what is market potential research

A beginner's guide to market potential

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A great idea doesn't necessarily translate into millions in sales. If you're launching a company or a new product, you need to know if your products or services are something consumers will need or want.

Don't panic if this is your first introduction to market potential or if you only have a vague concept of what it means. We're here to unpack exactly what market potential is, what factors to consider, and how to calculate a market potential analysis. We also answered frequently asked questions to clarify any confusion around similar market analysis terms.

• What is market potential?

In the most basic sense, market potential is an optimistic projection of how much you can earn from your product based on the number of consumers who could possibly be interested in what you have to offer. It is an estimate derived from multiplying the price of your product by your entire user market. 

Since attracting every possible customer is unlikely, certain factors are considered to calculate a more accurate portrayal of your potential earnings.

To determine the market potential of a product or service, you'll need to develop a clear picture of the market size, factors that affect the current market, growth potential, and external influences. Certain unique factors about your product will come into play, and the costs required to develop the product will also be a consideration.

The importance of market potential

Successful businesses and product launches are not built on innovation alone. A company or entrepreneur can develop a product that serves its intended purpose but still never becomes profitable. To avoid wasting time and money, a business must evaluate the potential returns a product or service will produce.

Market potential analysis helps you learn more about your target audience , so you can decide whether to turn an idea into a new revenue stream. As you work through the process, you might learn valuable information about fine-tuning your product for improved results or reasons to go in a different direction.

Calculating market potential gives you the hard data you need to determine whether your product or service will likely be viable in the current and future market.

• Market potential formula

Market potential is calculated by using a simple mathematical equation. Before you use the formula, you'll need to have a price point in mind for your product and identify the market size.

We mentioned that market potential is an optimistic outlook for your potential sales. You'll see this evidenced further in the basic formula used for the calculation. To determine market potential, you simply need to multiply the market size (number of people who could become users) by your unit price. 

Market potential = Market size x unit price

However, it's important to keep in mind that this formula suggests that all potential customers will purchase your product. When you run your complete analysis, specific factors will be applied that narrow your market. 

Example of market potential calculation

Let's say you've developed a fitness app to help seniors track exercise. It's voice-activated for convenience and automatically supplies relevant recommendations based on user preference and activity level.

Since there are approximately 108.7 million adults over 50 in the US, you set your market size at 36,720,000 (rounding down to 36 million, for simplicity’s sake). You've determined your market size to be all American adults over 50 who have used an app to track fitness.

If every potential customer downloaded the app at a cost of $10, your revenue would amount to $360 million (36M sales x $10 unit price).

While you can't expect to attract every adult over 50 to use a fitness app, this figure gives you a starting point for figuring out your market potential.

• Factors for calculating market potential

Now that you've generated an indication of what your market potential looks like, you can consider the factors that will further refine your market. These are the factors that will affect your real-world market potential.

The total size of the market — The total number of customers that could be interested in your particular product or service. In our example, it was the number of adults over 50 who use fitness apps.

Return on investment (ROI) — Is the market viable enough to invest in? In other words, will the market size provide you with enough profits to generate returns greater than your investment in the product?

Competition within the category — How many competitors already produce a similar product or service? Is the market saturated with similar products that already address the pain points solved by your solution?

Entry barriers — Are there any factors that make it especially challenging to enter your chosen market? For example, license costs, federal regulations, or large operational costs might be an issue.

Political environment — If you're considering international sales, the political environment can limit potential sales. Supply chains affected by international shipping can also be a concern.

Internal environment — Even if the market potential is promising, your strength in the market can be questionable. Do you have the resources to compete in the market at a suitable cost with an attractive offering?

• How to conduct a market potential analysis

Here's where we get to the fun part. You've learned all the factors that can influence your market potential. Now, you can plug in relevant data to get a real sense of your market potential. These steps will help you generate an indicative picture of how your product is likely to perform in the market.

By taking all relevant factors into consideration, you can get a more accurate estimate of the market potential of your planned product or service.

Identify market size and demand

We discussed how market size describes your potential customer base, but we will consider the factors likely to narrow your customer base. 

Our example began with the number of Americans over 50. We narrowed that number down by nearly two-thirds by taking into account how many seniors never use fitness apps. Yet, even after reducing the original population from over 100 million to 36 million, there are still other factors to consider. 

Here, the number of current users who may not want to switch to a new product will likely be relevant. Research shows that 45% of seniors are uncomfortable trying new things and therefore may be reluctant to incorporate your innovation into their routines.

To determine accurate market size, you'll need to consider how age groups, pricing, and other behavior may affect the interest of individuals in your target market. Research will be required to get a firm understanding of what conditions are most likely to affect your target customers' buying choices.

Examine the competition

Competitors already occupy part of the potential market. These are companies that offer similar products to the same target audience.

To accurately analyze the competition , you'll need to research companies with similar products and see if these products address the same need. You'll also need to evaluate customer loyalty and consider whether consumers will change brands.

Different factors affect customer loyalty in various demographics. Social and economic shifts can also impact customer loyalty. Some research may be required to get an accurate portrayal of customer loyalty in your chosen industry.

Evaluate market growth rate

You already have a firm understanding of the current market for your product. You've considered that the market is large enough to offer ROI. Now, you can determine if the market is growing. Market growth provides you with additional opportunities to attract customers who aren't already in the market. 

To understand market growth, you want to analyze trends and determine how the market has changed over the past few years. Consider economic or cultural shifts that might increase market growth. For instance, technology use and digital transformation grew exponentially during pandemic restrictions. As a result, many consumers are more comfortable using digital products.

Specific features about your product may also impact potential growth. Consider how our example is designed to improve convenience.

Maybe you created such a product because your grandmother prefers not to use complex digital products. Your new app will address her pain points. It also has the potential to address the pain points of the 14% of older adults who are uncomfortable with technology.

Calculate profitability

Now that you've narrowed down your market to a more accurate estimate, you need to determine whether you can still achieve profitability. Evaluate production costs, breaking into the market, advertising, and your intended price. Consider export laws, special taxes, legal fees, and administrative expenses.

Once you have a complete cost estimate , consider your potential ROI. Will you need to adjust your price level to break even? If you do, will your product still be competitive in the market?

Take a moment to consider what type of product you're offering. Is it a one-time offering or something that will generate repeat purchases? Demand over time will increase your purchase rate and improve your potential ROI.

Consider external influences

All the data you've considered so far has been based on internal market factors. Yet, external factors have a major impact on any marketable product. Social, economic, and political changes can affect your ability to supply products in a specific market.

Consider how new government regulations can impact costs and supply chain timelines. External factors can also significantly impact demand. For example, an expensive luxury item might not generate the expected consumer interest during a recession.

Do your research to get a better idea about which external factors are likely to affect your market. Examine historical trends that have previously affected the market and consider future predictions in your industry.

What is the difference between potential market and market potential?

The potential market is the population who is interested in the product or service you're offering. Market potential is an estimation of the potential sales revenue from all supplying channels in a market. In other words, the potential market describes a group of people, while market potential describes the potential value of a product.

What is the difference between target market and potential market?

The potential market is the total audience who could potentially be interested in using your product. Before considering all the factors influencing consumer choices, a potential market can encompass an entire gender or age group.

The target market is the audience most likely to be interested in your product despite competition and other factors that impact demand.

What is the difference between market size and market potential?

Market potential is the possible money-making capability of a business, product, or service. Market size is more closely aligned with the potential market. It is the group of people who are most likely to be interested in your product or service. Market size is one of the factors used to calculate market potential.

What are sales potential and market potential?

Sales potential is similar to market potential. However, it has a narrower focus.

Market potential describes the maximum amount of sales that could occur within a product category. 

Sales potential factors in the market share and product performance to represent an accurate estimation of the number of sales a company can expect to bring in within a specific time frame. Sales potential represents product sales within your company within a given time frame.

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How to Do Market Research: The Complete Guide

Learn how to do market research with this step-by-step guide, complete with templates, tools and real-world examples.

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Market research is the systematic process of gathering, analyzing and interpreting information about a specific market or industry.

What are your customers’ needs? How does your product compare to the competition? What are the emerging trends and opportunities in your industry? If these questions keep you up at night, it’s time to conduct market research.

Market research plays a pivotal role in your ability to stay competitive and relevant, helping you anticipate shifts in consumer behavior and industry dynamics. It involves gathering these insights using a wide range of techniques, from surveys and interviews to data analysis and observational studies.

In this guide, we’ll explore why market research is crucial, the various types of market research, the methods used in data collection, and how to effectively conduct market research to drive informed decision-making and success.

What is market research?

The purpose of market research is to offer valuable insight into the preferences and behaviors of your target audience, and anticipate shifts in market trends and the competitive landscape. This information helps you make data-driven decisions, develop effective strategies for your business, and maximize your chances of long-term growth.

Why is market research important? 

By understanding the significance of market research, you can make sure you’re asking the right questions and using the process to your advantage. Some of the benefits of market research include:

• Informed decision-making: Market research provides you with the data and insights you need to make smart decisions for your business. It helps you identify opportunities, assess risks and tailor your strategies to meet the demands of the market. Without market research, decisions are often based on assumptions or guesswork, leading to costly mistakes.
• Customer-centric approach: A cornerstone of market research involves developing a deep understanding of customer needs and preferences. This gives you valuable insights into your target audience, helping you develop products, services and marketing campaigns that resonate with your customers.
• Competitive advantage: By conducting market research, you’ll gain a competitive edge. You’ll be able to identify gaps in the market, analyze competitor strengths and weaknesses, and position your business strategically. This enables you to create unique value propositions, differentiate yourself from competitors, and seize opportunities that others may overlook.
• Risk mitigation: Market research helps you anticipate market shifts and potential challenges. By identifying threats early, you can proactively adjust their strategies to mitigate risks and respond effectively to changing circumstances. This proactive approach is particularly valuable in volatile industries.
• Resource optimization: Conducting market research allows organizations to allocate their time, money and resources more efficiently. It ensures that investments are made in areas with the highest potential return on investment, reducing wasted resources and improving overall business performance.
• Adaptation to market trends: Markets evolve rapidly, driven by technological advancements, cultural shifts and changing consumer attitudes. Market research ensures that you stay ahead of these trends and adapt your offerings accordingly so you can avoid becoming obsolete. 

As you can see, market research empowers businesses to make data-driven decisions, cater to customer needs, outperform competitors, mitigate risks, optimize resources and stay agile in a dynamic marketplace. These benefits make it a huge industry; the global market research services market is expected to grow from $76.37 billion in 2021 to $108.57 billion in 2026 . Now, let’s dig into the different types of market research that can help you achieve these benefits.

Types of market research 

• Qualitative research
• Quantitative research
• Exploratory research
• Descriptive research
• Causal research
• Cross-sectional research
• Longitudinal research

Despite its advantages, 23% of organizations don’t have a clear market research strategy. Part of developing a strategy involves choosing the right type of market research for your business goals. The most commonly used approaches include:

1. Qualitative research

Qualitative research focuses on understanding the underlying motivations, attitudes and perceptions of individuals or groups. It is typically conducted through techniques like in-depth interviews, focus groups and content analysis — methods we’ll discuss further in the sections below. Qualitative research provides rich, nuanced insights that can inform product development, marketing strategies and brand positioning.

2. Quantitative research

Quantitative research, in contrast to qualitative research, involves the collection and analysis of numerical data, often through surveys, experiments and structured questionnaires. This approach allows for statistical analysis and the measurement of trends, making it suitable for large-scale market studies and hypothesis testing. While it’s worthwhile using a mix of qualitative and quantitative research, most businesses prioritize the latter because it is scientific, measurable and easily replicated across different experiments.

3. Exploratory research

Whether you’re conducting qualitative or quantitative research or a mix of both, exploratory research is often the first step. Its primary goal is to help you understand a market or problem so you can gain insights and identify potential issues or opportunities. This type of market research is less structured and is typically conducted through open-ended interviews, focus groups or secondary data analysis. Exploratory research is valuable when entering new markets or exploring new product ideas.

4. Descriptive research

As its name implies, descriptive research seeks to describe a market, population or phenomenon in detail. It involves collecting and summarizing data to answer questions about audience demographics and behaviors, market size, and current trends. Surveys, observational studies and content analysis are common methods used in descriptive research. 

5. Causal research

Causal research aims to establish cause-and-effect relationships between variables. It investigates whether changes in one variable result in changes in another. Experimental designs, A/B testing and regression analysis are common causal research methods. This sheds light on how specific marketing strategies or product changes impact consumer behavior.

6. Cross-sectional research

Cross-sectional market research involves collecting data from a sample of the population at a single point in time. It is used to analyze differences, relationships or trends among various groups within a population. Cross-sectional studies are helpful for market segmentation, identifying target audiences and assessing market trends at a specific moment.

7. Longitudinal research

Longitudinal research, in contrast to cross-sectional research, collects data from the same subjects over an extended period. This allows for the analysis of trends, changes and developments over time. Longitudinal studies are useful for tracking long-term developments in consumer preferences, brand loyalty and market dynamics.

Each type of market research has its strengths and weaknesses, and the method you choose depends on your specific research goals and the depth of understanding you’re aiming to achieve. In the following sections, we’ll delve into primary and secondary research approaches and specific research methods.

Primary vs. secondary market research

Market research of all types can be broadly categorized into two main approaches: primary research and secondary research. By understanding the differences between these approaches, you can better determine the most appropriate research method for your specific goals.

Primary market research 

Primary research involves the collection of original data straight from the source. Typically, this involves communicating directly with your target audience — through surveys, interviews, focus groups and more — to gather information. Here are some key attributes of primary market research:

• Customized data: Primary research provides data that is tailored to your research needs. You design a custom research study and gather information specific to your goals.
• Up-to-date insights: Because primary research involves communicating with customers, the data you collect reflects the most current market conditions and consumer behaviors.
• Time-consuming and resource-intensive: Despite its advantages, primary research can be labor-intensive and costly, especially when dealing with large sample sizes or complex study designs. Whether you hire a market research consultant, agency or use an in-house team, primary research studies consume a large amount of resources and time.

Secondary market research 

Secondary research, on the other hand, involves analyzing data that has already been compiled by third-party sources, such as online research tools, databases, news sites, industry reports and academic studies.

Here are the main characteristics of secondary market research:

• Cost-effective: Secondary research is generally more cost-effective than primary research since it doesn’t require building a research plan from scratch. You and your team can look at databases, websites and publications on an ongoing basis, without needing to design a custom experiment or hire a consultant. 
• Leverages multiple sources: Data tools and software extract data from multiple places across the web, and then consolidate that information within a single platform. This means you’ll get a greater amount of data and a wider scope from secondary research.
• Quick to access: You can access a wide range of information rapidly — often in seconds — if you’re using online research tools and databases. Because of this, you can act on insights sooner, rather than taking the time to develop an experiment. 

So, when should you use primary vs. secondary research? In practice, many market research projects incorporate both primary and secondary research to take advantage of the strengths of each approach.

One rule of thumb is to focus on secondary research to obtain background information, market trends or industry benchmarks. It is especially valuable for conducting preliminary research, competitor analysis, or when time and budget constraints are tight. Then, if you still have knowledge gaps or need to answer specific questions unique to your business model, use primary research to create a custom experiment. 

Market research methods

• Surveys and questionnaires
• Focus groups
• Observational research
• Online research tools
• Experiments
• Content analysis
• Ethnographic research

How do primary and secondary research approaches translate into specific research methods? Let’s take a look at the different ways you can gather data: 

1. Surveys and questionnaires

Surveys and questionnaires are popular methods for collecting structured data from a large number of respondents. They involve a set of predetermined questions that participants answer. Surveys can be conducted through various channels, including online tools, telephone interviews and in-person or online questionnaires. They are useful for gathering quantitative data and assessing customer demographics, opinions, preferences and needs. On average, customer surveys have a 33% response rate , so keep that in mind as you consider your sample size.

2. Interviews

Interviews are in-depth conversations with individuals or groups to gather qualitative insights. They can be structured (with predefined questions) or unstructured (with open-ended discussions). Interviews are valuable for exploring complex topics, uncovering motivations and obtaining detailed feedback. 

3. Focus groups

The most common primary research methods are in-depth webcam interviews and focus groups. Focus groups are a small gathering of participants who discuss a specific topic or product under the guidance of a moderator. These discussions are valuable for primary market research because they reveal insights into consumer attitudes, perceptions and emotions. Focus groups are especially useful for idea generation, concept testing and understanding group dynamics within your target audience.

4. Observational research

Observational research involves observing and recording participant behavior in a natural setting. This method is particularly valuable when studying consumer behavior in physical spaces, such as retail stores or public places. In some types of observational research, participants are aware you’re watching them; in other cases, you discreetly watch consumers without their knowledge, as they use your product. Either way, observational research provides firsthand insights into how people interact with products or environments.

5. Online research tools

You and your team can do your own secondary market research using online tools. These tools include data prospecting platforms and databases, as well as online surveys, social media listening, web analytics and sentiment analysis platforms. They help you gather data from online sources, monitor industry trends, track competitors, understand consumer preferences and keep tabs on online behavior. We’ll talk more about choosing the right market research tools in the sections that follow.

6. Experiments

Market research experiments are controlled tests of variables to determine causal relationships. While experiments are often associated with scientific research, they are also used in market research to assess the impact of specific marketing strategies, product features, or pricing and packaging changes.

7. Content analysis

Content analysis involves the systematic examination of textual, visual or audio content to identify patterns, themes and trends. It’s commonly applied to customer reviews, social media posts and other forms of online content to analyze consumer opinions and sentiments.

8. Ethnographic research

Ethnographic research immerses researchers into the daily lives of consumers to understand their behavior and culture. This method is particularly valuable when studying niche markets or exploring the cultural context of consumer choices.

How to do market research

• Set clear objectives
• Identify your target audience
• Choose your research methods
• Use the right market research tools
• Collect data
• Analyze data 
• Interpret your findings
• Identify opportunities and challenges
• Make informed business decisions
• Monitor and adapt

Now that you have gained insights into the various market research methods at your disposal, let’s delve into the practical aspects of how to conduct market research effectively. Here’s a quick step-by-step overview, from defining objectives to monitoring market shifts.

1. Set clear objectives

When you set clear and specific goals, you’re essentially creating a compass to guide your research questions and methodology. Start by precisely defining what you want to achieve. Are you launching a new product and want to understand its viability in the market? Are you evaluating customer satisfaction with a product redesign? 

Start by creating SMART goals — objectives that are specific, measurable, achievable, relevant and time-bound. Not only will this clarify your research focus from the outset, but it will also help you track progress and benchmark your success throughout the process. 

You should also consult with key stakeholders and team members to ensure alignment on your research objectives before diving into data collecting. This will help you gain diverse perspectives and insights that will shape your research approach.

2. Identify your target audience

Next, you’ll need to pinpoint your target audience to determine who should be included in your research. Begin by creating detailed buyer personas or stakeholder profiles. Consider demographic factors like age, gender, income and location, but also delve into psychographics, such as interests, values and pain points.

The more specific your target audience, the more accurate and actionable your research will be. Additionally, segment your audience if your research objectives involve studying different groups, such as current customers and potential leads.

If you already have existing customers, you can also hold conversations with them to better understand your target market. From there, you can refine your buyer personas and tailor your research methods accordingly.

3. Choose your research methods

Selecting the right research methods is crucial for gathering high-quality data. Start by considering the nature of your research objectives. If you’re exploring consumer preferences, surveys and interviews can provide valuable insights. For in-depth understanding, focus groups or observational research might be suitable. Consider using a mix of quantitative and qualitative methods to gain a well-rounded perspective. 

You’ll also need to consider your budget. Think about what you can realistically achieve using the time and resources available to you. If you have a fairly generous budget, you may want to try a mix of primary and secondary research approaches. If you’re doing market research for a startup , on the other hand, chances are your budget is somewhat limited. If that’s the case, try addressing your goals with secondary research tools before investing time and effort in a primary research study. 

4. Use the right market research tools

Whether you’re conducting primary or secondary research, you’ll need to choose the right tools. These can help you do anything from sending surveys to customers to monitoring trends and analyzing data. Here are some examples of popular market research tools:

• Market research software: Crunchbase is a platform that provides best-in-class company data, making it valuable for market research on growing companies and industries. You can use Crunchbase to access trusted, first-party funding data, revenue data, news and firmographics, enabling you to monitor industry trends and understand customer needs.

