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When first starting a new company, it's important to do adequate market research. However, starting a new business can be a challenging undertaking with many other tasks that need to be addressed. Bringing together all of the basic components of what will make your business function can take time and effort. Securing a space to manufacture, sell, or store your goods, hiring workers, and gaining access to any necessary materials or software can all prove to be formidable obstacles in your path toward entrepreneurial success. Add to this the need to cover all of your bases legally, such as forming the proper business entity and getting the right insurance coverage; starting a new business can be very overwhelming. If you plan on looking for investors or getting a business loan, you will also need to write a well-detailed and thorough business plan. Even if you are not looking for investors or loans, it is still a good idea to write out a business plan. A good business plan can serve as a guide and a way to work out on paper the specific details of how your company will succeed.

Some companies overlook this step, but your chances of success are increased when you take the time to write a business plan. A huge part of creating a good business plan is conducting thorough market research, as it can give you valuable insights to shape many aspects of your business around. Alternatively, if you already have an existing business, doing market research can help you gain further insights into your target market and can help your company become more successful. Doing market research can seem like a confusing and overwhelming task. But in this article, we will present a guide that breaks down how to conduct good market research to help your business succeed.

  • What is Market Research?

    Market research is the practice of gathering information and data and analyzing it to understand a business' target customers. This analysis can be used to improve products or services and create a better customer experience. By better understanding a company's target customers, companies can create more effective marketing strategies that generate more sales. Market research can also reveal where current marketing campaigns are working efficiently. Additionally, well-done market research can also illuminate new types of customers that may respond positively toward a company's product or service, giving the company new opportunities to grow and reach more people.

    Businesses can collect information in a variety of ways through consumers and competitors. Social media analysis, surveys, consumer observation, interviews, and focus groups can all be used to learn more about the target market. Market research can show companies what consumers want from companies, what they like, what they don't like, what they wish was different, etc. Conducting competitor analysis also can help companies understand the market they are operating in, the demand and current supply within the market, and how they compare to competitors in their market. This can be used to better understand a company's role in a market and how it can better reach and serve customers and expand its business.

  • Determine What It Is You Want to Find Out About the Market

    The first step to conducting market research is identifying what you are trying to find out about your target market. Writing out questions that you are trying to answer about your market will help you direct your market research. By finding the answers to your research questions, you can identify the most urgent or common needs consumers have, or you can also find areas of the market you can expand into. Questions you can use that can direct your market research could include:

    • What percentage of our customers are satisfied with our products or services?
    • How would our customers rate our company on a scale of 1-10?
    • What about our company made our customers purchase from us?
    • Why did consumers decide not to buy from us and go with a competitor instead?
    • If we raised our prices, would customers still purchase our products?
    • Would consumers view our products as inferior or low-quality if we lowered our prices?
    • How did customers learn about our company?
    • What would consumers change about our products or services?

  • Demographics

    Additionally, you can use market research to learn more about the demographics of your customer base and the types of people that most commonly purchase your products. You can use this to better market your products to these specific demographics that your company is popular with. You can also learn whom your marketing falls short with and who isn't buying your products. Then you can create tailor-made marketing campaigns designed to target certain audiences you may not have been reaching effectively. Answers you can ask to learn more about your customers include:

    • Age
    • Gender
    • Ethnicity
    • Location
    • Education Level
    • Employment Status
    • Personal Income Level
    • Marital Status
    • Household Composition
    • Household Income

  • Create a Research Plan

    Once you have identified what you want to know about your target market, you can create a research plan. A research plan can serve as a guide to define how you will go about seeking your answers. What methods you will use, how you will implement these methods, and how extensive the research will be can all be outlined in your plan. Your research can include primary market research and secondary market research. Primary market research gathers information directly from consumers, while secondary market research relies on pre-existing information to extract market insights.

  • Primary Market Research

    Conducting primary market research can help you get specific, accurate, and objective answers to your research questions. You can collect data from primary sources in several ways, including online surveys, focus groups, and interviews. Primary market research can be very involved and expensive to carry out. However, it is one of the best ways to get good information to help your business succeed. Asking consumers direct questions can provide you with the valuable market insights you need to write a business plan, create a marketing strategy, and expand your business.

