionnaire back to them and see how they would respond to it. This will give you a sense for how long it takes and whether there are any potential issues such as unclear questions. You can iterate the questions based on this feedback before you send it out on a larger scale, or conduct any more interviews.
Mid-point review – Once you have some meaningful data you can start to do some preliminary analysis to get a sense for the types of trends that are coming through at this stage. This presents another opportunity for you to correct any areas where perhaps people are not interpreting the questions correctly. It also helps to highlight areas where the data is perhaps not as strong and you need to press people more on these points in future interviews.
Finally, your research so far may have thrown up some interesting responses that perhaps you were not expecting. Doing some midpoint analysis allows you to identify these areas so that you can ask additional follow up questions in your remaining interviews.
If you are doing an online survey using a tool such as Survey Monkey, it is very easy to generate analysis of your responses so far, these companies offer integrated reporting tools which will automatically generate charts, making it very easy to interpret your responses as the data comes in.
Continue to get responses – In light of your findings at the mid-point review; continue to collect data until you have an adequate sample to meet your research objectives.
Analyse your results – Once you have a good set of responses you need to allocate sufficient time to focused analysis. You don’t need advanced statistical software to do the analysis, but depending on the type of data you have, Microsoft Excel may come in useful.
If you have used online survey tools you can also download the raw data and do some of your own analysis. This gives you the opportunity to cross analyse data across multiple questions and look for correlations. This is where the data becomes extremely valuable.
For instance if you look at two data points in a survey individually:
- 50% of respondents were male
- 50% of respondents said they would buy this product
In isolation these points don’t tell us very much, but further analysis could in fact reveal that 100% of male respondents said they would buy the product.
Review against objectives – Once you have analysed your data and identified the key trends it is important that you review the output against your objectives. Have you answered the questions that you planned to from the outset? If not, you may need to do some further research.
Take action – This is the most important step of all. The outcome of your market research should enable you to make decisions or take actions that will directly improve your business. It is essential that you feed the research back into your strategy and build on what you have learnt. When working with a client we spend a long time on this phase, showing them exactly what the results mean and how they impact this business.