• Survey and questionnaire tools: SurveyMonkey is a widely used online survey platform that allows you to create, distribute and analyze surveys. Google Forms is a free tool that lets you create surveys and collect responses through Google Drive.
• Data analysis software: Microsoft Excel and Google Sheets are useful for conducting statistical analyses. SPSS is a powerful statistical analysis software used for data processing, analysis and reporting.
• Social listening tools: Brandwatch is a social listening and analytics platform that helps you monitor social media conversations, track sentiment and analyze trends. Mention is a media monitoring tool that allows you to track mentions of your brand, competitors and keywords across various online sources.
• Data visualization platforms: Tableau is a data visualization tool that helps you create interactive and shareable dashboards and reports. Power BI by Microsoft is a business analytics tool for creating interactive visualizations and reports.

5. Collect data

There’s an infinite amount of data you could be collecting using these tools, so you’ll need to be intentional about going after the data that aligns with your research goals. Implement your chosen research methods, whether it’s distributing surveys, conducting interviews or pulling from secondary research platforms. Pay close attention to data quality and accuracy, and stick to a standardized process to streamline data capture and reduce errors. 

6. Analyze data

Once data is collected, you’ll need to analyze it systematically. Use statistical software or analysis tools to identify patterns, trends and correlations. For qualitative data, employ thematic analysis to extract common themes and insights. Visualize your findings with charts, graphs and tables to make complex data more understandable.

If you’re not proficient in data analysis, consider outsourcing or collaborating with a data analyst who can assist in processing and interpreting your data accurately.

7. Interpret your findings

Interpreting your market research findings involves understanding what the data means in the context of your objectives. Are there significant trends that uncover the answers to your initial research questions? Consider the implications of your findings on your business strategy. It’s essential to move beyond raw data and extract actionable insights that inform decision-making.

Hold a cross-functional meeting or workshop with relevant team members to collectively interpret the findings. Different perspectives can lead to more comprehensive insights and innovative solutions.

8. Identify opportunities and challenges

Use your research findings to identify potential growth opportunities and challenges within your market. What segments of your audience are underserved or overlooked? Are there emerging trends you can capitalize on? Conversely, what obstacles or competitors could hinder your progress?

Lay out this information in a clear and organized way by conducting a SWOT analysis, which stands for strengths, weaknesses, opportunities and threats. Jot down notes for each of these areas to provide a structured overview of gaps and hurdles in the market.

9. Make informed business decisions

Market research is only valuable if it leads to informed decisions for your company. Based on your insights, devise actionable strategies and initiatives that align with your research objectives. Whether it’s refining your product, targeting new customer segments or adjusting pricing, ensure your decisions are rooted in the data.

At this point, it’s also crucial to keep your team aligned and accountable. Create an action plan that outlines specific steps, responsibilities and timelines for implementing the recommendations derived from your research. 

10. Monitor and adapt

Market research isn’t a one-time activity; it’s an ongoing process. Continuously monitor market conditions, customer behaviors and industry trends. Set up mechanisms to collect real-time data and feedback. As you gather new information, be prepared to adapt your strategies and tactics accordingly. Regularly revisiting your research ensures your business remains agile and reflects changing market dynamics and consumer preferences.

Online market research sources

As you go through the steps above, you’ll want to turn to trusted, reputable sources to gather your data. Here’s a list to get you started:

• Crunchbase: As mentioned above, Crunchbase is an online platform with an extensive dataset, allowing you to access in-depth insights on market trends, consumer behavior and competitive analysis. You can also customize your search options to tailor your research to specific industries, geographic regions or customer personas.

• Academic databases: Academic databases, such as ProQuest and JSTOR , are treasure troves of scholarly research papers, studies and academic journals. They offer in-depth analyses of various subjects, including market trends, consumer preferences and industry-specific insights. Researchers can access a wealth of peer-reviewed publications to gain a deeper understanding of their research topics.
• Government and NGO databases: Government agencies, nongovernmental organizations and other institutions frequently maintain databases containing valuable economic, demographic and industry-related data. These sources offer credible statistics and reports on a wide range of topics, making them essential for market researchers. Examples include the U.S. Census Bureau , the Bureau of Labor Statistics and the Pew Research Center .
• Industry reports: Industry reports and market studies are comprehensive documents prepared by research firms, industry associations and consulting companies. They provide in-depth insights into specific markets, including market size, trends, competitive analysis and consumer behavior. You can find this information by looking at relevant industry association databases; examples include the American Marketing Association and the National Retail Federation .
• Social media and online communities: Social media platforms like LinkedIn or Twitter (X) , forums such as Reddit and Quora , and review platforms such as G2 can provide real-time insights into consumer sentiment, opinions and trends. 

Market research examples

At this point, you have market research tools and data sources — but how do you act on the data you gather? Let’s go over some real-world examples that illustrate the practical application of market research across various industries. These examples showcase how market research can lead to smart decision-making and successful business decisions.

Example 1: Apple’s iPhone launch

Apple ’s iconic iPhone launch in 2007 serves as a prime example of market research driving product innovation in tech. Before the iPhone’s release, Apple conducted extensive market research to understand consumer preferences, pain points and unmet needs in the mobile phone industry. This research led to the development of a touchscreen smartphone with a user-friendly interface, addressing consumer demands for a more intuitive and versatile device. The result was a revolutionary product that disrupted the market and redefined the smartphone industry.

Example 2: McDonald’s global expansion

McDonald’s successful global expansion strategy demonstrates the importance of market research when expanding into new territories. Before entering a new market, McDonald’s conducts thorough research to understand local tastes, preferences and cultural nuances. This research informs menu customization, marketing strategies and store design. For instance, in India, McDonald’s offers a menu tailored to local preferences, including vegetarian options. This market-specific approach has enabled McDonald’s to adapt and thrive in diverse global markets.

Example 3: Organic and sustainable farming

The shift toward organic and sustainable farming practices in the food industry is driven by market research that indicates increased consumer demand for healthier and environmentally friendly food options. As a result, food producers and retailers invest in sustainable sourcing and organic product lines — such as with these sustainable seafood startups — to align with this shift in consumer values. 

The bottom line? Market research has multiple use cases and is a critical practice for any industry. Whether it’s launching groundbreaking products, entering new markets or responding to changing consumer preferences, you can use market research to shape successful strategies and outcomes.

Market research templates

You finally have a strong understanding of how to do market research and apply it in the real world. Before we wrap up, here are some market research templates that you can use as a starting point for your projects:

• Smartsheet competitive analysis templates : These spreadsheets can serve as a framework for gathering information about the competitive landscape and obtaining valuable lessons to apply to your business strategy.
• SurveyMonkey product survey template : Customize the questions on this survey based on what you want to learn from your target customers.
• HubSpot templates : HubSpot offers a wide range of free templates you can use for market research, business planning and more.
• SCORE templates : SCORE is a nonprofit organization that provides templates for business plans, market analysis and financial projections.
• SBA.gov : The U.S. Small Business Administration offers templates for every aspect of your business, including market research, and is particularly valuable for new startups. 

Strengthen your business with market research

When conducted effectively, market research is like a guiding star. Equipped with the right tools and techniques, you can uncover valuable insights, stay competitive, foster innovation and navigate the complexities of your industry.

Throughout this guide, we’ve discussed the definition of market research, different research methods, and how to conduct it effectively. We’ve also explored various types of market research and shared practical insights and templates for getting started. 

Now, it’s time to start the research process. Trust in data, listen to the market and make informed decisions that guide your company toward lasting success.

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What Is Market Research?

• How It Works
• Primary vs. Secondary
• How to Conduct Research

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Market research examines consumer behavior and trends in the economy to help a business develop and fine-tune its business idea and strategy. It helps a business understand its target market by gathering and analyzing data.

Market research is the process of evaluating the viability of a new service or product through research conducted directly with potential customers. It allows a company to define its target market and get opinions and other feedback from consumers about their interest in a product or service.

Research may be conducted in-house or by a third party that specializes in market research. It can be done through surveys and focus groups, among other ways. Test subjects are usually compensated with product samples or a small stipend for their time.

Key Takeaways

• Companies conduct market research before introducing new products to determine their appeal to potential customers.
• Tools include focus groups, telephone interviews, and questionnaires.
• The results of market research inform the final design of the product and determine how it will be positioned in the marketplace.
• Market research usually combines primary information, gathered directly from consumers, and secondary information, which is data available from external sources.

Market Research

How market research works.

Market research is used to determine the viability of a new product or service. The results may be used to revise the product design and fine-tune the strategy for introducing it to the public. This can include information gathered for the purpose of determining market segmentation . It also informs product differentiation , which is used to tailor advertising.

A business engages in various tasks to complete the market research process. It gathers information based on the market sector being targeted by the product. This information is then analyzed and relevant data points are interpreted to draw conclusions about how the product may be optimally designed and marketed to the market segment for which it is intended.

It is a critical component in the research and development (R&D) phase of a new product or service introduction. Market research can be conducted in many different ways, including surveys, product testing, interviews, and focus groups.

Market research is a critical tool that companies use to understand what consumers want, develop products that those consumers will use, and maintain a competitive advantage over other companies in their industry.

Primary Market Research vs. Secondary Market Research

Market research usually consists of a combination of:

• Primary research, gathered by the company or by an outside company that it hires
• Secondary research, which draws on external sources of data

Primary Market Research

Primary research generally falls into two categories: exploratory and specific research.

• Exploratory research is less structured and functions via open-ended questions. The questions may be posed in a focus group setting, telephone interviews, or questionnaires. It results in questions or issues that the company needs to address about a product that it has under development.
• Specific research delves more deeply into the problems or issues identified in exploratory research.

Secondary Market Research

All market research is informed by the findings of other researchers about the needs and wants of consumers. Today, much of this research can be found online.

Secondary research can include population information from government census data , trade association research reports , polling results, and research from other businesses operating in the same market sector.

History of Market Research

Formal market research began in Germany during the 1920s. In the United States, it soon took off with the advent of the Golden Age of Radio.

Companies that created advertisements for this new entertainment medium began to look at the demographics of the audiences who listened to each of the radio plays, music programs, and comedy skits that were presented.

They had once tried to reach the widest possible audience by placing their messages on billboards or in the most popular magazines. With radio programming, they had the chance to target rural or urban consumers, teenagers or families, and judge the results by the sales numbers that followed.

Types of Market Research

Face-to-face interviews.

From their earliest days, market research companies would interview people on the street about the newspapers and magazines that they read regularly and ask whether they recalled any of the ads or brands that were published in them. Data collected from these interviews were compared to the circulation of the publication to determine the effectiveness of those ads.

Market research and surveys were adapted from these early techniques.

To get a strong understanding of your market, it’s essential to understand demand, market size, economic indicators, location, market saturation, and pricing.

Focus Groups

A focus group is a small number of representative consumers chosen to try a product or watch an advertisement.

Afterward, the group is asked for feedback on their perceptions of the product, the company’s brand, or competing products. The company then takes that information and makes decisions about what to do with the product or service, whether that's releasing it, making changes, or abandoning it altogether.

Phone Research

The man-on-the-street interview technique soon gave way to the telephone interview. A telephone interviewer could collect information in a more efficient and cost-effective fashion.

Telephone research was a preferred tactic of market researchers for many years. It has become much more difficult in recent years as landline phone service dwindles and is replaced by less accessible mobile phones.

Survey Research

As an alternative to focus groups, surveys represent a cost-effective way to determine consumer attitudes without having to interview anyone in person. Consumers are sent surveys in the mail, usually with a coupon or voucher to incentivize participation. These surveys help determine how consumers feel about the product, brand, and price point.

Online Market Research

With people spending more time online, market research activities have shifted online as well. Data collection still uses a survey-style form. But instead of companies actively seeking participants by finding them on the street or cold calling them on the phone, people can choose to sign up, take surveys, and offer opinions when they have time.

This makes the process far less intrusive and less rushed, since people can participate on their own time and of their own volition.

How to Conduct Market Research

The first step to effective market research is to determine the goals of the study. Each study should seek to answer a clear, well-defined problem. For example, a company might seek to identify consumer preferences, brand recognition, or the comparative effectiveness of different types of ad campaigns.

After that, the next step is to determine who will be included in the research. Market research is an expensive process, and a company cannot waste resources collecting unnecessary data. The firm should decide in advance which types of consumers will be included in the research, and how the data will be collected. They should also account for the probability of statistical errors or sampling bias .

The next step is to collect the data and analyze the results. If the two previous steps have been completed accurately, this should be straightforward. The researchers will collect the results of their study, keeping track of the ages, gender, and other relevant data of each respondent. This is then analyzed in a marketing report that explains the results of their research.

The last step is for company executives to use their market research to make business decisions. Depending on the results of their research, they may choose to target a different group of consumers, or they may change their price point or some product features.

The results of these changes may eventually be measured in further market research, and the process will begin all over again.

Benefits of Market Research

Market research is essential for developing brand loyalty and customer satisfaction. Since it is unlikely for a product to appeal equally to every consumer, a strong market research program can help identify the key demographics and market segments that are most likely to use a given product.

Market research is also important for developing a company’s advertising efforts. For example, if a company’s market research determines that its consumers are more likely to use Facebook than X (formerly Twitter), it can then target its advertisements to one platform instead of another. Or, if they determine that their target market is value-sensitive rather than price-sensitive, they can work on improving the product rather than reducing their prices.

Market research only works when subjects are honest and open to participating.

Example of Market Research

Many companies use market research to test new products or get information from consumers about what kinds of products or services they need and don’t currently have.

For example, a company that’s considering starting a business might conduct market research to test the viability of its product or service. If the market research confirms consumer interest, the business can proceed confidently with its business plan . If not, the company can use the results of the market research to make adjustments to the product to bring it in line with customer desires.

What Are the Main Types of Market Research?

The main types of market research are primary research and secondary research. Primary research includes focus groups, polls, and surveys. Secondary research includes academic articles, infographics, and white papers.

Qualitative research gives insights into how customers feel and think. Quantitative research uses data and statistics such as website views, social media engagement, and subscriber numbers.

What Is Online Market Research?

Online market research uses the same strategies and techniques as traditional primary and secondary market research, but it is conducted on the Internet. Potential customers may be asked to participate in a survey or give feedback on a product. The responses may help the researchers create a profile of the likely customer for a new product.

What Are Paid Market Research Surveys?

Paid market research involves rewarding individuals who agree to participate in a study. They may be offered a small payment for their time or a discount coupon in return for filling out a questionnaire or participating in a focus group.

What Is a Market Study?

A market study is an analysis of consumer demand for a product or service. It looks at all of the factors that influence demand for a product or service. These include the product’s price, location, competition, and substitutes as well as general economic factors that could influence the new product’s adoption, for better or worse.

Market research is a key component of a company’s research and development (R&D) stage. It helps companies understand in advance the viability of a new product that they have in development and to see how it might perform in the real world.

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How to Determine Market Potential of a Product (The 2022 Guide)

There are a lot of decisions that go into launching a new product or service. You have to come up with the concept , define your target market, decide where you’d want to sell that product, and test your positioning, marketing, branding, pricing , packaging, and more.

But if you’re launching a product in a brand new market, or launching a new type of product in a market you already sell in, you’ll need to assess its market potential before launch. Forecasting the success of your product by analyzing market potential helps you decide whether or not the product is worth the investment, and if so, how to approach the marketing of your new product.

What is market potential?

Determining the market potential for a productor service tells you what the market is really worth by helping you calculate the total demand for a product in a certain business environment. It tells you the total number of people (or businesses) that you could ever possibly sell to, also known as your sample size , which can help you calculate your revenue potential.

It doesn’t help you predict the future, but it does help you predict whether or not your product has a shot at success. Market potential answers the question, “How much could we sell?” It’s commonly used to estimate whether or not expansion into new markets is feasible (for example, if you’re considering expanding sales into a brand new U.S. territory you’ve never sold to before).

Potential markets take one of a few forms:

●    New products you market to your current customers

●    New products you market to new customers

●    Current products you market to new customers

You probably won’t (and shouldn’t) expand into multiple new markets at once, but understanding your options can help you decide which new markets make the most sense for your business goals.

Use cases for market potential analyses

Here are a few examples of situations in which a company would want to perform a market potential analysis before moving forward on a new initiative:

• A sustainable athleisure brand that creates clothing out of recycled products is interested in expanding its clothing options to include sleepwear and day-to-day basis. They’ll need to determine their market potential for these new clothing verticals and see if it’s something existing and new customers would want to buy.
• A skincare brand wants to branch out into makeup and beauty products. In an industry as heavily saturated as the beauty industry, a market potential analysis can be a valuable tool to determine whether or not that will be a profitable decision.
• A rideshare company that launched in Chicago is testing out new geographic markets. They can determine the market potential of new territories to determine which other cities make sense for the next phase of their expansion.
• A manufacturing company that sells products through a network of authorized distributors is exploring the possibility of launching a direct-to-consumer channel. They’ll need to determine the market potential of their product and the implications of a distribution channel change before moving forward.

Determining market potential

So how do you determine market potential? There are a few factors to consider:

• Market Size : This is the first and most important factor. Market size is the total market sales potential of every company in a market combined. If you’re launching a new skincare brand, the market size would include the combined sales of every other skincare brand, both branded and non-branded, in your geographic territory. This is also known as your Total Addressable Market (TAM) . Your TAM is generally a huge number (depending on what you’re selling) but not everyone in the TAM will fit your customer profile. Depending on the size of your industry, you can consult companies like Nielsen to get accurate market size data.
• Market Growth Rate : Is the market you’re entering (or already selling in) growing or declining? When you check the last 5-10 years of sales data for your industry, what patterns do you see? By using this data, you can forecast     whether or not the market size will change and use that to shape your predictions.
• Profitability : What’s your likelihood of profitability? How profitable, generally, is the market you’re entering? Lower profitability markets require higher sales volumes, while higher profitability markets can get away with lower sales volumes.
• Competitive Analysis : Who are you competing against in the market? Which companies are selling similar products, or might in the future? How much market share do they have? What advantages and disadvantages do you hold over them? If you’re entering a market where one or two companies monopolize most of the market share, you’ll be at a much greater risk of vulnerability. Knowing your existing (or potential) competition helps you plan better for the future.
• Product and Consumer Type : What type of product or service will you be selling? Is it a one-time purchase (like a high-end piece of furniture) or a repeat purchase (like toothpaste)? Is it a product or service consumers are     already familiar with, or will you need to invest in consumer education to boost product adoption?
• Distribution Channels : How will you distribute your product? Will you sell directly to consumers or use distribution channels? Will you white label your products and distribute them through a network of resellers? Distribution channels can affect revenue and expenses, which will affect your revenue forecasts.    

Analyzing each of these factors can help you accurately assess the potential of a new market. You may be able to look at your own historical sales data for answers, or you may have to consult outside organizations like consumer research publications, consultancies, or other third parties. It’s important to fully consider every factor for a well-rounded view of your market potential; this will give you the best shot at success by showing you areas of risk and opportunity.

What is the market potential analysis formula?

NC State University distills market potential down into the following formula :

Estimating Market Potential MP = N × MS × P × Q

The formulaic elements are:

●    MP = market potential

●    N = total number of potential consumers

●    MS = market share (percent of consumers buying from you)

●    P = average selling price

●    Q = average annual consumption

To calculate the market share (the percent of consumers buying from you), multiply the percentage of consumers who are potential customers by the percentage of the market the client expects to capture from competitors.

Honing in on your potential markets

Market potential tells you the total number of people/businesses that could buy your product or service. But remember: just because someone could buy your product doesn’t mean you should invest valuable time and resources in marketing to them.

You’ll need to spend time on additional market research to narrow down your target market and create a marketing plan that’s a bit more sustainable than marketing to every single person who could ever buy what you’re selling. This is where customer research comes into play—focus groups, customer interviews, and other strategies that will give you a better idea of what demographic or geographic segments are the best fit for what you’re selling.

Conducting customer research helps you evaluate where you have the most opportunity in your market. You can use that research to define a market segment of people who are most likely to buy from you. Generally, you would use demographic data to describe this segment, including:

●    Marital Status

●    Household Income

●    Race/Ethnicity

●    Education

●    Location

You can use demographic data alongside behavioral data to paint a rich picture of your ideal customer. Maybe you already know that most of your existing customers are young families with a household income above $150,000 who live in urban areas. They’re college-educated and like to do a  lot of research before making a large purchase. Knowing this, you can carve out a smaller section of your total market size and allocate your marketing dollars more efficiently when entering new markets.

How accurate are market potential calculations?