    You can reach consumers to conduct primary market research through various avenues, including email, social media, and in person. Additionally, you can incentivize consumers to participate in your research studies by offering discounts, free sample products, cash incentives, gift cards, etc. In this regard, conducting market research could act as a promotional marketing tool, which is a win-win. You could learn more about your target customers and customer reception of your products, promote your company and potentially gain new or repeat customers at the same time.

  • Secondary Market Research

    Secondary market research includes finding and analyzing data from existing sources in order to find answers to your research questions. These secondary sources of info can include government reports and statistics, data from industry group studies, other companies' reports and published data, and other public and private sources. Conducting secondary market research can be more accessible to companies as much of this information is free and can be found easily online. In addition, you can conduct secondary market research to get more general information and insights into what your primary market research questions will aim to solve, what methods you will use, and how you will conduct the research.

    Not everyone has the time or money to conduct thorough primary market research. In that case, you can use secondary market research to still produce some very insightful and comprehensive analyses of your industry and target market if your budget or timetable does not support conducting primary market research.

  • Collect Data for Your Market Research

    Once you have established what you want to find out about your target market, you can begin collecting data. You can use multiple methods simultaneously or independently of each other, some of which include the following:

    • Surveys: Surveys are one of the most popular and effective methods to conduct primary market research. They can be administered in-person, online, via email, etc. Answers to the surveys can be quantified so that you can see clear patterns in your target market's answers, giving you valuable insights for your business. You can create charts and graphs to easily demonstrate your findings to potential investors, lenders, or even the general public. You can incentivize consumers to take your survey by offering them cash rewards, gift cards, free products, and discounts for participating.
    • Customer Observation Through Social Media: A great way to learn about how consumers interact with and perceive your or your competitors' products is by observing them through social media. You can see what related content customers are posting by searching for your or your competitors' products or company names on social media sites like Facebook, Instagram, and Twitter/X. You can use this to see what they like and dislike about your or your competitors' products and businesses. In addition, you may observe that customers are using products in a way you hadn't thought of including in your marketing campaigns. This can illustrate customer needs in your industry, allowing you to better design and market your product to help fulfill those needs.
    • Focus Groups: A focus group is a group of people that have been gathered together to create a discussion around a product or company to gain a better understanding of consumer responses. The group will be hosted by a moderator who will ask a series of questions to the group to gain more insights into their thoughts and reactions. This can help you see what consumers like and dislike, and you can adjust your product or marketing approach based on your findings. Hosting multiple separate focus groups can give you a better general idea of how consumers respond to your products or business. However, they tend to be less objective than surveys, but focus groups can produce more personalized answers to research questions than surveys can. In addition, focus groups are often videotaped for future reference, and participants are generally incentivized with cash rewards, free products, or gift cards.
    • Interviews: Similar to a focus group, personal interviews are conducted to gain more insights into consumer reactions to products and companies as a whole. An interviewer will ask the participant a series of questions regarding a product or company, and the interview is also typically recorded. Interviews also tend to be less objective than surveys but can provide more personalized answers.
    • Collect Data from Secondary Sources: Collecting data from pre-existing secondary sources can be a great way to learn more about your target market. You can generally find this information easily online. For example, many government organizations have consumer data listed on their websites. Other sources can include trade and industry groups that collect and publish data and private companies or non-profit organizations. These data sources can be analyzed and made into various charts or graphs to help demonstrate the trends in the market you are trying to illustrate.

