Market research is an essential part of launching a new product. “A lot of companies skim over the important background information because they’re so interested in getting their product to market,” marketer Donna Barson told Entrepreneur. “But the companies that do the best are the ones that do their homework.”
Market research is also necessary for gauging customer feelings about existing products and for new marketing plans. There are two types of market research that businesses should be familiar with and employ.
Primary Market Research Methods
Primary research concentrates on information that comes directly from the source — current or potential customers.
“The goal of primary research is to gather data from analyzing current sales and the effectiveness of current practices,” according to author Lesley Spencer Pyle in Entrepreneur. “Primary research also takes competitors’ plans into account, giving you information about your competition.” A new product will rely more on competitors’ plans and data, while existing products will rely more on their own sales.
There are several ways to collect data in primary research.
- Focus groups that include a sample of potential clients or customers
Questions might include the following.
- What factors do you consider when purchasing this product or service?
- What do you like or dislike about current products or services currently on the market?
- What areas would you suggest for improvement?
- What is the appropriate price for a product or service?
Many companies make the mistake of ignoring primary research, Pyle notes. Primary research gives companies a full picture; the insight from actual customers can be extremely valuable.
Another common mistake is surveying only friends and family members. Companies need to “talk to real customers about their needs, wants and expectations,” according to Pyle.
Secondary Market Research Methods
Secondary market research involves gathering statistics, reports, studies and other data. This encompasses the vast majority of research that companies can find, according to Entrepreneur, and secondary market research encompasses a variety of sources. The local library and the internet are the best places to conduct secondary market research.
- Associations: Industry trade associations can produce information such as market statistics, lists of members and books and reference materials. Most libraries have the Encyclopedia of Associations that can help find relevant associations. Customers’ trade associations can help provide information to market to customers.
- Government Guidance: Most county governments publish population density and distribution figures in widely available census tracts. The U.S. Census Bureau has a lot of information available online, including the State and Metropolitan Area Data Book, the Census Product Update, County Business Patterns and the Economic Census.
- Maps: Maps of trading areas are available from chambers of commerce, trade development commissions, industrial development boards and local newspaper offices.
- Colleges and Universities: “Local colleges and universities are valuable sources of information,” according to Entrepreneur. “Many college business departments have students who are eager to work in the ‘real world,’ gathering information and doing research at little or no cost. Finally, local business schools are a great source of experts. Many business professors do consulting on the side, and some will even be happy to offer you marketing, sales, strategic planning or financial information for free.”
- Community Organizations: Businesses should look at their local chamber of commerce or business development agency for useful information on site selection, demographic reports and directories of local businesses.
- D&B: The financial and business services firm D&B offers reference sources that can help startups.
- Online-Only Resources: Good starting points include KnowThis.com’s marketing virtual library, BizMiner.com’s national market research reports for 16,000 industries and MarketResearch.com’s more than 250,000 research reports.
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