It’s important to remember that any marketing potential analysis is only as accurate as the assumptions you make, the data you use and the market analysis tools you're using. When you calculate market potential, it’s generally recommended that you’ll be better off estimating on the lower side of potential revenue and setting your prices to cover your costs.

If your estimates are lower than the actual revenue, you’ll drive additional profit. If, however, your estimates are too high, you may find yourself struggling to cover costs.

Unlock your full market potential

Determining market potential can help you determine who to market to, when the best time to scale is, and where you have opportunities for additional growth. Finding and aligning on the right data for these analyses can be more difficult than it seems, especially if you don’t have a clear framework.

Starlight Analytics has a team of seasoned product experts that power winning products across all major industries. We’ll equip you with high-quality, easily digestible insights and actionable takeaways that are practical and considerate of your business strategy. We can even help you uncover product whitespace and new market opportunities by identifying unmet customer needs and emerging conversations .

Together, we’ll review the output and work to prioritize which ideas have the potential to influence your product roadmap. Want to learn more? Click here to share more about your goals and get started.

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Table of Contents

Everything you want to know about market research.

Nearly 80% of businesses conduct market research to gather targeted insights into their performance, customers, industry, and competition.

While market research offers a variety of benefits, it can be challenging to identify what research to conduct, and when to ensure you get accurate and actionable data for your business decisions.

To cut through information overload and discover how market research can help you, we are breaking down the basics of market research, including what it is, what you can learn, potential benefits, and how to get started.

What is market research?

Market research is the process of collecting, analyzing, and interpreting data about your target market, competitors, and industry. Market research spans a wide range of topics, uncovering insights on various elements that can impact a business. 

Some common subjects of market research include:

• Customer needs, preferences, and behaviors
• Market trends, competitors, and growth opportunities
• Brand awareness, perception, and evaluation amongst competitors
• Product performance, strengths and weaknesses, and customer evaluations

Why do companies conduct market research?

There is a wealth of insights   and benefits  provided by market research, but at its core, the purpose and value of market research is that it helps you make informed decisions by:

Understanding the Market

Market research provides in-depth insights, allowing companies to better understand the market, identify customers’ needs and preferences, discover how their brand is perceived in the market, and measure the impact of investments and strategies.

Identifying Opportunities

Market research spots untapped opportunities for companies to focus on, including how to improve their brand status, identify new customer bases and markets to sell to, and provide insights to help senior leadership prioritize investment opportunities.

Uncovering Risks

Market research also reveals potential risks that, if ignored, can cause considerable damage. This includes insight into competitors, the impact of major challenges or economic influences (i.e., COVID-19, heightened regulatory concerns), and negative perceptions of the company and its brands.

What types of companies use market research?

All types of businesses use market research, Including B2B ( 77% of companies ), B2C (82%), and B2B2C (83%). 

While they conduct research at similar rates, the types of questions they ask are driven by the unique challenges each type of business faces. For example, over half of B2B companies conducted a market share analysis last year, while B2C and B2B2C companies’ top project was evaluating customer satisfaction.

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What can you learn from market research?

Anything. One of the biggest values of market research is how you can customize your research to gather the insights you need most. Below are some common examples of insights you can learn through market research.

Understand the Market

• Identify and prioritize markets for exploration and entry.
• Identify and build in-depth comparative profiles for your biggest competitors in the market.
• Understand market dynamics and identify potential factors, innovations, and trends that might impact your company.

Optimize Products and Services

• Generate new product ideas or optimize existing products.
• Develop an optimized pricing strategy.
• Evaluate how customers perceive and use your products and services.
• Identify any sales and service gaps or unmet customer needs.

Strengthen Brand Strategy

• Measure and track the strength of your brand and competing brands.
• Measure and improve brand health.
• Evaluate marketing and sales approaches to align with customer needs and preferences.

Understand Customers

• Understand the needs and preferences of your target customers.
• Identify crucial components of the customer experience. including unmet needs, pain points and levels of satisfaction.
• Differentiate customers into targetable segments based on behavioral, attitudinal, demographic, and psychographic data.

What are the most common market research projects?

The most popular market research projects can vary slightly over time, often reflecting market, economic, and societal shifts that impact company performance. Last year, with a focus on expanding to new markets and obtaining new customers, leading projects were analyzing customer satisfaction and needs , evaluating the market and identifying current and upcoming market trends , and measuring the strength of their brand equity .

This year, with inflation affecting customers’ buying power and increased production and resource costs, companies have expressed increased interest in price sensitivity research , making it the fifth-most common market research project. Increased uncertainty has also prompted companies to evaluate sales and renewal performance with win loss analysis projects increasing by 19%. 

Most Common Research Projects

How do you know you need market research?

With endless possibilities for insights, it can be hard to figure out where to start. To identify the type of market research you need, examine your top business priorities and determine if they could benefit from new data and insights. 

Ask yourself these two questions.

• Do you have the information you need to accomplish your goals?
• Is that data comprehensive and recent?

If the answer to either is no, your strategies will benefit from updated research insights.

Need help convincing your executive team to invest in market research?

You can find more stats on the use and impact of market research in our recent study.

• The State of Market Research

When should you conduct market research?

Companies usually conduct market research for one of three reasons: In response to a triggering event, to evaluate past performance, or to measure changes over time and quickly respond to declined performance.

Market Research Triggers

There are a variety of triggering events that prompt businesses to conduct research. Some common situations include:

• Evaluating the impact of external influences (economic factors, political shifts, etc.,)
• Understanding and adjusting to shifting customer needs
• Entering new markets
• New or increased competition
• Developing new products or features
• Merging or acquiring a new company

Evaluating Past Performance

In addition to conducting research to inform upcoming strategies or overcome pressing challenges, companies also conduct market research to evaluate the success of recent strategies or determine the reason for recent declines in performance. Market research allows companies to measure performance and identify areas of improvement. This can include anything from evaluating the performance of recent product launches, assessing the impact of recent sales and marketing strategies, or measuring the impact of recent pricing or service changes.

Recurring Assessments

The final instance of market research is recurring research. Companies conduct recurring research to ensure data is relevant, to evaluate performance over time, and to quickly identify and respond to changes in performance. For example, some companies periodically measure their brand health including brand awareness, perception, and evaluation against their competitors. By consistently assessing their brand health, these companies have updated insights into their presence in the industry, how customers evaluate them, and potential threats from competitors.

How often should you conduct market research?

How much research you should conduct depends on your unique business needs and strategies. Often, the amount you conduct is determined by the market research triggers we mention above. If you are launching a new product, breaking into a new market or customer base, or have noticed a decline in performance, you should conduct market research to address these needs as they arise.

Most businesses conduct multiple market research projects a year depending on their needs and resources. Over 80% of companies conduct market research frequently, and 79% conduct at least five market research projects a year.

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Value of market research

What roi can you expect from market research.

In addition to successful key initiatives, companies that conduct market research say it provides an ROI of over four times the cost.

What challenges does market research address?

The insights market research provides are directly related to businesses’ biggest challenges. In our State of Market Research report , we asked respondents what their company’s biggest challenges were. In addition, we also asked respondents how their companies have benefited from market research findings. 

We found that the benefits they attributed to market research directly addressed their biggest reported challenges. Even those who did not report having a specific challenge reported market research insights helped them accomplish their goals.

What are the benefits of effective market research?

There are a variety of benefits of market research depending on the specific research you conduct.

Market research can benefit your company by helping you:

Companies that leverage market research insights into their strategies are also able to accomplish their goals at a higher rate than those without market research insights.

Companies that conduct market research are:

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Market research KPIs

Some common KPIs based on the focus of the research can include:

Brand-focused

• Brand recall and recognition
• Brand perception
• Brand preference
• Net promoter score (NPS)

Customer-focused

• Customer retention and churn
• Customer satisfaction (CSAT)
• Cost per acquisition

Product-focused

• Product appeal
• Willingness to pay
• Future purchase consideration
• Post-purchase satisfaction

Market-focused

• Share of market
• Competitive benchmarks
• Total addressable market
• Market demand

How do you evaluate the success of market research?

Market research is successful if the resulting data is accurate, representative, and informative. Accurate data means the data has been cleaned and is a valid response to the study questions. Representative means that the data reflects the target market and is comprehensive. Finally, informative means the data provides insight and is actionable.

See how market research can help you with these key market research stats.

• Market Research Stats You Need to Know

How to perform market research

What are the common market research methods .

There are four main types of market research.

Quantitative Data Analysis

Data analytics involves collecting and analyzing large sets of existing data to uncover patterns and predict future outcomes. These data sets can include information like customer behavior data or historical sales data that allows companies to analyze their current performance and model potential scenarios and outcomes. 

By leveraging existing data, data analytics provides companies with an objective view of the situation, allowing them to identify gaps and discern trends.

Quantitative Survey Research

Surveys pose a set of questions to a targeted group of people. The survey measures the opinions, preferences, perceptions, and experiences of a desired audience and can collect self-reported demographic and geographic data. 

With surveys, companies get an aggregate but statistically valid picture that they can leverage to make decisions. Surveys also offer the ability to segment and further analyze the answers to determine key drivers of behaviors.

Qualitative Primary Research

Qualitative research focuses on targeted insights around concepts, opinions, and preferences. Unlike quantitative methods, these market research methodologies leverage a smaller set of data and respondents but allow for more in-depth answers.

There are two common types of qualitative primary research: in-depth Interviews and focus groups.

• In-depth Interviews In-depth interviews involve one-on-one conversations between interviewers and those from the target audience. The interview follows a pre-determined set of questions, or guide, to reveal sentiment, decision-making processes, and unmet needs.
• Focus Groups Focus groups are facilitator-led group discussions reveal perceptions of or reception to a concept or idea. While the facilitator guides the meeting, the direction of the conversation is determined by the participants creating organic responses that stem from participant perception and reactions.

Secondary Research

Secondary research, also known as desk research, is leveraging data that already exists to answer questions. It can be used to understand what others in the market are doing, identify potential markets for growth or expansion, or allow companies to compare their organization to others on key performance indicators.

What is the market research process?

There are five stages to the market research process.

• Determine your Area of Focus To determine the focus of your market research, look at your goals objectively and determine if you have accurate and effective data to accomplish these goals.  Once you have identified your goal, the next thing is to determine what you need to learn to support it. This could be anything from external information like market trends and competitors or internal information like customer satisfaction with your brand and offerings.

• Gather Your Data With your focus and methodology determined, the next step is to start collecting data. Each methodology has its own methods of data collection. Methods like surveys and interviews require researchers to gather feedback data from a select sample of their intended audience. Data analysis and secondary research entail gathering existing internal or external data related to the primary research focus.
• Analyze the Results Once the data is collected, the next step is to clean and analyze the results. It is essential that data is verified and accessed to ensure the data is valid and is sufficient to provide accurate results. Once the data has been cleaned it should be reviewed for general findings, evaluated against your initial questions, and benchmarked against past performance or competitors.
• Leverage Findings to Inform Your Business Strategies After conducting your initial research, it’s time to reassess your strategies. Look at the strengths, weaknesses, opportunities, and threats that your research has uncovered to see how it might impact your business and existing strategies. Is there a way to enhance your current strategies with the new data? Do you need to alter your strategies and resources to address an uncovered threat? 

Leverage your findings to inform your strategy and determine your next steps, whether they indicate you should stay the course, pivot to tackle a more pressing challenge, or even conduct new research to further understand your recent findings.

Why use both quantitative and qualitative research?

Leveraging both quantitative and qualitative research can provide a more holistic view of a situation. For example, quantitative data analysis offers relevant findings but can sometimes lack context. If it is followed up by qualitative in-depth interviews, companies can gather feedback to understand the factors that lead to the data analysis findings and identify potential solutions or untapped opportunities.

Interviews can help businesses identify customers’ thoughts and opinions and then that feedback can inform a survey that is sent to a wider audience for measurable insights. Companies can also use secondary desktop research to identify market trends and industry benchmarks and combine it with data analysis or surveys to evaluate the company’s performance in the market.

What is a sample in market research?

A sample in research refers to a small but representative group of people whose answers are extrapolated to a larger population.

For example, if a company wants to identify their brand awareness, they will survey a sample of people that have similar characteristics to their target audience. The survey’s findings will then provide a general understanding of how well known the brand is and directions on how to improve their brand’s presence in the market.

Start conducting your own research with this step-by-step guide.

• The Ultimate Guide to Market Research

How companies conduct market research

How can you get market research.

There are three main ways companies can get market research insights.

• Internal non-dedicated research Some companies conduct research with no real dedicated resource, requiring members in the marketing, product, strategy, and business intelligence departments to conduct research themselves. While initially low-cost, this option consumes internal resources and time, can produce incomplete, inaccurate, and biased results, and is often not shared company wide.
• Dedicated internal research team Some companies are big enough or require extensive market research and have therefore invested in building an internal research department. This option produces more accurate and strategic results than the first option. However, it requires a long-term investment and the amount of research and insights you can collect will be limited depending on the amount and expertise of the analysts employed.
• External market research company Many companies partner with an external research company to gain access to research experts, technology, and advice for actionable insights. The price for this option depends on the type and amount of research you do, but it can be less of a burden than maintaining an internal department while still providing the value of research expertise.

What are the types of market research firms?

A market research company is a firm that specializes in conducting research. There are a few different types of market research firms based on the services they provide.

• Custom research providers Custom research companies (like Hanover) design and conduct research centered around client’s unique needs. They often specialize in all four research methodologies to develop research that answers clients’ focus questions and provide findings that connect the data back to the intent of the research.
• Syndicated research providers Syndicated research companies do not conduct client-specific research. Instead, these companies conduct widespread research to offer data such as industry statistics, current best practices, or recent trends. Businesses can then buy this research to gather perspectives on their performance and identify areas where custom research can help provide more insight.
• Self-service platforms Self-service companies provide research technology for companies to conduct their own research. It allows companies to design and administer their own research and analyze and assess the results.

Should you use a market research firm?

Market research companies provide valuable benefits, making them an effective partner for your research needs. In addition to the research they provide, they have added benefits like:

• Removing the influence of preconceived opinions and personal or company bias
• Access to sophisticated analysis software and research methods
• Offering expert insights to help design research that results in accurate and relevant findings
• Offloading time-intensive research and analysis enabling companies to focus internal resources on strategic work
• Access to expert researchers without having to hire a full-time employees

How much does market research cost?

The cost of market research varies based on how you conduct your research. Conducting research in-house vs hiring a research company might be cheaper (but less effective). The type of methodology you use can affect the cost, for example, in-depth interviews can become quite expensive depending on the incentives you offer to participate. Price can also vary depending on the level of service you need, for example some companies will work with you to identify your focus and mythology, conduct the research, and present findings and recommendations while others will only conduct research and deliver the results.

Don’t make the mistake of focusing on costs by itself. Opting for cheaper or quick research can provide you with skewed data that can do more harm than good.

Good research is worth the investment. Over 85% of companies say market research ROI is over four times the investment. The insights and impact market research provides has also led 69% of businesses to increase their investment in market research this year.

Find out how Baltimore Aircoil successfully entered an international market with targeted insights

• Baltimore Aircoil Company Develops HVAC Purchasing Strategy for New International Market

What are some tips for making market research effective?

Market research is instrumental in building effective data-driven strategies. But only if done right. As you begin to plan out your market research and business strategies, keep the following tips in mind.

• Refresh your data to ensure it is accurate and relevant
• Tailor research to your unique needs and challenges
• Use the correct methodology to accurately answer your questions
• Incorporate research findings into your strategies
• Share insights across the company to ensure everyone is operating off the same data
• Leverage outside expertise when you need it

By implementing these tips, you can enhance the quality and effectiveness of your market research efforts, enabling data-driven decision-making and strategic planning that aligns with your business objectives.

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Written by Mary Kate Miller | June 1, 2021

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Market research is a cornerstone of all successful, strategic businesses. It can also be daunting for entrepreneurs looking to launch a startup or start a side hustle . What is market research, anyway? And how do you…do it?

We’ll walk you through absolutely everything you need to know about the market research process so that by the end of this guide, you’ll be an expert in market research too. And what’s more important: you’ll have actionable steps you can take to start collecting your own market research.

What Is Market Research?

Market research is the organized process of gathering information about your target customers and market. Market research can help you better understand customer behavior and competitor strengths and weaknesses, as well as provide insight for the best strategies in launching new businesses and products. There are different ways to approach market research, including primary and secondary research and qualitative and quantitative research. The strongest approaches will include a combination of all four.

“Virtually every business can benefit from conducting some market research,” says Niles Koenigsberg of Real FiG Advertising + Marketing . “Market research can help you piece together your [business’s] strengths and weaknesses, along with your prospective opportunities, so that you can understand where your unique differentiators may lie.” Well-honed market research will help your brand stand out from the competition and help you see what you need to do to lead the market. It can also do so much more.

The Purposes of Market Research

Why do market research? It can help you…

• Pinpoint your target market, create buyer personas, and develop a more holistic understanding of your customer base and market.
• Understand current market conditions to evaluate risks and anticipate how your product or service will perform.
• Validate a concept prior to launch.
• Identify gaps in the market that your competitors have created or overlooked.
• Solve problems that have been left unresolved by the existing product/brand offerings.
• Identify opportunities and solutions for new products or services.
• Develop killer marketing strategies .

What Are the Benefits of Market Research?

Strong market research can help your business in many ways. It can…

• Strengthen your market position.
• Help you identify your strengths and weaknesses.
• Help you identify your competitors’ strengths and weaknesses.
• Minimize risk.
• Center your customers’ experience from the get-go.
• Help you create a dynamic strategy based on market conditions and customer needs/demands.

What Are the Basic Methods of Market Research?

The basic methods of market research include surveys, personal interviews, customer observation, and the review of secondary research. In addition to these basic methods, a forward-thinking market research approach incorporates data from the digital landscape like social media analysis, SEO research, gathering feedback via forums, and more. Throughout this guide, we will cover each of the methods commonly used in market research to give you a comprehensive overview.

Primary vs. Secondary Market Research

Primary and secondary are the two main types of market research you can do. The latter relies on research conducted by others. Primary research, on the other hand, refers to the fact-finding efforts you conduct on your own.

This approach is limited, however. It’s likely that the research objectives of these secondary data points differ from your own, and it can be difficult to confirm the veracity of their findings.

Primary Market Research

Primary research is more labor intensive, but it generally yields data that is exponentially more actionable. It can be conducted through interviews, surveys, online research, and your own data collection. Every new business should engage in primary market research prior to launch. It will help you validate that your idea has traction, and it will give you the information you need to help minimize financial risk.

You can hire an agency to conduct this research on your behalf. This brings the benefit of expertise, as you’ll likely work with a market research analyst. The downside is that hiring an agency can be expensive—too expensive for many burgeoning entrepreneurs. That brings us to the second approach. You can also do the market research yourself, which substantially reduces the financial burden of starting a new business .

Secondary Market Research

Secondary research includes resources like government databases and industry-specific data and publications. It can be beneficial to start your market research with secondary sources because it’s widely available and often free-to-access. This information will help you gain a broad overview of the market conditions for your new business.

Identify Your Goals and Your Audience

Before you begin conducting interviews or sending out surveys, you need to set your market research goals. At the end of your market research process, you want to have a clear idea of who your target market is—including demographic information like age, gender, and where they live—but you also want to start with a rough idea of who your audience might be and what you’re trying to achieve with market research.

You can pinpoint your objectives by asking yourself a series of guiding questions:

• What are you hoping to discover through your research?
• Who are you hoping to serve better because of your findings?
• What do you think your market is?
• Who are your competitors?
• Are you testing the reception of a new product category or do you want to see if your product or service solves the problem left by a current gap in the market?
• Are you just…testing the waters to get a sense of how people would react to a new brand?

Once you’ve narrowed down the “what” of your market research goals, you’re ready to move onto how you can best achieve them. Think of it like algebra. Many math problems start with “solve for x.” Once you know what you’re looking for, you can get to work trying to find it. It’s a heck of a lot easier to solve a problem when you know you’re looking for “x” than if you were to say “I’m gonna throw some numbers out there and see if I find a variable.”

How to Do Market Research

This guide outlines every component of a comprehensive market research effort. Take into consideration the goals you have established for your market research, as they will influence which of these elements you’ll want to include in your market research strategy.

Secondary Data

Secondary data allows you to utilize pre-existing data to garner a sense of market conditions and opportunities. You can rely on published market studies, white papers, and public competitive information to start your market research journey.

Secondary data, while useful, is limited and cannot substitute your own primary data. It’s best used for quantitative data that can provide background to your more specific inquiries.