  • Analyze the Data

    When you thoroughly analyze the collected data, patterns can emerge, giving you valuable insights into how your market behaves. And by adjusting and shifting your products, branding, or marketing to accommodate these patterns, you can better appeal to your target market. Four types of data analysis are commonly used in almost every industry imaginable, which include:

    • Descriptive Analysis: The most common type of data analysis is descriptive analysis. It is the most straightforward type of data analysis used in business and lays the groundwork for all data analytics. Descriptive analysis uses past data to present broad statistics and trends in a given area. Descriptive analysis uses charts and graphs to show this data in an easy-to-understand and relatable visual format. Descriptive analysis answers the research question of "what happened." Examples of this could be a line chart showing the gradual and continual increase in sales of fitness-related devices from year to year within a specific demographic.
    • Diagnostic Analysis: Now that you have illustrated "what happened" through descriptive analysis, you can use diagnostic analysis to explore "why it happened." Diagnostic analytics can further examine why a situation may have occurred by relating the patterns found in the descriptive analytics to other correlated patterns found in different data sets. This can illustrate the "cause and effect" of a situation. With our example of sales of fitness-related devices gradually increasing year after year among a specific demographic, a data analyst may find that salaries of that demographic also followed a similar upward growth pattern year after year. In addition, they may also find that increased health and fitness awareness was also reported within the demographic during the same period.
    • Predictive Analysis: With predictive analytics, you can use previous data and patterns to predict what may happen in the future. You can address the question of "what is likely to happen next." With our example, suppose the Bureau of Labor Statistics released a report stating that salaries within the demographic we are studying are likely to experience an unusually high increase in the coming year. We can use this, along with other correlated data, to suggest we may see a similar rise in the sales of fitness-related devices within the demographic this year. This can influence how we plan our marketing strategies and manufacturing output.
    • Prescriptive Analysis: Prescriptive analytics combine the previous three forms of analysis to help prescribe a certain course of action based on the data. This is the solution to the issues and questions we have been contemplating. In our fitness-related devices example, we could use prescriptive analytics to suggest the company ramp up our production efforts, create specific marketing campaigns targeting the demographic we are studying, and increase our advertising budget. Based on the data, we can predict that these actions will pay off as we can stay ahead of increased demand by expanding our manufacturing output. In addition, we can also expect increased sales within the demographic, so our marketing and advertising efforts will see a good return on investment.

  • Produce a Research Report

    After you have collected and analyzed your data, you can create a research report to show your results. The report should include information regarding customer demographics, consumer behavior, and information regarding your competitors. This report can be anything from a written report containing charts and graphs, a video presentation, a slideshow presentation, or a combination of these elements. Your research report should clearly illustrate your points and be easy to understand. You can describe your research methods and details about your studies, like how many consumers took your survey or how many people participated in your focus groups.

    Your research report should present a convincing and objective argument explaining how the different data sets you used correlate with each other and support your ideas. You can also provide quotes from your focus groups or interviews. Finally, you can present answers to the original research questions you set out to ask and show how these answers can help determine the best path forward for your company and how you can reach your goals. Once your research report is completed, you can include it in your overall business plan and can present it to potential investors and lenders. You can also give it to your employees to study or hold meetings and present it to them. Additionally, you can display certain aspects of your research findings that may appeal to your customers on your website.

  • Adjust Your Business Strategies Based on Your Market Research

    After you have completed your market research and have created a research report, you can start implementing new plans to better position your business in the market based on what you learned from your research. For example, this could include incorporating more pre-existing elements of your current marketing strategy into your advertising that you found your customers respond to positively. It could also mean altering a product to meet customer needs better. Using your market research to make adjustments to your business will help you better align with your customers and allow your business to become more successful in your market.

    Conclusion: Whether you are already operating an existing company or starting a new one, you can better understand your customers and your industry as a whole by conducting thorough market research. Taking the time to do market research can provide valuable insights into how to adjust your business to better meet your customers' needs. This can help make your company more successful by becoming more appealing, popular, and valuable to consumers.

Are You Doing Market Research for a New Company You Are Starting?

If you are starting a new company, InCorp can help. We provide entity formation services that can help you form a legally recognized business entity such as an LLC or corporation. We also offer registered agent services that are available in all 50 states, D.C., the U.S. Virgin Islands, and Puerto Rico. Additionally, you can use our business entity management system and iOS app to help manage your newly formed business entity. Don't hesitate to contact us today to help get your new business started!

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