Find Your Customers Online

Once you’ve identified your target market, you can use online gathering spaces and forums to gain insights and give yourself a competitive advantage. Rebecca McCusker of The Creative Content Shop recommends internet recon as a vital tool for gaining a sense of customer needs and sentiment. “Read their posts and comments on forums, YouTube video comments, Facebook group [comments], and even Amazon/Goodreads book comments to get in their heads and see what people are saying.”

If you’re interested in engaging with your target demographic online, there are some general rules you should follow. First, secure the consent of any group moderators to ensure that you are acting within the group guidelines. Failure to do so could result in your eviction from the group.

Not all comments have the same research value. “Focus on the comments and posts with the most comments and highest engagement,” says McCusker. These high-engagement posts can give you a sense of what is already connecting and gaining traction within the group.

Social media can also be a great avenue for finding interview subjects. “LinkedIn is very useful if your [target customer] has a very specific job or works in a very specific industry or sector. It’s amazing the amount of people that will be willing to help,” explains Miguel González, a marketing executive at Dealers League . “My advice here is BE BRAVE, go to LinkedIn, or even to people you know and ask them, do quick interviews and ask real people that belong to that market and segment and get your buyer persona information first hand.”

Market research interviews can provide direct feedback on your brand, product, or service and give you a better understanding of consumer pain points and interests.

When organizing your market research interviews, you want to pay special attention to the sample group you’re selecting, as it will directly impact the information you receive. According to Tanya Zhang, the co-founder of Nimble Made , you want to first determine whether you want to choose a representative sample—for example, interviewing people who match each of the buyer persona/customer profiles you’ve developed—or a random sample.

“A sampling of your usual persona styles, for example, can validate details that you’ve already established about your product, while a random sampling may [help you] discover a new way people may use your product,” Zhang says.

Market Surveys

Market surveys solicit customer inclinations regarding your potential product or service through a series of open-ended questions. This direct outreach to your target audience can provide information on your customers’ preferences, attitudes, buying potential, and more.

Every expert we asked voiced unanimous support for market surveys as a powerful tool for market research. With the advent of various survey tools with accessible pricing—or free use—it’s never been easier to assemble, disseminate, and gather market surveys. While it should also be noted that surveys shouldn’t replace customer interviews , they can be used to supplement customer interviews to give you feedback from a broader audience.

Who to Include in Market Surveys

• Current customers
• Past customers
• Your existing audience (such as social media/newsletter audiences)

Example Questions to Include in Market Surveys

While the exact questions will vary for each business, here are some common, helpful questions that you may want to consider for your market survey. Demographic Questions: the questions that help you understand, demographically, who your target customers are:

• “What is your age?”
• “Where do you live?”
• “What is your gender identity?”
• “What is your household income?”
• “What is your household size?”
• “What do you do for a living?”
• “What is your highest level of education?”

Product-Based Questions: Whether you’re seeking feedback for an existing brand or an entirely new one, these questions will help you get a sense of how people feel about your business, product, or service:

• “How well does/would our product/service meet your needs?”
• “How does our product/service compare to similar products/services that you use?”
• “How long have you been a customer?” or “What is the likelihood that you would be a customer of our brand?

Personal/Informative Questions: the deeper questions that help you understand how your audience thinks and what they care about.

• “What are your biggest challenges?”
• “What’s most important to you?”
• “What do you do for fun (hobbies, interests, activities)?”
• “Where do you seek new information when researching a new product?”
• “How do you like to make purchases?”
• “What is your preferred method for interacting with a brand?”

Survey Tools

Online survey tools make it easy to distribute surveys and collect responses. The best part is that there are many free tools available. If you’re making your own online survey, you may want to consider SurveyMonkey, Typeform, Google Forms, or Zoho Survey.

Competitive Analysis

A competitive analysis is a breakdown of how your business stacks up against the competition. There are many different ways to conduct this analysis. One of the most popular methods is a SWOT analysis, which stands for “strengths, weaknesses, opportunities, and threats.” This type of analysis is helpful because it gives you a more robust understanding of why a customer might choose a competitor over your business. Seeing how you stack up against the competition can give you the direction you need to carve out your place as a market leader.

Social Media Analysis

Social media has fundamentally changed the market research landscape, making it easier than ever to engage with a wide swath of consumers. Follow your current or potential competitors on social media to see what they’re posting and how their audience is engaging with it. Social media can also give you a lower cost opportunity for testing different messaging and brand positioning.

SEO Analysis and Opportunities

SEO analysis can help you identify the digital competition for getting the word out about your brand, product, or service. You won’t want to overlook this valuable information. Search listening tools offer a novel approach to understanding the market and generating the content strategy that will drive business. Tools like Google Trends and Awario can streamline this process.

Ready to Kick Your Business Into High Gear?

Now that you’ve completed the guide to market research you know you’re ready to put on your researcher hat to give your business the best start. Still not sure how actually… launch the thing? Our free mini-course can run you through the essentials for starting your side hustle .

About Mary Kate Miller

Mary Kate Miller writes about small business, real estate, and finance. In addition to writing for Foundr, her work has been published by The Washington Post, Teen Vogue, Bustle, and more. She lives in Chicago.

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What is Market Research? Types, Tools, Examples

Appinio Research · 13.12.2022 · 33min read

Are you ready to unlock the secrets to success in today's competitive business landscape? Understanding your market is critical to thriving in an ever-changing environment. But where do you start? Market research holds the answers. It's not just about gathering data; it's about gaining invaluable insights into your customers, competitors, and industry trends. Whether you're a seasoned entrepreneur or just starting out, mastering the art of market research is essential for making informed decisions that drive growth and profitability. In this guide, we'll demystify the world of market research, breaking down complex concepts into easy-to-understand insights and practical strategies. From defining market research to implementing actionable insights, we'll cover everything you need to know to take your business to the next level.

What is Market Research?

Market research is the systematic process of gathering, analyzing, and interpreting information about a market, its consumers, and its competitors. It involves collecting both quantitative and qualitative data to gain insights into consumer behavior, market trends, and competitive landscapes. Market research serves as a foundation for strategic decision-making in business, helping organizations understand their target audience , identify opportunities, and mitigate risks.

Importance of Market Research

• Understanding  Customer  Needs : Market research helps businesses gain insights into their target customers' needs, preferences, and expectations. By understanding what drives consumer behavior,  businesses  can develop products and services that effectively meet customer demands.
• Identifying Market Trends : Market research enables businesses to stay abreast of emerging trends and shifts in consumer behavior. By monitoring market trends,  businesses  can adapt their strategies accordingly and capitalize on new opportunities.
• Assessing Competitive Landscape : Market research provides insights into competitors' strategies, strengths, and weaknesses. By understanding the competitive landscape, businesses can identify gaps in the market and differentiate themselves effectively.
• Mitigating Risks : Market research helps  businesses  assess the feasibility and viability of new products, services, or business ventures. They can minimize risks and avoid costly mistakes by conducting market research before making strategic decisions.
• Optimizing Marketing Strategies : Market research informs the development and optimization of marketing strategies, enabling businesses to target the right audience with the right message through the proper channels. By understanding consumer preferences and behaviors, they can tailor their marketing efforts for maximum impact.

Objectives of Market Research

• Understanding Consumer Behavior : Market research aims to understand  the  motivations, preferences, and behaviors  of target consumers .  By gaining insights into consumer behavior, businesses can tailor their products, services, and marketing strategies to meet  customer  needs effectively.
• Identifying Market Opportunities : Market research helps  businesses  identify untapped market segments, niche markets, and unmet needs. By identifying market opportunities, they can develop new products or services that address market gaps and drive growth.
• Assessing Market Potential : Market research enables businesses to evaluate the size, growth potential, and attractiveness of target markets. By understanding market potential, they can prioritize resource allocation and focus their efforts on markets with the most significant opportunities for success.
• Evaluating Competitor Strategies : Market research provides insights into competitors' strategies, offerings, and market positioning. By analyzing competitor data, businesses can identify areas of competitive advantage and develop strategies to differentiate themselves.
• Informing Decision-Making : Market research  serves as  a basis for strategic decision-making across all business areas.  By providing data-driven insights and actionable recommendations,  market research helps businesses make informed decisions that drive growth and profitability.

Understanding Market Research

Scope of Market Research

The scope of market research extends far beyond simply understanding consumer preferences. It encompasses various aspects of market dynamics, including:

• Consumer Behavior : Understanding  the  motivations, needs, and preferences  of target consumers .
• Market Trends : Identifying emerging trends, shifts in consumer behavior, and changes in market demand.
• Competitive Analysis : Assessing competitor strategies, market positioning, and strengths and weaknesses.
• Industry Insights : Gathering information about industry trends, regulatory changes, and technological advancements.
• Market Segmentation : Identifying distinct market segments based on demographics, psychographics, and behavior.

By comprehensively exploring these aspects, businesses can  gain a holistic understanding of  their market environment and make strategic decisions accordingly.

Types of Market Research

Market research can be broadly categorized into two main types: qualitative  research and quantitative research .

Qualitative Research

Qualitative research focuses on exploring underlying motivations, attitudes, and perceptions through non-numerical data. Common methods include:

• Focus Groups : Small group discussions led by a moderator to gather insights into consumer opinions and attitudes.
• In-depth Interviews : One-on-one interviews  conducted  to delve deeper into individual experiences and perspectives.
• Observation : Direct observation of consumer behavior in real-world or simulated environments.

Qualitative research provides rich, nuanced insights that help businesses understand the "why" behind consumer actions and preferences.

Quantitative Research

Quantitative research involves collecting and analyzing numerical data to quantify market trends, consumer behavior, and business performance. Key methods include:

• Surveys : Structured questionnaires administered to a sample of respondents to gather quantitative data.
• Experiments : Controlled studies designed to test hypotheses and measure the impact of variables on consumer behavior.
• Secondary Data Analysis :  Utilizing existing data sources, such as market reports and databases , to analyze  trends and patterns .

Quantitative research provides statistically valid insights that enable businesses to make data-driven decisions and measure the effectiveness of marketing strategies.

Market Research Components

The success of market research initiatives hinges on several key components:

• Clear Objectives : Defining research objectives that align with business goals and provide actionable insights.
• Methodological Rigor : Selecting appropriate research methods and ensuring the validity and reliability of data collection.
• Data Analysis : Applying rigorous analysis techniques to derive meaningful insights from collected data.
• Insightful Interpretation : Interpreting research findings in the context of broader market dynamics and business implications.
• Actionable Recommendations : Providing actionable recommendations that guide strategic decision-making and drive business growth.

How to Set Market Research Objectives?

Before embarking on any market research initiative, establishing clear objectives is essential to guide the entire process.  By setting  research objectives , you can ensure  that your efforts are focused, relevant, and aligned with your business goals and target audience.

1. Identify Business Goals

The first step in setting research objectives is identifying your overarching business goals. What are you trying to achieve with your market research? Are you looking to launch a new product, enter a new market, or improve customer satisfaction ?  By clearly  defining your business goals , you  can tailor your research efforts to address specific challenges and opportunities.

Suppose your goal is to increase market share in a particular demographic segment. Your research objectives may then focus on understanding the preferences and purchasing behavior of that target audience.

2. Define Research Questions

Once you've identified your business goals, the next step is to define research questions that will help you achieve those goals. Research questions should be specific, measurable, and relevant to your objectives. They should guide your data collection efforts and provide a framework for analysis.

For instance, if your business goal is to improve brand perception among millennials, your research questions may include:

• What factors influence millennials' brand preferences?
• How do millennials perceive our brand compared to competitors?
• What channels do millennials use to engage with brands?

3. Establish Market Research KPIs

In addition to defining research questions, it's essential to establish key performance indicators (KPIs) that will measure the success of your market research efforts. KPIs should be aligned with your business goals and reflect the outcomes you aim to achieve.

For example, if your goal is to increase customer satisfaction, KPIs may include metrics such as Net Promoter Score (NPS) , customer retention rate, and customer lifetime value. These KPIs provide quantifiable measures of success that can inform strategic decision-making.

4. Align Objectives with Target Audience

Finally, it is crucial to ensure that your research objectives align with  those of your target audience .  Understanding their needs, preferences, and behaviors is essential for conducting meaningful research and deriving actionable insights.

For example, if your target audience consists of young professionals, your research objectives may focus on understanding their lifestyle choices, media consumption habits, and purchasing behavior.  You  can gather relevant data that drives business growth and customer satisfaction  by aligning your goals with your target audience .

By following these steps to set clear and actionable research objectives, you can maximize the effectiveness of your market research efforts and achieve tangible results that contribute to your business success.

Market Research Tools

Market research tools are essential resources that facilitate data collection,  data analysis, and data  interpretation to gain insights into consumer behavior, market trends, and competitive landscapes.  These tools come in various forms, ranging from survey platforms to analytics software , each  designed to streamline and enhance the market research process. Here's a closer look at what market research tools are, what they do, and their benefits.

What Are Market Research Tools?

Market research tools encompass a wide range of software, platforms, and applications specifically designed to assist businesses in gathering and analyzing data related to their target market, customers, and competitors. These tools offer functionalities such as survey creation, data visualization, sentiment analysis , competitor monitoring, and trend forecasting, among others. By leveraging these tools, businesses can gain valuable insights that inform strategic decision-making and drive business growth.

What Do Market Research Tools Do?

Market research tools serve multiple purposes throughout the market research process. They enable businesses to:

• Collect Data : Market research tools facilitate the gathering of data through surveys, questionnaires, social media monitoring, web scraping, and other methods.
• Analyze Data : Once data is collected, these tools provide analytical capabilities to process and interpret the data, uncovering actionable insights and trends.
• Visualize Insights : Many market research tools offer data visualization features, allowing users to create charts, graphs, and dashboards to present insights in a clear and visually appealing manner.
• Monitor Competitors : Some tools enable businesses to track and analyze competitor activities, pricing strategies, product launches, and customer sentiment, providing valuable competitive intelligence.
• Forecast Trends : Advanced market research tools leverage data analytics and machine learning algorithms to forecast market trends, consumer behavior patterns, and emerging opportunities, helping businesses stay ahead of the curve.

Benefits of Market Research Tools

Market research tools offer several benefits to businesses of all sizes and industries, including:

• Time and Cost Savings : Market research tools save businesses valuable time and resources compared to traditional research methods by automating data collection, analysis, and reporting processes.
• Data Accuracy and Reliability : These tools ensure data accuracy and reliability by standardizing data collection methods , reducing human error, and providing robust analytical capabilities.
• Actionable Insights : Market research tools generate actionable insights that inform strategic decision-making, product development, marketing campaigns, and overall business strategy.
• Competitive Advantage : By monitoring competitors and identifying market trends, businesses gain a competitive advantage and adapt quickly to changing market conditions.
• Improved Customer Understanding : Market research tools enable businesses to gain a deeper understanding of their target audience, including their needs, preferences, behaviors, and pain points, leading to more effective customer engagement and retention strategies.

Appinio: Your All-in-One Market Research Platform

Ready to take your market research to the next level? Look no further than Appinio – the ultimate all-in-one market research platform. With Appinio, you can seamlessly conduct surveys, analyze data, and gain real-time consumer insights in minutes. Our intuitive platform empowers businesses to  make data-driven decisions with confidence , driving growth and profitability.

Say goodbye to complex research processes and hello to actionable insights with Appinio. Book a demo today and experience the power of Appinio for yourself!

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Primary Research Methods

Primary research methods are fundamental tools  used by businesses and researchers  to gather firsthand data directly from the source.  Unlike secondary research, which relies on existing data, primary research involves collecting new information tailored to specific research objectives. These methods allow for a deeper understanding of target audiences, market dynamics, and consumer preferences through direct interaction and observation.

Surveys are one of the most widely used primary research methods for gathering quantitative data from a sample of respondents. Surveys typically consist  of a series of structured close-ended questions as well as open-ended questions administered through various mediums, such as online platforms, phone interviews, or paper forms.

Interviews involve direct one-on-one or group interactions with respondents to gather in-depth qualitative insights. Depending on the level of flexibility in questioning, interviews can be structured, semi-structured, or unstructured.

Focus Groups

Focus groups involve facilitated discussions with  a  small  group of  participants to gather qualitative insights on a specific topic or issue.  Focus groups are  particularly useful  for exploring complex topics and understanding group dynamics and consensus.

Observation

Observation involves systematically watching and recording behaviors, interactions, and events in natural or controlled settings. Observation can be overt or covert and is often used to gather qualitative data on behaviors that may be difficult to capture through other methods.

How to Conduct Secondary Research?

Secondary research is a foundational step in the market research  process , providing valuable insights from existing sources.

What is Secondary Research?

Secondary research involves collecting and analyzing existing data and information from various sources. Unlike primary research, which  involves gathering original data through surveys or experiments, secondary research relies on data that others have already collected. The purpose of secondary research is to leverage existing knowledge to inform decision-making and gain insights into market trends, consumer behavior, and industry dynamics.

Sources of secondary data  include government agencies, industry associations, research organizations, companies, market research firms, academic institutions, online databases, and media sources.  By accessing these diverse sources, businesses can leverage existing knowledge to inform their strategies and decision-making processes effectively.

Techniques for Gathering Secondary Data

Several techniques can be employed to gather secondary data, including:

• Literature Review : Conducting a comprehensive review of existing literature and research studies relevant to the topic of interest.
• Data Mining : Using advanced data analytics techniques to extract valuable insights from large datasets and databases.
• Content Analysis : Analyzing textual data from  sources such as  news articles, social media posts, and online reviews to identify patterns and trends.
• Document Analysis : Examining reports, whitepapers, and other documents to extract relevant information and insights.

Evaluating the Credibility of Secondary Sources

When utilizing secondary sources, it's essential  to critically evaluate their credibility and reliability . Several factors should be considered when assessing the credibility of secondary sources, including:

• Authoritativeness : Assessing the reputation and expertise of the source or organization that produced the data.
• Accuracy :  Verifying  the accuracy of the data and  ensuring  that it is based on sound research methods and rigorous analysis.
• Currency : Checking the timeliness of the data to ensure that it reflects current market conditions and trends.
• Objectivity : Evaluating whether the source has any biases or conflicts of interest that may impact the reliability of the data.

By carefully evaluating the credibility of secondary sources, businesses can ensure that the information they rely on is accurate, relevant, and trustworthy.

By leveraging secondary research, businesses can access a wealth of information that informs strategic decision-making, drives innovation, and facilitates business growth.

Market Research Use Cases

Market research is a crucial tool for businesses to understand their target audience, competitors, and market dynamics. By employing various research methods, companies can gain valuable insights into consumer behavior, preferences, and trends. Here are some of the most common use cases of market research.

Market Segmentation

Market segmentation involves dividing a heterogeneous market into smaller, more manageable segments based on shared characteristics such as demographics, psychographics, or behavior.

By segmenting the market, businesses can tailor their marketing strategies and offerings to better meet the needs and preferences of specific customer groups . For example, a clothing retailer might segment its market based on age groups to create targeted advertising campaigns and product assortments for different demographics.

Target Group Analysis

Target group analysis focuses on identifying and understanding specific market segments most likely to be interested in a company's products or services. This analysis involves researching the characteristics, behaviors, and preferences of potential customers within these segments.

By understanding their target groups, businesses can develop more effective marketing strategies and allocate resources more efficiently. For instance, a software company might conduct target group analysis to identify industries or businesses  most in need of their product, allowing them to tailor their sales efforts accordingly.

Utility Analysis/Feature Prioritization

Utility analysis,  also known as feature prioritization, helps businesses understand which product features are most important to customers and prioritize development efforts accordingly. This analysis involves gathering customer feedback through surveys, focus groups, or interviews to determine which features they value most.

By prioritizing features that offer the highest utility to customers, businesses can enhance customer satisfaction and differentiate their products from competitors. For example, a mobile phone manufacturer might conduct a utility analysis to identify which features—such as camera quality or battery life—are most important to consumers when purchasing a new phone.

MaxDiff Analysis

MaxDiff analysis , short for Maximum Difference Scaling, is a research method used to identify the relative importance of different product features or attributes. In a MaxDiff study, participants are presented with sets of features and asked to indicate which they consider the most and least important.

By analyzing the results, businesses can determine which features impact customer preferences most  and prioritize them in product development efforts. For instance, a fast-food chain might use MaxDiff analysis to identify the most desired menu items or promotional offers among customers.

TURF Analysis

Total Unduplicated Reach & Frequency (TURF) analysis is a method used to optimize product portfolios, marketing strategies, or product variants to maximize reach and frequency among target customers. TURF analysis helps businesses identify the combination of offerings that appeal to the  largest  number of customers while minimizing overlap. For example, a media company might use TURF analysis to determine the  most effective  combination of TV shows or advertising channels to reach their target audience.

Conjoint Analysis

Conjoint analysis is a powerful technique  used  to understand customer preferences and trade-offs when evaluating product features or attributes. In a conjoint study, participants are presented with multiple product profiles that vary in features and  asked to choose their preferred option.

By analyzing these choices, businesses can determine the relative importance of different features and predict how changes in product attributes will impact customer preference and willingness to purchase. For example, a car manufacturer might use conjoint analysis to determine a new model's optimal combination of price, fuel efficiency, and design features.

Kano Analysis

Kano analysis helps businesses understand the factors that drive customer satisfaction and dissatisfaction. This method categorizes product features into three categories:  basic , performance, and delighters.

Basic features are essential and expected by customers, while performance features increase satisfaction linearly. Delighters, on the other hand, provide unexpected satisfaction and can differentiate a product from competitors. By understanding the Kano model, businesses can prioritize features that delight customers and differentiate their offerings in the market.

Driver Analysis

Driver analysis identifies the key factors influencing customer behavior and purchasing decisions. By quantifying the impact of different product features or attributes on customer satisfaction or purchase intent, businesses can prioritize areas for improvement and allocate resources efficiently. For example, a hospitality company might conduct a driver analysis to determine which amenities or services have the greatest  impact on guest satisfaction and loyalty.

Cost/Price Analysis

Price analysis involves studying customer preferences and purchasing behavior around different price points to optimize pricing strategies.  By  quantifying the relative importance of price levels and understanding price sensitivity , businesses can set prices that maximize revenue and profitability .  Price analysis methods include Van Westendorp analysis, Gabor-Granger analysis, and price elasticity modeling.

Gabor-Granger Price Analysis

Gabor-Granger price analysis is a method used to understand customer responses to different pricing strategies. In a Gabor-Granger study, participants are presented with  different price points  and asked about their likelihood of purchasing the product at each price level. By analyzing these responses, businesses can determine price sensitivity and identify the optimal price point that maximizes revenue and profitability.

Van Westendorp Pricing Analysis

Van Westendorp pricing analysis helps businesses understand customer preferences around different price points and determine the optimal pricing strategy for their products or services. This method involves asking customers a series of questions about price acceptability, including the price they would consider too expensive, too cheap, a bargain, and too expensive but still worth considering. By analyzing the responses, businesses can identify the price range that maximizes customer acceptance and willingness to purchase.

Discovering consumer insights has  never  been  easier . With Appinio , you can conduct these market research use cases in minutes, effortlessly gaining valuable insights to fuel your business decisions. From segmenting your market to prioritizing features and analyzing pricing strategies, Appinio streamlines the entire process, allowing you to focus on what truly matters – making data-driven decisions that propel your business forward.

Ready to experience the  full  potential market research? Book a demo today and experience the power of real-time consumer insights with Appinio!

How to Interpret Market Research Findings?

Once you've collected and analyzed your data, the next step is to interpret the findings to extract actionable insights. Interpreting research findings involves more than just looking at the numbers or qualitative responses—it requires understanding the broader context, identifying patterns, and drawing meaningful conclusions.

To interpret your market research findings:

• Contextualize the Data : Consider the broader context in which the data was collected, including market trends, competitive dynamics, and industry developments. Understanding the context helps you interpret the findings accurately and identify potential implications for your business.
• Identify Patterns and Trends : Look for patterns, trends, and relationships in the data that provide insights into consumer behavior, preferences, and market dynamics. Use visualizations such as charts, graphs, and  heatmaps  to identify patterns.
• Compare and Contrast : Compare your findings with previous research, industry benchmarks , or internal data to gain a deeper understanding of your market position and performance. Contrasting your findings with competitors' data can also provide valuable insights.
• Consider Limitations : Acknowledge any limitations or biases in your research methodology that may impact the interpretation of findings. Be transparent about the strengths and weaknesses of your research approach to ensure the validity of your conclusions .
• Seek Diverse Perspectives : Encourage collaboration and discussion among team members or stakeholders to gain diverse perspectives on the findings. Different viewpoints can lead to  richer  interpretations and more robust insights.
• Look for Actionable Insights : Focus on identifying actionable insights that can inform strategic decision-making and drive business growth. Translate your findings into concrete recommendations and initiatives that address key challenges or capitalize on opportunities.

How to Implement Market Research Insights?

Implementing market research insights is where the actual value of your research efforts comes to fruition. It involves translating your findings into actionable strategies and initiatives that drive business growth and competitive advantage.

• Prioritize Key Findings : Identify your research's most critical findings and insights with the  greatest  potential impact on your business objectives. Prioritize these insights to focus your implementation efforts effectively.
• Develop Action Plans : Translate your research findings into concrete action plans and initiatives that address identified opportunities or challenges. Define clear goals, objectives, timelines, and responsibilities for each action plan to ensure accountability and alignment.
• Engage Stakeholders : Involve key stakeholders, including senior leadership, department heads, and frontline employees, in the implementation process. Seek their input and buy-in to ensure alignment and support for your initiatives.
• Allocate Resources : Allocate the necessary resources, including budget, personnel, and technology, to support the implementation of your market research insights. Ensure that resources are allocated effectively to maximize the impact of your initiatives.
• Monitor Progress : Establish metrics and KPIs to track the progress and success of your implementation efforts. Regularly monitor and evaluate performance against these metrics to identify any deviations or areas for improvement.
• Iterate and Adapt : Market dynamics are constantly evolving, so it's essential to iterate and adapt your strategies based on ongoing research and feedback. Continuously reassess your initiatives and make adjustments as needed to stay competitive and responsive to changing market conditions.

By effectively implementing market research insights, you can drive tangible results and create a competitive advantage for your business in today's dynamic marketplace.

Conclusion for Market Research

Market research is the compass that guides your business journey, helping you navigate through uncertainties and make informed decisions. By understanding your customers, competitors, and market trends, you can position your business for success and stay ahead of the curve. Remember, market research isn't a one-time task—it's an ongoing process that evolves with your  business  and the market. So, continue to gather insights, analyze data, and adapt your strategies to meet the ever-changing needs of your target audience.

In today's fast-paced world, the importance of market research cannot be overstated. It's the foundation upon which successful businesses are built, providing the insights needed to drive innovation, optimize marketing efforts, and maximize profitability. By harnessing the power of market research, you can unlock new opportunities, mitigate risks, and achieve sustainable growth.

How to Conduct Market Research in Minutes?

Introducing Appinio , the real-time market research platform that revolutionizes how companies gather consumer insights. With Appinio, conducting market research is not only fast but also incredibly intuitive. Say goodbye to long waits for data and complex research processes.

Here's why Appinio is the ultimate solution for your market research needs:

• From questions to insights in minutes:  With our platform, you can go from formulating your research questions to obtaining actionable insights in mere minutes.
• No research degree required:  Our intuitive platform is designed for everyone, regardless of their research background. You don't need a PhD to navigate our user-friendly interface and access powerful consumer insights.
• Global reach, instant results:  Define your target audience from over 1200 characteristics and survey them in more than 90 countries, all within minutes. With an average field time of just 23 minutes for 1,000 respondents, you can get the data you need quickly and efficiently.

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Market Research: A How-To Guide and Template

Discover the different types of market research, how to conduct your own market research, and use a free template to help you along the way.

MARKET RESEARCH KIT

5 Research and Planning Templates + a Free Guide on How to Use Them in Your Market Research

Updated: 02/21/24

Published: 02/21/24

Today's consumers have a lot of power. As a business, you must have a deep understanding of who your buyers are and what influences their purchase decisions.

Enter: Market Research.

Whether you're new to market research or not, I created this guide to help you conduct a thorough study of your market, target audience, competition, and more. Let’s dive in.

Table of Contents

What is market research?

Primary vs. secondary research, types of market research, how to do market research, market research report template, market research examples.

Market research is the process of gathering information about your target market and customers to verify the success of a new product, help your team iterate on an existing product, or understand brand perception to ensure your team is effectively communicating your company's value effectively.

Market research can answer various questions about the state of an industry. But if you ask me, it's hardly a crystal ball that marketers can rely on for insights on their customers.

Market researchers investigate several areas of the market, and it can take weeks or even months to paint an accurate picture of the business landscape.

However, researching just one of those areas can make you more intuitive to who your buyers are and how to deliver value that no other business is offering them right now.

How? Consider these two things:

• Your competitors also have experienced individuals in the industry and a customer base. It‘s very possible that your immediate resources are, in many ways, equal to those of your competition’s immediate resources. Seeking a larger sample size for answers can provide a better edge.
• Your customers don't represent the attitudes of an entire market. They represent the attitudes of the part of the market that is already drawn to your brand.

The market research services market is growing rapidly, which signifies a strong interest in market research as we enter 2024. The market is expected to grow from roughly $75 billion in 2021 to $90.79 billion in 2025 .

Free Market Research Kit

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• Survey Template
• Focus Group Template

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Why do market research?

Market research allows you to meet your buyer where they are.

As our world becomes louder and demands more of our attention, this proves invaluable.

By understanding your buyer's problems, pain points, and desired solutions, you can aptly craft your product or service to naturally appeal to them.

Market research also provides insight into the following:

• Where your target audience and current customers conduct their product or service research
• Which of your competitors your target audience looks to for information, options, or purchases
• What's trending in your industry and in the eyes of your buyer
• Who makes up your market and what their challenges are
• What influences purchases and conversions among your target audience
• Consumer attitudes about a particular topic, pain, product, or brand
• Whether there‘s demand for the business initiatives you’re investing in
• Unaddressed or underserved customer needs that can be flipped into selling opportunity
• Attitudes about pricing for a particular product or service

Ultimately, market research allows you to get information from a larger sample size of your target audience, eliminating bias and assumptions so that you can get to the heart of consumer attitudes.

As a result, you can make better business decisions.

To give you an idea of how extensive market research can get , consider that it can either be qualitative or quantitative in nature — depending on the studies you conduct and what you're trying to learn about your industry.

Qualitative research is concerned with public opinion, and explores how the market feels about the products currently available in that market.

Quantitative research is concerned with data, and looks for relevant trends in the information that's gathered from public records.

That said, there are two main types of market research that your business can conduct to collect actionable information on your products: primary research and secondary research.

Primary Research

Primary research is the pursuit of first-hand information about your market and the customers within your market.

It's useful when segmenting your market and establishing your buyer personas.

Primary market research tends to fall into one of two buckets:

• Exploratory Primary Research: This kind of primary market research normally takes place as a first step — before any specific research has been performed — and may involve open-ended interviews or surveys with small numbers of people.
• Specific Primary Research: This type of research often follows exploratory research. In specific research, you take a smaller or more precise segment of your audience and ask questions aimed at solving a suspected problem.

Secondary Research

Secondary research is all the data and public records you have at your disposal to draw conclusions from (e.g. trend reports, market statistics, industry content, and sales data you already have on your business).

Secondary research is particularly useful for analyzing your competitors . The main buckets your secondary market research will fall into include:

• Public Sources: These sources are your first and most-accessible layer of material when conducting secondary market research. They're often free to find and review — like government statistics (e.g., from the U.S. Census Bureau ).
• Commercial Sources: These sources often come in the form of pay-to-access market reports, consisting of industry insight compiled by a research agency like Pew , Gartner , or Forrester .
• Internal Sources: This is the market data your organization already has like average revenue per sale, customer retention rates, and other historical data that can help you draw conclusions on buyer needs.
• Focus Groups
• Product/ Service Use Research
• Observation-Based Research
• Buyer Persona Research
• Market Segmentation Research
• Pricing Research
• Competitive Analysis Research
• Customer Satisfaction and Loyalty Research
• Brand Awareness Research
• Campaign Research

1. Interviews

Interviews allow for face-to-face discussions so you can allow for a natural flow of conversation. Your interviewees can answer questions about themselves to help you design your buyer personas and shape your entire marketing strategy.

2. Focus Groups

Focus groups provide you with a handful of carefully-selected people that can test out your product and provide feedback. This type of market research can give you ideas for product differentiation.

3. Product/Service Use Research

Product or service use research offers insight into how and why your audience uses your product or service. This type of market research also gives you an idea of the product or service's usability for your target audience.

4. Observation-Based Research

Observation-based research allows you to sit back and watch the ways in which your target audience members go about using your product or service, what works well in terms of UX , and which aspects of it could be improved.

5. Buyer Persona Research

Buyer persona research gives you a realistic look at who makes up your target audience, what their challenges are, why they want your product or service, and what they need from your business or brand.

6. Market Segmentation Research

Market segmentation research allows you to categorize your target audience into different groups (or segments) based on specific and defining characteristics. This way, you can determine effective ways to meet their needs.

7. Pricing Research

Pricing research helps you define your pricing strategy . It gives you an idea of what similar products or services in your market sell for and what your target audience is willing to pay.

8. Competitive Analysis

Competitive analyses give you a deep understanding of the competition in your market and industry. You can learn about what's doing well in your industry and how you can separate yourself from the competition .

9. Customer Satisfaction and Loyalty Research

Customer satisfaction and loyalty research gives you a look into how you can get current customers to return for more business and what will motivate them to do so (e.g., loyalty programs , rewards, remarkable customer service).

10. Brand Awareness Research

Brand awareness research tells you what your target audience knows about and recognizes from your brand. It tells you about the associations people make when they think about your business.

11. Campaign Research

Campaign research entails looking into your past campaigns and analyzing their success among your target audience and current customers. The goal is to use these learnings to inform future campaigns.

• Define your buyer persona.
• Identify a persona group to engage.
• Prepare research questions for your market research participants.
• List your primary competitors.
• Summarize your findings.

1. Define your buyer persona.

You have to understand who your customers are and how customers in your industry make buying decisions.

This is where your buyer personas come in handy. Buyer personas — sometimes referred to as marketing personas — are fictional, generalized representations of your ideal customers.

Use a free tool to create a buyer persona that your entire company can use to market, sell, and serve better.

Don't forget to share this post!

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Total Addressable Market (TAM): What It Is & How You Can Calculate It

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How to Conduct Market Research for a Startup

• 17 Mar 2022

With every innovative product idea comes the pressing question: “Will people want to buy it?”

As an entrepreneur with a big idea, what’s the best way to determine how potential customers will react to your product? Conducting market research can provide the data needed to decide whether your product fits your target market.

Before launching a new venture, you should understand market research. Here’s how to conduct market research for a startup and why it’s important.

Access your free e-book today.

What Is Market Research?

Market research is the process of gathering information about customers and the market as a whole to determine a product or service’s viability. Market research includes interviews, surveys, focus groups, and industry data analyses.

The goal of market research is to better understand potential customers, how well your product or service fits their needs, and how it compares to competitors’ offerings.

There are two types of research you can conduct: primary and secondary.

• Primary research requires collecting data to learn about your specific customers or target market segment. It’s useful for creating buyer personas, segmenting your market, and improving your product to cater to customers’ needs .
• Secondary research is conducted using data you didn’t collect yourself. Industry reports, public databases, and other companies’ proprietary data can be used to gain insights into your target market segment and industry.

Why Is Market Research Important for Entrepreneurs?

Before launching your venture, it’s wise to conduct market research to ensure your product or service will be well received. Feedback from people who fall into your target demographics can be invaluable as you iterate on and improve your product.

Performing market research can also help you determine a pricing strategy by gauging customers’ willingness to pay for your product. Additionally, it can improve the user experience by revealing what features matter most to potential customers.

When assessing which startups to fund, investors place heavy importance on thorough market research that indicates promising potential. Providing tangible proof that your product fulfills a market need and demonstrating you’ve taken the time to iterate on and improve it signal that your startup could be a worthwhile investment.

Related: How to Talk to Potential Investors: 5 Tips

How to Do Market Research for a Startup

1. form hypotheses.

What questions do you aim to answer through market research? Using those questions, you can make predictions called hypotheses . Defining your hypotheses upfront can help guide your approach to selecting subjects, researching questions, and testing designs.

An example question you may ask is: “How much are people in my target demographic willing to pay for the current version of my product?” Your hypothesis could be: “If my product contains all its current features, customers will be willing to pay $500 for it.”

Another example question you may ask is: “What’s the user’s biggest pain point, and is my product meeting their needs?” Your hypothesis could be: “I believe the user’s biggest pain point is needing an easy, unintimidating way to learn basic car maintenance, and I predict that my product meets that need.”

You can and should test multiple hypotheses, but try to select no more than a few per test, so the research stays focused.

Related: A Beginner’s Guide to Hypothesis Testing in Business

2. Select the Type of Research Needed to Test Hypotheses

Once you’ve formed your hypotheses, determine which type of research to conduct.

If your hypotheses focus on determining your startup’s place in the broader market, start with secondary research. This can include using existing data to determine market size, how much of that market your startup could reasonably own, who your biggest competitors are, and how your brand and product compare to theirs.

If your hypotheses require primary research, decide which data collection method best fits your needs. These can include one-on-one interviews, surveys, focus groups, and polls. Primary research allows you to gather insights into customer satisfaction and loyalty, brand awareness and perception, and real-time product usability.

3. Identify Target Demographics and Recruit Subjects

To gather meaningful insights, you need to understand your target demographic. Do you aim to cater to working parents, young athletes, or pet owners? Determine the type of person who can benefit from your product.

If you conduct primary research, you need to recruit subjects. This can be done in several ways, including:

• Word of mouth: The simplest but least reliable way to recruit participants is by word of mouth. Ask people you know to refer others to be research subjects, then screen them to confirm they fit your target demographic.
• Promoting the study on social media: Many social media platforms enable you to show an ad to people who fall into specific demographic categories or have certain interests. This allows you to get the word out to a large number of people who qualify.
• Hiring a third-party market research company: Some companies provide full market research services and recruit participants and conduct research on your behalf.

However you recruit subjects, ensure they take a screener survey beforehand, which allows you to determine whether they fit the specific demographic you want to study or have a trait that eliminates them from the research pool. It also provides demographic data—such as age and race—that enables you to select a diverse subset of your target demographic.

In addition, you can offer compensation to boost participation, such as money, meal vouchers, gift cards, or early access to your product. Make it clear that compensation is in appreciation for subjects’ time and honest feedback.

4. Conduct the Research

Once you’ve determined the type of research and target demographic necessary to test your hypotheses, conduct your research. To reduce bias, enlist someone unfamiliar with your hypotheses to perform interviews or lead focus groups.

Ask questions based on your audience and hypotheses. For instance, if you’re aiming to test existing customers’ purchase motivations, you may ask: “What challenge were you trying to solve when you first bought the product?”

If examining brand perception, your audience should consist of potential customers who don’t yet know your brand. Present them with a list of competitor logos—with yours in the mix—and ask them to rank the brands by perceived reliability.

While the questions you ask are vehicles to prove or disprove hypotheses, ensure they don’t lead subjects in one direction. To craft unbiased research questions , use neutral language and vary the order of options in multiple-choice questions. This can keep subjects from selecting the same option each time if they sense the third option is always mapped to a certain outcome. It also helps account for primacy bias (the tendency to select the first option in a list) and recency bias (the tendency to select the final option in a list).

Once you’ve collected data, ensure it’s organized efficiently and securely so you can protect subjects’ identities .

Related: 3 Examples of Bad Survey Questions and How to Fix Them

5. Gather Insights and Determine Action Items

After you’ve organized your data, analyze it to extract actionable insights. While some of the data will be qualitative rather than quantitative, you can detect patterns in responses to make it quantifiable. For instance, noting that 15 of 20 subjects mentioned feeling overwhelmed when attempting to assemble your product.

Once you’ve analyzed the data and communicated emerging trends using data visualizations , outline action items.

If the majority of users in your target demographic reported feeling overwhelmed while assembling your product, action items might include:

• Creating different versions of assembly instructions to test with other groups, varying diagrams and instructional language
• Researching instruction manual best practices

Each round of market research can offer more information about how your product is perceived and experienced by potential users.

Market Research as an Ongoing Endeavor

While it’s useful to conduct market research before launching your product, you should revisit your hypotheses and form new ones over the course of building your venture.

By conducting market research with each version of your product, you can gradually improve it and ensure it continues to fit target customers’ needs.

Are you interested in bolstering your entrepreneurship skills? Explore our four-week online course Entrepreneurship Essentials and our other entrepreneurship and innovation courses to learn to speak the language of the startup world.

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Market Potential

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What is market potential? Market potential is an estimate of the maximum possible sales or revenue for your products or services in a specific market. It represents the upper limit of potential demand and provides an idea of growth possibilities and the market space that’s yet to be tapped. In the partnerships world, understanding your market potential is crucial for shaping your strategic approach within your partner ecosystem. It helps you gauge the room for growth, profitability, and the possibility of expanding your partner network and customer base. For example, say you’re a company that manufactures Industry 4.0 equipment. Your market potential wouldn’t just be companies already investing in these solutions. It may also include companies who are aware of these new tech trends, but who have yet to adopt them. A well-networked and robust partner ecosystem could help you tap into this larger potential, expanding your reach and growing your sales. Defining your market potential is a complex process that involves assessing the total achievable revenue or sales volume your business could generate within a specific market. Use these steps to get started: Define audience: Clearly define the specific market or segment you intend to analyze. Identify your target audience and their characteristics, and then segment your target market further based on various criteria such as demographics, geographic location, psychographics, and behavioral factors. Conduct research: Estimate your total market size by researching industry reports, relevant data, or using market research tools and services. Also, analyze external factors like technological advancements, regulatory changes, and cultural shifts that can impact market potential. Analyze competitors: Determine your potential market share by analyzing your competitors, their market share, and their strategies. Assess how your products or services compare to existing offerings. Assess demand: Assess the demand for your product or service, considering factors like consumer trends, economic conditions, and emerging technologies that may influence future demand. Also evaluate the historical and projected growth rate to understand whether the market is expanding, stable, or declining. Plan market penetration: Plan how you intend to penetrate the market and acquire customers. Consider marketing and sales strategies, distribution channels, and promotional efforts. Also identify any barriers to entry, such as regulatory hurdles, high capital requirements, or strong competition. Align partnership strategies: Choose partners that align with your target market and can reach untapped areas. Work closely with your partners to utilize their knowledge of the local markets. Run financial projections: Create financial projections based on your market analysis. Estimate your revenue and sales volume under different scenarios, taking into account market conditions, potential risks, and growth rates. Test and validate: Conduct pilot tests, soft launches, or small-scale market entry strategies to validate your assumptions before committing more significant resources. Remember, your market potential is not a static figure; it can change over time. It’s also an estimation, and it may not always translate into actual sales. Regularly review and adjust your market potential analysis as you gather real-world data and feedback from your activities. This process can help you make more informed decisions about market entry, growth strategies, partnership goals, and resource allocation.

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Market Research Basics: What is Market Research?

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Doing market research is like a cross between a scavenger hunt and a jigsaw puzzle.

There's no one magic information source that has all the answers. And sometimes, the information or data you're looking for may not even exist. Don't get discouraged! There are often alternate places to look or ways to search.

What is a market research definition?

Market research is " The process of gathering, analyzing and interpreting information about a market, about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service; research into the characteristics, spending habits, location and needs of your business's target market, the industry as a whole, and the particular competitors you face " ( source ).

Essentially, it helps you answer some of the following questions:

• What is the size of my market?
• Who are my competitors?
• Which market is best suited for my product or service?
• How much will customers pay for my product or service?
• What are the emerging trends in an industry?

These questions can be roughly divided into two categories, Industry Questions, and Market Sizing & Customer Discovery.

The best market research is a combination of primary and secondary information.

Primary information: research you compile yourself or hire someone to gather for you.

Secondary information : This type of research is already compiled and organized for you. Examples of secondary information include reports and studies by government agencies, trade associations or other businesses within your industry.( source )

This module focuses on secondary research.

The next section defines the information sources you will likely use in researching your market.

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Home Market Research

Market Research: What it Is, Methods, Types & Examples

Would you like to know why, how, and when to apply market research? Do you want to discover why your consumers are not buying your products? Are you interested in launching a new product, service, or even a new marketing campaign, but you’re not sure what your consumers want?

LEARN ABOUT: Market research vs marketing research

To answer the questions above, you’ll need help from your consumers. But how will you collect that data? In this case and in many other situations in your business, market research is the way to get all the answers you need.

In this ultimate guide about market research, you’ll find the definition, advantages, types of market research, and some examples that will help you understand this type of research. Don’t forget to download the free ebook available at the end of this guide!

LEARN ABOUT: Perceived Value

Content Index

Three key objectives of market research

Why is market research important.

• Types of Market Research: Methods and Examples

Steps for conducting Market Research

Benefits of an efficient market research, 5 market research tips for businesses, why does every business need market research, free market research ebook, what is market research.

Market research is a technique that is used to collect data on any aspect that you want to know to be later able to interpret it and, in the end, make use of it for correct decision-making.

Another more specific definition could be the following:

Market research is the process by which companies seek to collect data systematically to make better decisions. Still, its true value lies in the way in which all the data obtained is used to achieve a better knowledge of the market consumer.

The process of market research can be done through deploying surveys , interacting with a group of people, also known as a sample , conducting interviews, and other similar processes.  

The primary purpose of conducting market research is to understand or examine the market associated with a particular product or service to decide how the audience will react to a product or service. The information obtained from conducting market research can be used to tailor marketing/ advertising activities or determine consumers’ feature priorities/service requirement (if any).

LEARN ABOUT: Consumer Surveys

Conducting research is one of the best ways of achieving customer satisfaction , reducing customer churn and elevating business. Here are the reasons why market research is important and should be considered in any business:

• Valuable information: It provides information and opportunities about the value of existing and new products, thus, helping businesses plan and strategize accordingly.
• Customer-centric: It helps to determine what the customers need and want. Marketing is customer-centric and understanding the customers and their needs will help businesses design products or services that best suit them. Remember that tracing your customer journey is a great way to gain valuable insights into your customers’ sentiments toward your brand.
• Forecasts: By understanding the needs of customers, businesses can also forecast their production and sales. Market research also helps in determining optimum inventory stock.
• Competitive advantage: To stay ahead of competitors market research is a vital tool to carry out comparative studies. Businesses can devise business strategies that can help them stay ahead of their competitors.

LEARN ABOUT: Data Analytics Projects

Types of Market Research: Market Research Methods and Examples

Whether an organization or business wishes to know the purchase behavior of consumers or the likelihood of consumers paying a certain cost for a product segmentation , market research helps in drawing meaningful conclusions.

LEARN ABOUT: Behavioral Targeting

Depending on the methods and tools required, the following are the types:

1. Primary Market Research (A combination of both Qualitative and Quantitative Research):

Primary market research is a process where organizations or businesses get in touch with the end consumers or employ a third party to carry out relevant studies to collect data. The data collected can be qualitative data (non-numerical data) or quantitative data (numerical or statistical data).

While conducting primary market research, one can gather two types of information: Exploratory and Specific. Exploratory research is open-ended, where a problem is explored by asking open ended questions in a detailed interview format usually with a small group of people, also known as a sample. Here the sample size is restricted to 6-10 members. Specific research, on the other hand, is more pinpointed and is used to solve the problems that are identified by exploratory research.

LEARN ABOUT: Marketing Insight

As mentioned earlier, primary market research is a combination of qualitative market research and quantitative market research. Qualitative market research study involves semi-structured or unstructured data collected through some of the commonly used qualitative research methods like:

Focus groups :

Focus group is one of the commonly used qualitative research methods. Focus group is a small group of people (6-10) who typically respond to online surveys sent to them. The best part about a focus group is the information can be collected remotely, can be done without personally interacting with the group members. However, this is a more expensive method as it is used to collect complex information.

One-to-one interview:

As the name suggests, this method involves personal interaction in the form of an interview, where the researcher asks a series of questions to collect information or data from the respondents. The questions are mostly open-ended questions and are asked to facilitate responses. This method heavily depends on the interviewer’s ability and experience to ask questions that evoke responses.

Ethnographic research :

This type of in-depth research is conducted in the natural settings of the respondents. This method requires the interviewer to adapt himself/herself to the natural environment of the respondents which could be a city or a remote village. Geographical constraints can be a hindering market research factor in conducting this kind of research. Ethnographic research can last from a few days to a few years.

Organizations use qualitative research methods to conduct structured market research by using online surveys , questionnaires , and polls to gain statistical insights to make informed decisions.

LEARN ABOUT: Qualitative Interview

This method was once conducted using pen and paper. This has now evolved to sending structured online surveys to the respondents to gain actionable insights. Researchers use modern and technology-oriented survey platforms to structure and design their survey to evoke maximum responses from respondents.

Through a well-structured mechanism, data is easily collected and reported, and necessary action can be taken with all the information made available firsthand.

Learn more: How to conduct quantitative research

2. Secondary Market Research:

Secondary research uses information that is organized by outside sources like government agencies, media, chambers of commerce etc. This information is published in newspapers, magazines, books, company websites, free government and nongovernment agencies and so on. The secondary source makes use of the following:

• Public sources: Public sources like library are an awesome way of gathering free information. Government libraries usually offer services free of cost and a researcher can document available information.
• Commercial sources: Commercial source although reliable are expensive. Local newspapers, magazines, journal, television media are great commercial sources to collect information.
• Educational Institutions: Although not a very popular source of collecting information, most universities and educational institutions are a rich source of information as many research projects are carried out there than any business sector.

Learn more: Market Research Example with Types and Methods

A market research project may usually have 3 different types of objectives.

• Administrative : Help a company or business development, through proper planning, organization, and both human and material resources control, and thus satisfy all specific needs within the market, at the right time.
• Social : Satisfy customers’ specific needs through a required product or service. The product or service should comply with a customer’s requirements and preferences when consumed.
• Economical : Determine the economical degree of success or failure a company can have while being new to the market, or otherwise introducing new products or services, thus providing certainty to all actions to be implemented.

LEARN ABOUT:  Test Market Demand

Knowing what to do in various situations that arise during the investigation will save the researcher time and reduce research problems . Today’s successful enterprises use powerful market research survey software that helps them conduct comprehensive research under a unified platform, providing actionable insights much faster with fewer problems.

LEARN ABOUT:  Market research industry

Following are the steps to conduct effective market research.

Step #1: Define the Problem

Having a well-defined subject of research will help researchers when they ask questions. These questions should be directed to solve problems and must be adapted to the project. Make sure the questions are written clearly and that the respondents understand them. Researchers can conduct a marketing test with a small group to know if the questions are going to know whether the asked questions are understandable and if they will be enough to gain insightful results.

Research objectives should be written in a precise way and should include a brief description of the information that is needed and the way in which it will obtain it. They should have an answer to this question “why are we doing the research?”

Learn more: Interview Questions

Step #2: Define the Sample

To carry out market research, researchers need a representative sample that can be collected using one of the many sampling techniques . A representative sample is a small number of people that reflect, as accurately as possible, a larger group.

• An organization cannot waste their resources in collecting information from the wrong population. It is important that the population represents characteristics that matter to the researchers and that they need to investigate, are in the chosen sample.
• Take into account that marketers will always be prone to fall into a bias in the sample because there will always be people who do not answer the survey because they are busy, or answer it incompletely, so researchers may not obtain the required data.
• Regarding the size of the sample, the larger it is, the more likely it is to be representative of the population. A larger representative sample gives the researcher greater certainty that the people included are the ones they need, and they can possibly reduce bias. Therefore, if they want to avoid inaccuracy in our surveys, they should have representative and balanced samples.
• Practically all the surveys that are considered in a serious way, are based on a scientific sampling, based on statistical and probability theories.

There are two ways to obtain a representative sample:

• Probability sampling : In probability sampling , the choice of the sample will be made at random, which guarantees that each member of the population will have the same probability of selection bias and inclusion in the sample group. Researchers should ensure that they have updated information on the population from which they will draw the sample and survey the majority to establish representativeness.
• Non-probability sampling : In a non-probability sampling , different types of people are seeking to obtain a more balanced representative sample. Knowing the demographic characteristics of our group will undoubtedly help to limit the profile of the desired sample and define the variables that interest the researchers, such as gender, age, place of residence, etc. By knowing these criteria, before obtaining the information, researchers can have the control to create a representative sample that is efficient for us.

When a sample is not representative, there can be a margin of error . If researchers want to have a representative sample of 100 employees, they should choose a similar number of men and women.

The sample size is very important, but it does not guarantee accuracy. More than size, representativeness is related to the sampling frame , that is, to the list from which people are selected, for example, part of a survey.

LEARN ABOUT: Behavioral Research If researchers want to continue expanding their knowledge on how to determine the size of the sample consult our guide on sampling here.

Step #3: Carry out data collection

First, a data collection instrument should be developed. The fact that they do not answer a survey, or answer it incompletely will cause errors in research. The correct collection of data will prevent this.

Step #4: Analyze the results

Each of the points of the market research process is linked to one another. If all the above is executed well, but there is no accurate analysis of the results, then the decisions made consequently will not be appropriate. In-depth analysis conducted without leaving loose ends will be effective in gaining solutions. Data analysis will be captured in a report, which should also be written clearly so that effective decisions can be made on that basis.

Analyzing and interpreting the results is to look for a wider meaning to the obtained data. All the previous phases have been developed to arrive at this moment. How can researchers measure the obtained results? The only quantitative data that will be obtained is age, sex, profession, and number of interviewees because the rest are emotions and experiences that have been transmitted to us by the interlocutors. For this, there is a tool called empathy map that forces us to put ourselves in the place of our clientele with the aim of being able to identify, really, the characteristics that will allow us to make a better adjustment between our products or services and their needs or interests. When the research has been carefully planned, the hypotheses have been adequately defined and the indicated collection method has been used, the interpretation is usually carried out easily and successfully. What follows after conducting market research?

Learn more: Types of Interviews

Step #5: Make the Research Report

When presenting the results, researchers should focus on: what do they want to achieve using this research report and while answering this question they should not assume that the structure of the survey is the best way to do the analysis. One of the big mistakes that many researchers make is that they present the reports in the same order of their questions and do not see the potential of storytelling.

To make good reports, the best analysts give the following advice: follow the inverted pyramid style to present the results, answering at the beginning the essential questions of the business that caused the investigation. Start with the conclusions and give them fundamentals, instead of accumulating evidence. After this researchers can provide details to the readers who have the time and interest.

Step #6: Make Decisions

An organization or a researcher should never ask “why do market research”, they should just do it! Market research helps researchers to know a wide range of information, for example,  consumer purchase intentions, or gives feedback about the growth of the target market. They can also discover valuable information that will help in estimating the prices of their product or service and find a point of balance that will benefit them and the consumers.

Take decisions! Act and implement.

Learn more: Quantitative Research

• Make well-informed decisions: The growth of an organization is dependent on the way decisions are made by the management. Using market research techniques, the management can make business decisions based on obtained results that back their knowledge and experience. Market research helps to know market trends, hence to carry it out frequently to get to know the customers thoroughly.

LEARN ABOUT: Research Process Steps

• Gain accurate information: Market research provides real and accurate information that will prepare the organization for any mishaps that may happen in the future. By properly investigating the market, a business will undoubtedly be taking a step forward, and therefore it will be taking advantage of its existing competitors.
• Determine the market size: A researcher can evaluate the size of the market that must be covered in case of selling a product or service in order to make profits.
• Choose an appropriate sales system: Select a precise sales system according to what the market is asking for, and according to this, the product/service can be positioned in the market.
• Learn about customer preferences: It helps to know how the preferences (and tastes) of the clients change so that the company can satisfy preferences, purchasing habits, and income levels. Researchers can determine the type of product that must be manufactured or sold based on the specific needs of consumers.
• Gather details about customer perception of the brand: In addition to generating information, market research helps a researcher in understanding how the customers perceive the organization or brand.
• Analyze customer communication methods: Market research serves as a guide for communication with current and potential clients.
• Productive business investment: It is a great investment for any business because thanks to it they get invaluable information, it shows researchers the way to follow to take the right path and achieve the sales that are required.

LEARN ABOUT: Total Quality Management

The following tips will help businesses with creating a better market research strategy.

Tip #1: Define the objective of your research.

Before starting your research quest, think about what you’re trying to achieve next with your business. Are you looking to increase traffic to your location? Or increase sales? Or convert customers from one-time purchasers to regulars? Figuring out your objective will help you tailor the rest of your research and your future marketing materials. Having an objective for your research will flesh out what kind of data you need to collect.

Tip #2: Learn About Your Target Customers.

The most important thing to remember is that your business serves a specific kind of customer. Defining your specific customer has many advantages like allowing you to understand what kind of language to use when crafting your marketing materials, and how to approach building relationships with your customer. When you take time to define your target customer you can also find the best products and services to sell to them.

You want to know as much as you can about your target customer. You can gather this information through observation and by researching the kind of customers who frequent your type of business. For starters, helpful things to know are their age and income. What do they do for a living? What’s their marital status and education level?

Learn more: Customer Satisfaction

Tip #3: Recognize that knowing who you serve helps you define who you do not.

Let’s take a classic example from copywriting genius Dan Kennedy. He says that if you’re opening up a fine dining steakhouse focused on decadent food, you know right off the bat that you’re not looking to attract vegetarians or dieters. Armed with this information, you can create better marketing messages that speak to your target customers.

It’s okay to decide who is not a part of your target customer base. In fact, for small businesses knowing who you don’t cater to can be essential in helping you grow. Why? Simple, if you’re small your advantage is that you can connect deeply with a specific segment of the market. You want to focus your efforts on the right customer who already is compelled to spend money on your offer.

If you’re spreading yourself thin by trying to be all things to everyone, you will only dilute your core message. Instead, keep your focus on your target customer. Define them, go deep, and you’ll be able to figure out how you can best serve them with your products and services.

Tip #4: Learn from your competition.

This works for brick-and-mortar businesses as well as internet businesses because it allows you to step into the shoes of your customer and open up to a new perspective of your business. Take a look around the internet and around your town. If you can, visit your competitor’s shops. For example, if you own a restaurant specializing in Italian cuisine, dine at the other Italian place in your neighborhood or in the next township.

As you experience the business from the customer’s perspective, look for what’s being done right and wrong.

Can you see areas that need attention or improvement? How are you running things in comparison? What’s the quality of their product and customer service ? Are the customers here pleased? Also, take a close look at their market segment. Who else is patronizing their business? Are they the same kinds of people who spend money with you? By asking these questions and doing in-person research, you can dig up a lot of information to help you define your unique selling position and create even better offers for your customers.

Tip #5: Get your target customers to open up and tell you everything.

A good customer survey is one of the most valuable market research tools because it gives you the opportunity to get inside your customer’s head. However, remember that some feedback may be harsh, so take criticism as a learning tool to point you in the right direction.

Creating a survey is simple. Ask questions about what your customer thinks you’re doing right and what can be improved. You can also prompt them to tell you what kinds of products and services they’d like to see you add, giving you fantastic insight into how to monetize your business more. Many customers will be delighted to offer feedback. You can even give customers who fill out surveys a gift like a special coupon for their next purchase.

Bonus Tip: Use an insight & research repository

An insight & research repository is a consolidated research management platform to derive insights about past and ongoing market research. With the use of such a tool, you can leverage past research to get to insights faster, build on previously done market research and draw trendlines, utilize research techniques that have worked in the past, and more.

Market research is one of the most effective ways to gain insight into your customer base , competitors , and the overall market. The goal of conducting market research is to equip your company with the information you need to make informed decisions.

It is especially important when small businesses are trying to determine whether a new business idea is viable, looking to move into a new market, or are launching a new product or service.  Read below for a more in-depth look at how market research can help small businesses.

• COMPETITION According to a study conducted by Business Insider, 72% of small businesses focus on increasing revenue. Conducting research helps businesses gain insight into competitor behavior. By learning about your competitor’s strengths and weaknesses, you can learn how to position your product or offering. In order to be successful, small businesses need to have an understanding of what products and services competitors are offering, and their price point.

Learn more: Trend Analysis

• CUSTOMERS Many small businesses feel they need to understand their customers, only to conduct market research and learn they had the wrong assumptions. By researching, you can create a profile of your average customer and gain insight into their buying habits, how much they’re willing to spend, and which features resonate with them. Additionally, and perhaps more importantly, you can learn what will make someone use your product or service over a competitor.

Learn more: Customer Satisfaction Survey

• OPPORTUNITIES Potential opportunities, whether they are products or services, can be identified by conducting market research. By learning more about your customers, you can gather insights into complementary products and services. Consumer needs change over time, influenced by new technology and different conditions, and you may find new needs that are not being met, which can create new opportunities for your business.

Learn more: SWOT Analysis 

• FORECAST A small business is affected by the performance of the local and national economy, as are its’ customers. If consumers are worried, then they will be more restrained when spending money, which affects the business. By conducting research with consumers, businesses can get an idea of whether they are optimistic or apprehensive about the direction of the economy, and make adjustments as necessary. For example, a small business owner may decide to postpone a new product launch if it appears the economic environment is turning negative.

Learn more: 300+ Market Research Survey Questionnaires

Market research and market intelligence may be as complex as the needs that each business or project has. The steps are usually the same. We hope this ultimate guide helps you have a better understanding of how to make your own market research project to gather insightful data and make better decisions.

LEARN ABOUT: Projective Techniques

We appreciate you taking the time to read this ultimate guide. We hope it was helpful! 

You can now download our free ebook that will guide you through a market research project, from the planning stage to the presentation of the outcomes and their analysis.

Sign up now, and download our free ebook: The Hacker’s Guide to Advanced Research Methodologies 

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Market Potential

This article covers meaning, importance, factors & example of Market Potential from marketing perspective

What is Market Potential?

Market potential is the valuation of the sales revenue from all the supplying channels in a market. Market potential is the population that is interested in the product/ service that is being made or offered by an organization. In other words, market potential is the potential money making capability of a firm if it capitalizes all advantages and everything goes its way. It is usually measured in sales units/sales volume or the potential revenue.

Importance of Market Potential

It is very important for a new business to know and determine the market potential of the product of service being offered. If the market potential is very low then there is no point spending a lot of money on the product. One of the most important aspects of market potential is the amount of business a product can generate in future as compared to today. Companies can also evaluate the market share of companies in the market.

The most relevant question is the target market growing for the offering. Market potential helps business plan better and launch their products and services with better preparation. Depending upon the overall market potential, companies can identify the sales potential, or the amount of sales they would be doing in that identified market.

• Marketing Function
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Determination of Market Potential

It is a subset of the total population, where market potential is the population, all of whom can be potential consumers of the product or service. Market potential is the maximum population which would be interested in the product / service, and gives a good insight on the growth possibility as well.

Total market potential can be calculated in terms of units or money.

Factors for calculating Market Potential

There are various factors which are important for knowing the actual market potential:

1. Total Size of the Market

This means the total value of customers or clients for the particular offering. higher the number better it is.

2. Return on Investment

This would mean is the market profitable to invest in? A market which would give a good return on the costs incurred would only lead to good business today as well as in future.

3. Growth Rate of the Market

A target market may be good today in terms of size and ROI but is it going to be rising in future as well? Hence the growth rate and trends are very important for determining the market potential

4. Category Competition

How many and how big are the competitors for our product/service? The competition would determine on the market potential. More would be the number of competitors, less would be the share the new organization would be able to take.

5. Entry Barriers

Are there any real barriers to entry into the existing market? e.g. Very high licence cost can be an issue or large operational or setup cost can also be an entry barrier.

6. Political Environment

In international markets, the political environment forms a very important factor in determining the market potential.

7. Internal Environment

Overall the market potential may be very good but the question arises that are we strong enough to compete in the market with suitable offering, cost, competition.

Market Potential Example

Let us say we need to see what is market potential of a tablet PC which has to be launched in a geography. It will depend on how many tech savvy individuals are there in the geography. It will depend on the overall population of that region. The other factor can be are tablet PCs already available in the market through existing competitors.

The features of those tablet PCs would be critical in determining the market potential. Eventually based on multiple factors, it can be determined for example that 10000 tablet PCs would be sold in the year which can be 10,000,000$ given price of each tablet is 1000$.

Hence, this concludes the definition of Market Potential along with its overview.

This article has been researched & authored by the Business Concepts Team which comprises of MBA students, management professionals, and industry experts. It has been reviewed & published by the MBA Skool Team . The content on MBA Skool has been created for educational & academic purpose only.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 1800 business concepts from 5 categories.

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Marketing91

What is Market Potential? How to Determine It

August 12, 2023 | By Hitesh Bhasin | Filed Under: Marketing

Whenever we launch a new product or a service, we fear whether it has enough market potential. It is known very well that you need to calculate market potential before you launch a product or a service. This article will help you determine 5 basic factors which can give you an idea of whether or not you have a good Market potential.

Market potential, quite simply, is the total demand for a product in a given business environment. So if you were going to write a book on business, you will check all the books written on business and the sales they had. That is your market potential. Off course, determining the actual values is very difficult and that is where you need to use various tips and tactics.

Table of Contents

What Is Market Potential?

The market potential is an estimate of the maximum sales opportunity that a product or service may have in a target market . It’s an evaluation of the expected sales, given the customer base ’s size and the product or service’s demand in the market.

This calculation allows businesses to realistically gauge the possible profitability and success of their offerings. Remember, the actual values can be challenging to determine, and this is where strategic planning and tactics come into play.

Why Is Market Potential Important?

To be a successful business, you need to plan your growth and investments according to the market potential. It gives you an idea of how much demand there is for your product or service in the market.

In addition, it can direct you toward areas where more customers are likely to be interested in your products or services. By understanding the size of the market, you can develop realistic goals for your product or service. You can also make decisions about how to allocate resources based on the potential market size and the potential revenue it may bring.

To get a better sense of the market potential, businesses should evaluate the growth rate in that particular market. This will provide an estimate for future sales and help with strategic planning . In addition, it’s important to understand the specific target market that you’re trying to reach. Knowing who your customers are and what their needs are can help to inform your decisions.

By taking all these factors into account, you can develop the right strategies and tactics for achieving the full potential of your market. It’s an essential part of business development and success.

Factors to Consider for Determining Market Potential

Let us go through the 5 elements important for calculating market potential –

1) Market Size

The first and most important factor to consider while determining market potential is the market size of your product. Market size is the total market sales potential of all companies put together. So if I planned on launching a new soap or Shampoo, then all the different companies such as HUL and P&G are my competitors. And the combined sales of soaps, including branded and non-branded products is my complete market size.

If you look at the consumer level, the market size is generally huge. Market size would be in Millions or billions too. But as you go down to the industrial level, Market size can be anything from a lakh to a thousand or even a hundred.

If you were a dealer of industrial ball bearings, then all the companies which are in manufacturing are potentially your customers. So if you find out the number of industries in your region, that is the ideal market size that you can target when launching a new Ball bearing product. Mind you, this is 100% market size. The market captured by you and who is going to be your future customer is a different story altogether.

The best way to get market size is to contact local research agencies if it is a small business. If it is a large business, it is better to take Market research data from companies like Nielson or IMRB. Determination of market size is the first step to determining market potential.

2) Market growth rate

The PC market as compared to the laptop market or the smartphone market is declining. So if you are a company that makes PCs, then you have to be aware that you are entering a declining market. Instead, if you have the potential, why not enter the Laptop market or the Smartphone market?

The ongoing trend in the industry is important as it can forecast the future of your product. Initially, books were all the rage, but now they have been replaced by Ebooks and there is hardly any need for physical books (though people still love to read them).

When you evaluate market growth rate, you have to forecast based on the differences between product line extensions and a completely new concept in the Market. Samsung has the Samsung Galaxy series which is a pioneer series in Samsung. Naturally, whenever a new product line extension of Samsung Galaxy is launched, it will sell in the market. But will a new product line sell at the same pace? So the Market growth rate is subjective and it depends on the type of product you are going to launch.

Market growth rate can be determined by checking the facts and figures of the last 5 years of the industry that you are in. Many top websites will give you such data. In fact, even newspapers do frequent analyses of which industries are growing and at what percentage. Today, if I were to enter the E- commerce industry, it will be a wise choice because the industry is growing by leaps and bounds. However, 10 years down the line, a new technology might be invented, which makes E-commerce buying obsolete.

3) Profitability

Going back to the E-commerce example, many small businesses have mixed feedback for E-commerce businesses. Some say that the market is huge and there is a lot of potential. But others say that they have suffered huge losses because of the amount of packaging and the transport costs involved in shipping across the country. These are both perspectives and both of them are correct.

Determining and forecasting your profitability is important to understand the market potential. If the business is going to give low profitability, then the volumes need to be high (ex – fmcg products) or if the business is going to give low volumes, then the profit needs to be higher (ex-industrial goods).

Calculation of profitability to determine Market potential can use three main elements

• ROI – Return on investment
• ROS – Return on sales
• RONA – Return on net assets
• ROCE – Return on capital employed

You can use any of the calculations mentioned above to calculate the likelihood of profitability and to determine how profitable the industry or product is going to be.

4) Competition

You need to know and understand the competition in an industry to determine the market potential for the product you are going to launch. If the industry has high competition, the entry barriers are going to be high and at the same time, establishing yourself will require deep pockets . You might have to lower the price of your products even though you are giving higher value. This requires that you have enough money to take hits till the time competition leaves the market.

This is exactly what happens when top brands enter industries that were dominated by Smaller players. Today, small retailers are suffering under the brunt of large multi-national sellers. Nonetheless, this does not mean small businesses have stopped establishing themselves. They are using different strategies to attract customers to their businesses. One such strategy is good customer service , which is missing in large corporations.

When competition is low, market awareness will be low as well. An example can be taken from industrial refrigeration products, where the competition is low, but the product knowledge is low as well. So your competitor is equally likely to influence the potential buyer as you are. Differentiation will be minimal because there is no need of investing in differentiation. In such a market, the companies which actually differentiate, literally dominate the market they are in.

Determining market potential requires you to understand the market standing of various competitors and it also requires that you have the necessary plans up your sleeves to understand how to tackle these competitors when the time comes.

5) Product and consumer type

Is your product a repeat buying product or a one-time sale only? In the above examples, Soap and shampoo is a repeat buying product. But once you buy a refrigerator, I doubt you will need another for the next 10 years. So in your whole lifetime, you will buy 8-10 refrigerators at the max. But in a year, you are likely to buy 40-50 soaps individually. That’s 300-400 soaps per individual in their livelihood. Multiply that by a billion and you can understand the market potential of the soap industry.

So how frequently is your product going to be bought again? Many toothpaste companies actively push the consumer to brush twice in a day. One of the reasons is that your teeth will be better. But another reason is that the toothpaste will be consumed faster and you will buy another toothpaste soon. Hence the push for brushing twice daily!!

Is your product completely new in the market? How likely is the customer to accept and adopt the same and what are the hurdles to be faced in product adoption ? Can you forecast them right now? Because that will help in determining market potential.

The above 5 elements will give you a very good idea about the market potential of your product, irrespective of whether the product exists in the market or you are going to launch a new one. Remember – this does not apply to innovative products because the market size and growth rate of innovative products are unknown.

What is the Market Potential Analysis Formula?

For market potential calculation, you can use the formula –

Market Potential (MP) = N × MS × P × Q

• N = Total number of potential consumers
• MS = Market share (percent of consumers buying from you)
• P = Average selling price
• Q = Average annual consumption

To determine the market share, which represents the percentage of customers purchasing from your business, multiply the proportion of potential customers by the portion of the market your company aims to gain from competitors.

Example of Determining Market Potential

I want to launch a Chinese cuisine restaurant in my locality. So I determine the market potential as follows.

1. Market size – I have 2 lakh people living in my locality. They are of different demographics. But with some market research, I find out that many of them are young adults.

2. Market growth – As my region has even more apartments and buildings coming up, the market is going to grow instead of decreasing.

3. Profitability – I have an idea of the prices being kept by competitors, and at those prices, I will definitely earn a good margin

4. Competition – Strong competition from a local Chinese restaurant. But I believe my cook and experience is better than him when it comes to serving Chinese food.

5. Customer type – It is going to be a repeat business because customers who like my food are more likely to come again and again. Each customer will be important because I am in the food industry, and a single mistake can lose me a lot of customers as well as my reputation.

So, with the above analysis, I can safely say that I am better off with the launch of the restaurant and that the market potential exists. Similarly, you can perform a statistical analysis of the product or service which you are going to launch, and come to a decision with regard to the launch of the product.

How to Conduct a Market Potential Analysis

1) conducting customer research.

Conducting customer research involves understanding the needs, preferences, and behaviors of your target customers. This can include collecting data through surveys, interviews, focus groups , and even social media engagement. This crucial step allows you to tailor your product or service to meet the demands of your customer base, enhancing customer satisfaction and loyalty.

2) Analyzing Market Trends

Understanding current market trends is key to assessing market potential. You need to keep an eye on the latest developments in your industry, including new products, technologies, regulatory changes, and consumer behavior . This insight can inform your product development and marketing strategies, ensuring you stay competitive and relevant in your market.

3) Evaluating Competitive Landscape

An evaluation of the competitive landscape involves identifying your direct and indirect competitors and analyzing their products, marketing strategies , market share, strengths, and weaknesses. This knowledge allows you to differentiate your product, identify gaps in the market, and devise strategies to gain a competitive edge.

4) Assessing Market Size and Growth Rate

Assessing the market size and growth rate involves quantifying the number of potential customers and the rate at which the market is expanding or contracting. This information is vital for understanding the potential demand for your product and the scalability of your business.

5) Estimating Profit Potential

Finally, estimating profit potential involves analyzing the potential revenue and costs associated with your product or service. This includes considering the pricing strategy, cost of production, operating costs, and potential return on investment. This step is crucial for determining the financial viability of your product or service in the market.

Q. What sets apart the potential market from market potential?

A. The potential market is the total number of people who could be interested in your product or service, while the market potential is the estimated profit that can be earned from a particular product or service.

Q. How do you determine the market potential?

A. To determine the market potential, you need to evaluate the competitive landscape, assess the size and growth rate of the market, and estimate your profit potential. Additionally, it’s important to consider factors such as customer needs and preferences, pricing strategies , cost of production, operating costs, and potential return on investment.

Q. What is the difference between sales potential and market potential?

A. Sales potential is the amount of revenue that can be generated from a particular product or service in a given market, while market potential is the estimated profit that can be earned from that same product or service. The two are related but distinct concepts.

Q. How market size and market potential are related?

A. The size of the market is an important factor in estimating market potential since it will determine how many customers are available for your business and how much revenue you can generate. Thus, larger markets typically have greater potential than smaller ones. Additionally, the growth rate of the market can also affect its potential for profit.

Liked this post? Check out the complete series on Marketing

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About Hitesh Bhasin

Hitesh Bhasin is the CEO of Marketing91 and has over a decade of experience in the marketing field. He is an accomplished author of thousands of insightful articles, including in-depth analyses of brands and companies. Holding an MBA in Marketing, Hitesh manages several offline ventures, where he applies all the concepts of Marketing that he writes about.

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Hello Thank you for your post..this topic is very clear Now how to determine market potential with great examples…once again thanks and best wishes to your entire team..

All the best..

Thank you for your post this was very helpful

very interesting idea for research paper

Hello Team, Thanks for this post, It is very helpful to understand, how to pitch in the market as well as it helps to decide the budget/targets in business.

Ones again Thanks for sharing this valuable information.

Hello Ma’am/ Sir,

How to find out the Market Potential of commerical vehicle parts of which I have sold. If a Truck travels 10 lakh kilometres and emgine seized …. So in this case what is the Market Potential of engine requirements of a Particular Company…like… Tata Motors.

You guys really made this as retarded as possible lmao, it’s actually such a useless fucking article that doesn’t help me at all.

thank you for this wonderful tips

Like this explanation. Thanks writer.

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How to do market research: The complete guide for your brand

Written by by Jacqueline Zote

Published on  April 13, 2023

Reading time  10 minutes

Blindly putting out content or products and hoping for the best is a thing of the past. Not only is it a waste of time and energy, but you’re wasting valuable marketing dollars in the process. Now you have a wealth of tools and data at your disposal, allowing you to develop data-driven marketing strategies . That’s where market research comes in, allowing you to uncover valuable insights to inform your business decisions.

Conducting market research not only helps you better understand how to sell to customers but also stand out from your competition. In this guide, we break down everything you need to know about market research and how doing your homework can help you grow your business.

Table of contents:

What is market research?

Why is market research important, types of market research, where to conduct market research.

• Steps for conducting market research
• Tools to use for market research

Market research is the process of gathering information surrounding your business opportunities. It identifies key information to better understand your audience. This includes insights related to customer personas and even trends shaping your industry.

Taking time out of your schedule to conduct research is crucial for your brand health. Here are some of the key benefits of market research:

Understand your customers’ motivations and pain points

Most marketers are out of touch with what their customers want. Moreover, these marketers are missing key information on what products their audience wants to buy.

Simply put, you can’t run a business if you don’t know what motivates your customers.

And spoiler alert: Your customers’ wants and needs change. Your customers’ behaviors today might be night and day from what they were a few years ago.

Market research holds the key to understanding your customers better. It helps you uncover their key pain points and motivations and understand how they shape their interests and behavior.

Figure out how to position your brand

Positioning is becoming increasingly important as more and more brands enter the marketplace. Market research enables you to spot opportunities to define yourself against your competitors.

Maybe you’re able to emphasize a lower price point. Perhaps your product has a feature that’s one of a kind. Finding those opportunities goes hand in hand with researching your market.

Maintain a strong pulse on your industry at large

Today’s marketing world evolves at a rate that’s difficult to keep up with.

Fresh products. Up-and-coming brands. New marketing tools. Consumers get bombarded with sales messages from all angles. This can be confusing and overwhelming.

By monitoring market trends, you can figure out the best tactics for reaching your target audience.

Not everyone conducts market research for the same reason. While some may want to understand their audience better, others may want to see how their competitors are doing. As such, there are different types of market research you can conduct depending on your goal.

Interview-based market research allows for one-on-one interactions. This helps the conversation to flow naturally, making it easier to add context. Whether this takes place in person or virtually, it enables you to gather more in-depth qualitative data.

Buyer persona research

Buyer persona research lets you take a closer look at the people who make up your target audience. You can discover the needs, challenges and pain points of each buyer persona to understand what they need from your business. This will then allow you to craft products or campaigns to resonate better with each persona.

Pricing research

In this type of research, brands compare similar products or services with a particular focus on pricing. They look at how much those products or services typically sell for so they can get more competitive with their pricing strategy.

Competitive analysis research

Competitor analysis gives you a realistic understanding of where you stand in the market and how your competitors are doing. You can use this analysis to find out what’s working in your industry and which competitors to watch out for. It even gives you an idea of how well those competitors are meeting consumer needs.

Depending on the competitor analysis tool you use, you can get as granular as you need with your research. For instance, Sprout Social lets you analyze your competitors’ social strategies. You can see what types of content they’re posting and even benchmark your growth against theirs.

Brand awareness research

Conducting brand awareness research allows you to assess your brand’s standing in the market. It tells you how well-known your brand is among your target audience and what they associate with it. This can help you gauge people’s sentiments toward your brand and whether you need to rebrand or reposition.

If you don’t know where to start with your research, you’re in the right place.

There’s no shortage of market research methods out there. In this section, we’ve highlighted research channels for small and big businesses alike.

Considering that Google sees a staggering 8.5 billion searches each day, there’s perhaps no better place to start.

A quick Google search is a potential goldmine for all sorts of questions to kick off your market research. Who’s ranking for keywords related to your industry? Which products and pieces of content are the hottest right now? Who’s running ads related to your business?

For example, Google Product Listing Ads can help highlight all of the above for B2C brands.

The same applies to B2B brands looking to keep tabs on who’s running industry-related ads and ranking for keyword terms too.

There’s no denying that email represents both an aggressive and effective marketing channel for marketers today. Case in point, 44% of online shoppers consider email as the most influential channel in their buying decisions.

Looking through industry and competitor emails is a brilliant way to learn more about your market. For example, what types of offers and deals are your competitors running? How often are they sending emails?

Email is also invaluable for gathering information directly from your customers. This survey message from Asana is a great example of how to pick your customers’ brains to figure out how you can improve your quality of service.

Industry journals, reports and blogs

Don’t neglect the importance of big-picture market research when it comes to tactics and marketing channels to explore. Look to marketing resources such as reports and blogs as well as industry journals

Keeping your ear to the ground on new trends and technologies is a smart move for any business. Sites such as Statista, Marketing Charts, AdWeek and Emarketer are treasure troves of up-to-date data and news for marketers.

And of course, there’s the  Sprout Insights blog . And invaluable resources like The Sprout Social Index™  can keep you updated on the latest social trends.

Social media

If you want to learn more about your target market, look no further than social media. Social offers a place to discover what your customers want to see in future products or which brands are killin’ it. In fact, social media is become more important for businesses than ever with the level of data available.

It represents a massive repository of real-time data and insights that are instantly accessible. Brand monitoring and social listening are effective ways to conduct social media research . You can even be more direct with your approach. Ask questions directly or even poll your audience to understand their needs and preferences.

The 5 steps for how to do market research

Now that we’ve covered the why and where, it’s time to get into the practical aspects of market research. Here are five essential steps on how to do market research effectively.

Step 1: Identify your research topic

First off, what are you researching about? What do you want to find out? Narrow down on a specific research topic so you can start with a clear idea of what to look for.

For example, you may want to learn more about how well your product features are satisfying the needs of existing users. This might potentially lead to feature updates and improvements. Or it might even result in new feature introductions.

Similarly, your research topic may be related to your product or service launch or customer experience. Or you may want to conduct research for an upcoming marketing campaign.

Step 2: Choose a buyer persona to engage

If you’re planning to focus your research on a specific type of audience, decide which buyer persona you want to engage. This persona group will serve as a representative sample of your target audience.

Engaging a specific group of audience lets you streamline your research efforts. As such, it can be a much more effective and organized approach than researching thousands (if not millions) of individuals.

You may be directing your research toward existing users of your product. To get even more granular, you may want to focus on users who have been familiar with the product for at least a year, for example.

Step 3: Start collecting data

The next step is one of the most critical as it involves collecting the data you need for your research. Before you begin, make sure you’ve chosen the right research methods that will uncover the type of data you need. This largely depends on your research topic and goals.

Remember that you don’t necessarily have to stick to one research method. You may use a combination of qualitative and quantitative approaches. So for example, you could use interviews to supplement the data from your surveys. Or you may stick to insights from your social listening efforts.

To keep things consistent, let’s look at this in the context of the example from earlier. Perhaps you can send out a survey to your existing users asking them a bunch of questions. This might include questions like which features they use the most and how often they use them. You can get them to choose an answer from one to five and collect quantitative data.

Plus, for qualitative insights, you could even include a few open-ended questions with the option to write their answers. For instance, you might ask them if there’s any improvement they wish to see in your product.

Step 4: Analyze results

Once you have all the data you need, it’s time to analyze it keeping your research topic in mind. This involves trying to interpret the data to look for a wider meaning, particularly in relation to your research goal.

So let’s say a large percentage of responses were four or five in the satisfaction rating. This means your existing users are mostly satisfied with your current product features. On the other hand, if the responses were mostly ones and twos, you may look for opportunities to improve. The responses to your open-ended questions can give you further context as to why people are disappointed.

Step 5: Make decisions for your business

Now it’s time to take your findings and turn them into actionable insights for your business. In this final step, you need to decide how you want to move forward with your new market insight.

What did you find in your research that would require action? How can you put those findings to good use?

The market research tools you should be using

To wrap things up, let’s talk about the various tools available to conduct speedy, in-depth market research. These tools are essential for conducting market research faster and more efficiently.

Social listening and analytics

Social analytics tools like Sprout can help you keep track of engagement across social media. This goes beyond your own engagement data but also includes that of your competitors. Considering how quickly social media moves, using a third-party analytics tool is ideal. It allows you to make sense of your social data at a glance and ensure that you’re never missing out on important trends.

Email marketing research tools

Keeping track of brand emails is a good idea for any brand looking to stand out in its audience’s inbox.

Tools such as MailCharts ,  Really Good Emails  and  Milled  can show you how different brands run their email campaigns.

Meanwhile, tools like  Owletter  allow you to monitor metrics such as frequency and send-timing. These metrics can help you understand email marketing strategies among competing brands.

Content marketing research

If you’re looking to conduct research on content marketing, tools such as  BuzzSumo  can be of great help. This tool shows you the top-performing industry content based on keywords. Here you can see relevant industry sites and influencers as well as which brands in your industry are scoring the most buzz. It shows you exactly which pieces of content are ranking well in terms of engagements and shares and on which social networks.

SEO and keyword tracking

Monitoring industry keywords is a great way to uncover competitors. It can also help you discover opportunities to advertise your products via organic search. Tools such as  Ahrefs  provide a comprehensive keyword report to help you see how your search efforts stack up against the competition.

Competitor comparison template

For the sake of organizing your market research, consider creating a competitive matrix. The idea is to highlight how you stack up side-by-side against others in your market. Use a  social media competitive analysis template  to track your competitors’ social presence. That way, you can easily compare tactics, messaging and performance. Once you understand your strengths and weaknesses next to your competitors, you’ll find opportunities as well.

Customer persona creator

Finally, customer personas represent a place where all of your market research comes together. You’d need to create a profile of your ideal customer that you can easily refer to. Tools like  Xtensio  can help in outlining your customer motivations and demographics as you zero in on your target market.

Build a solid market research strategy

Having a deeper understanding of the market gives you leverage in a sea of competitors. Use the steps and market research tools we shared above to build an effective market research strategy.

But keep in mind that the accuracy of your research findings depends on the quality of data collected. Turn to Sprout’s social media analytics tools to uncover heaps of high-quality data across social networks.

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More From Forbes

The evolving role of technology in market research.

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James Whaley is the CEO of OvationMR .

Recent advancements in generative AI and machine learning are changing the ways data analytics and market research are conducted. Practitioners and consumers of market insights can leverage new algorithms to develop deeper insights faster than ever. But these technologies are not immediate problem-solvers. Firms must understand the best marketing applications of generative AI to harness their full potential—responsibly freeing practitioners from repetitive tasks and enabling them to focus on higher level tasks.

How is AI affecting market research?

Traditional analytics has historically been used to perform statistical analysis on large collections of data. While helpful, it is primarily retrospective in nature. These data points—which rely on static models—lack the capability to generate new insights or help predict future changes. In a dynamic economy, focusing on past performance may be a disadvantage.

Generative AI models such as ChatGPT are trained on massive databases of information but those databases are not infinite, so chat models aren’t always responsive to the context you want them to work in. This leads to “hallucinations,” which produce errors. The best way to secure the benefits of AI while eliminating risks is to work with experts who maintain your system. Humans are still best at identifying bias, ethics and privacy issues. For teams that put too much trust in tools built on external data, their successes are at constant risk of mistakes due to lack of human oversight.

Instead of trusting their sensitive data to public databases, many teams opt to build their own AI for research purposes. An internal chatbot can be specifically trained on your data, eliminating bias and most hallucinations from the system. Plus, training on internal data enables you to ask questions like, “What was the competition like between these two major soda brands between 1990 and 1995, and which marketing campaigns affected the results the most?” These types of questions provide powerful insights that could not be derived from a public AI.

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Most businesses know they want to invest in AI for some of their data analysis. A more productive question is whether they want to build their own product or partner with an AI company. To understand the best decision for your firm, consider how these traditional challenges in market research will change with new technology developments.

Data Cleaning

One of the most important tasks in market research is data cleaning . As analysts, we must ensure our data is based on valid responses. This has always been the case with data analytics—you get out what you put in—but is even more critical in the age of artificial intelligence.

If your firm creates and interprets data from a large number of surveys, you already know this is an arduous task when performed manually. As a result, many firms are tempted to outsource all of their data cleaning to an AI solution. While this is a great application of AI, excessive trust in algorithms risks missing mistakes in data which can result in exponentially worse errors.

Many firms prefer working with companies that emphasize high quality data collection to mitigate this risk. They seek partnerships with companies that specialize in using AI to identify large blocks of text for efficient human screening. This saves a lot of time in the process of data cleaning while upholding the importance of human insights. An ideal partner will have a deep understanding of how generative models should (and should not) be used for data cleaning.

If you are approaching the development of your own AI product, this should be considered with your internal team. Do you have the capacity to maintain a significant level of focus on data cleaning? If not, a partnership with the right firm may be in your best interest.

Survey Depth

Survey insights have traditionally been limited by quantitative analysis. For example, in a standard survey for a banking service, you may ask participants to rate the service on a scale of one through 10. But what do these data points tell you about your business? More often than not, firms must arrange follow-up qualitative interviews. This deeper dive with respondents yields meaningful insights at a steep cost, both of time and money.

Instead, with a properly trained AI model, you can design your survey to include interactive elements that prompt qualitative responses. For example, if a respondent gives a score of 90%, which we know falls at the high end of the Net Promoter Score, a properly trained chat feature can ask a follow-up question and probe further if needed, diving deeper into what an individual customer likes and dislikes about your service. You may find that loyal customers have problems with your company, allowing you to revisit your strategy in a more proactive manner. To set this up properly, you need to either partner with a company who has expertise in training AI models or have the capability to hire experts for your team as required.

Data cleaning is even more important when using surveys with qualitative elements. This further emphasizes the importance of your dedication to maintaining data quality. If you plan to include qualitative chat elements in your otherwise quantitative survey, it is important to work with experts that understand how to use machine learning with very large data sets. This skillset extends far beyond expertise in chatbot functionality.

If you want AI to perform both data cleaning and qualitative functionality in your customer surveys, you may want to partner with a market research company with expertise in artificial intelligence. The specialized knowledge required is often too much for an internal team to assume. Plus, working with a trusted provider helps mitigate risks—and liabilities—of working with these new and powerful technologies.

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• 1. Open a trading account 
• 2. Set your budget 
• 3. Learn the basic types of stock analysis 
• 4. Practice with a stock market simulator 

5. Plan your first trade

Stock trading: how to get started for beginners.

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• Stock trading involves buying and selling stocks for profits within a short time period.
• Trading is a risky venture, and to do it successfully requires time and understanding the market.
• Trade smarter by setting your budget, risk tolerance, and trading strategy ahead of time.

We all want to be the next person to win big with a lucky stock trade. Unfortunately, this isn't in the cards for most traders. In reality, it takes a lot of knowledge, research, discipline, and patience to become a profitable stock trader. 

"Investing is not about getting rich quick. Investing is about getting rich slowly," says Randy Frederick , vice president of trading and derivatives at Charles Schwab. These are wise words to live by if you're new to the stock market and wondering if trading is right for you.

But if you're curious about the thrill of short-term buying and selling and the potential profits that can come along with it, here are the basics of stock trading and the steps that will help get you started.

Stock trading entails buying and holding stocks for a short period of time in order to turn a quick and significant profit. Traders aim to take advantage of short-term pricing fluctuations in the market.

Trading can be contrasted with investing , the approach to the stock market that aims to gradually build wealth by holding assets over a long period of time. Whereas investors buy stocks and hold them for many years, traders hold them for only an hour, a day, a week, or a few months.

There are two main types of stock trading: active and passive trading.

Active trading is a highly technical approach with the goal of capitalizing on short-term price fluctuations. Active traders are generally divided into two camps, based on the time period in which they hold their securities:

• Day traders: Day trading refers to any strategy that involves buying and selling stock over a single day, such as seconds, minutes, or hours.
• Swing traders: Swing trading involves buying securities and holding them for days or weeks. 

Passive trading focuses more on stocks' long-term trends, rather than short-term fluctuations or market news. Position trading is a type of passive trading. 

Passive traders buy based on overall market trends, and sell when they believe the security hits its peak, which can take months. They generally trade less than active traders. In this way, passive traders are more akin to long-term investors who follow a buy-and-hold strategy . 

How to learn stock trading

Stock trading is a tricky business. Yes, trading individual stocks can be exciting and profitable, but it's not easy. Here are a few things to keep in mind: 

Successful trading takes time and commitment. If you're just starting out in trading stocks, it's best to avoid day trading and consider longer-term strategies. "Day trading is actually the worst option for beginner investors," says Frederick. In reality, for every person who makes millions off of a lucky trade, there's thousands of others who lost money trying the same tactic.

Whether you plan to trade full-time or part-time, the bottom line is trading requires a lot of time to follow the markets and spot opportunities. And when it comes to trading within short-to-medium timeframes, timing can often be everything. 

Trading has tax implications. Don't let the thrill of making a quick buck distract from your obligation to the IRS. It's important to understand how taxes on trades could affect your tax bill. 

When you sell your stocks for a profit, you are subject to capital gains tax . While profits on stocks held for more than a year get a special tax rate — meaning you'll most likely pay lower taxes —  profits on stocks held for less than a year are taxed at the same rate as your regular income. 

Knowledge is power for trading safely. Instead of blindly pursuing "hot" stock tips from a neighbor or recommendations from Wall Street analysts, it pays to develop your own trading ideas. When you study historical stock movements and research an investment yourself, you'll be able to ride market volatility or formulate an exit strategy with confidence. 

Moreover, experts agree that one of the worst things you can do is let your emotions or bias influence your investing decisions. Excessive emotional trading is one of the most common ways investors damage their returns. 

How to start trading stocks

Now that you're armed with the stock-trading basics, it's time to get into the real deal. Just make sure you take your time to learn the ropes. "Dip your toe in," Frederick says. "Don't dive in." 

1. Open a trading account 

You will need a broker to make trades, so you'll want to find one that you like and trust. There are several brokers to choose from, each with their own specialties. 

As you decide on a broker, choose one with the tools, features, and interface that best complement your trading style and know-how. Other things to consider are fee structures, on-the-go accessibility, stock analysis tools, and educational resources. In the end, beginner traders will want a firm that has a wide offering and that will be there when times get tough.

If you're not sure where to begin, see our recommendations for the best stock trading apps . 

2. Set your budget 

Set a trading budget for yourself and stick to it. Frederick suggests that if you're drawn toward shiny new investments or companies, allocate up to 1% or 2% of your investment budget toward those assets. You can start trading with just about any amount, but don't touch money you might need in the short-term, like for mortgage payments or emergencies. 

3. Learn the basic types of stock analysis 

Generally, trading relies on "technical analysis," or making decisions based on stock price and historical market data, rather than "fundamental analysis," which involves evaluating a company and determining its true worth . 

The goal of technical analysis is to analyze price movements of a security in an attempt to forecast future price movements. While a technical analyst may look at statistical trends and patterns with charts, a fundamental analyst will start with a company's financial statements. 

While the two styles of analysis are oftentimes considered as opposing approaches, it makes financial sense to combine the two methods to give you a broad understanding of the markets to help you better gauge where your investment is heading. 

In short: Any time well spent learning the fundamentals of stock trading is time well spent. 

4. Practice with a stock market simulator 

As you begin improving your analytical skills, you can easily put them to practice. Give stock trading a try without putting real money on the line with virtual trading, or paper trading. Virtual trading allows you to test your trading skills in a low-stakes environment.

Reputable online programs include TD Ameritrade's paperMoney , MarketWatch's Virtual Stock Exchange , and Power E*TRADE . 

Once you fund your brokerage account and you're ready to place your first trade, it's time to drum up a plan, which will help you maintain discipline and consistency as a trader. 

A good trading plan typically outlines entry (buy) and exit (sell) points, informed by your skill level, risk level, and your overall goals. Keep in mind that every position you hold will most likely come with its own technical parameters — so keep in mind the time and effort you'll need to give each stock the attention it deserves. 

FAQs on stock trading

A fractional share allows an investor to own a small portion, or fraction, of one whole share of a stock. Exchange-traded funds can also be bought as fractional shares. Previously, retail investors would need to have thousands of dollars to invest in an expensive stock like Amazon, for example. Now, they can own a slice of Amazon with as little as $5, so they can build a diversified portfolio no matter their investing budget.

A stockbroker is a type of broker that allows you to buy and sell stocks, bonds, and other securities. When you choose a broker, you open a brokerage account, which is a fundamental step to becoming an investor. Securities are bought and sold on stock exchanges, like the New York Stock Exchange and Nasdaq. Because these exchanges require special access or membership to trade, investors need brokers to facilitate transactions. Broker firms and individuals become members of specific exchanges by meeting certain regulatory standards set by the Financial Industry Regulatory Authority (FINRA).

A cyclical stock rises and falls in tandem with the economy. When the economy is strong, unemployment is low, and production and consumer spending are high, cyclical stocks tend to gain value. But when a weakening economy hits — causing businesses to contract and lay workers off, and people to shut their wallets — the value of these stocks goes down.

Cyclical stocks can rapidly drive gains in a portfolio when the economy expands, with supply and demand in specific sectors growing. But they can also quickly reduce the value of a portfolio when spending slows and the economy starts to shrink, further dampening demand. So timing is key to investing wisely with cyclical stocks. 

A defensive stock can be relied on to provide consistent returns even during an economic or market downturn. These companies typically offer goods or services people buy even when the economy isn't doing well. There are no hard and fast rules to define a defensive stock, but there are some general guidelines you should look for:

• History of success:  The company is established and very large. It has a couple of decades in business, at the very least, and a total market value in the billions is a reasonable threshold.
• Consistent dividends:  The stock has consistently paid dividends over a long period of time — 10 years or longer.
• Low volatility:  The beta coefficient, which measures a stock share's movements compared to the overall stock market's, is low — ideally below 1. This indicates that the stock isn't greatly affected by market swings. The beta coefficient is a complex economist's tool, but you can often find it in analysts' reports on a company, or it may be included in its online stock listing.

Momentum investing is a different approach to the stock market than other investing strategies, focusing on the pure market instead of fundamentals that drive the market. In physics, an object in motion will stay in motion until it's acted upon by an external force. Momentum investors apply the same rule to stock prices, expecting a growth trend to continue over the course of a few months. Momentum investing works on the belief that if a stock's price is increasing, it will continue to increase in the intermediate term. Once that momentum dries up — either the price has plateaued or starts declining —  it's time to sell. 

• Main content

The state of AI in early 2024: Gen AI adoption spikes and starts to generate value

If 2023 was the year the world discovered generative AI (gen AI) , 2024 is the year organizations truly began using—and deriving business value from—this new technology. In the latest McKinsey Global Survey  on AI, 65 percent of respondents report that their organizations are regularly using gen AI, nearly double the percentage from our previous survey just ten months ago. Respondents’ expectations for gen AI’s impact remain as high as they were last year , with three-quarters predicting that gen AI will lead to significant or disruptive change in their industries in the years ahead.

About the authors

This article is a collaborative effort by Alex Singla , Alexander Sukharevsky , Lareina Yee , and Michael Chui , with Bryce Hall , representing views from QuantumBlack, AI by McKinsey, and McKinsey Digital.

Organizations are already seeing material benefits from gen AI use, reporting both cost decreases and revenue jumps in the business units deploying the technology. The survey also provides insights into the kinds of risks presented by gen AI—most notably, inaccuracy—as well as the emerging practices of top performers to mitigate those challenges and capture value.

AI adoption surges

Interest in generative AI has also brightened the spotlight on a broader set of AI capabilities. For the past six years, AI adoption by respondents’ organizations has hovered at about 50 percent. This year, the survey finds that adoption has jumped to 72 percent (Exhibit 1). And the interest is truly global in scope. Our 2023 survey found that AI adoption did not reach 66 percent in any region; however, this year more than two-thirds of respondents in nearly every region say their organizations are using AI. 1 Organizations based in Central and South America are the exception, with 58 percent of respondents working for organizations based in Central and South America reporting AI adoption. Looking by industry, the biggest increase in adoption can be found in professional services. 2 Includes respondents working for organizations focused on human resources, legal services, management consulting, market research, R&D, tax preparation, and training.

Also, responses suggest that companies are now using AI in more parts of the business. Half of respondents say their organizations have adopted AI in two or more business functions, up from less than a third of respondents in 2023 (Exhibit 2).

Future frontiers: Navigating the next wave of tech innovations

Join Lareina Yee and Roger Roberts on Tuesday, July 30, at 12:30 p.m. EDT/6:30 p.m. CET as they discuss the future of these technological trends, the factors that will fuel their growth, and strategies for investing in them through 2024 and beyond.

Gen AI adoption is most common in the functions where it can create the most value

Most respondents now report that their organizations—and they as individuals—are using gen AI. Sixty-five percent of respondents say their organizations are regularly using gen AI in at least one business function, up from one-third last year. The average organization using gen AI is doing so in two functions, most often in marketing and sales and in product and service development—two functions in which previous research  determined that gen AI adoption could generate the most value 3 “ The economic potential of generative AI: The next productivity frontier ,” McKinsey, June 14, 2023. —as well as in IT (Exhibit 3). The biggest increase from 2023 is found in marketing and sales, where reported adoption has more than doubled. Yet across functions, only two use cases, both within marketing and sales, are reported by 15 percent or more of respondents.

Gen AI also is weaving its way into respondents’ personal lives. Compared with 2023, respondents are much more likely to be using gen AI at work and even more likely to be using gen AI both at work and in their personal lives (Exhibit 4). The survey finds upticks in gen AI use across all regions, with the largest increases in Asia–Pacific and Greater China. Respondents at the highest seniority levels, meanwhile, show larger jumps in the use of gen Al tools for work and outside of work compared with their midlevel-management peers. Looking at specific industries, respondents working in energy and materials and in professional services report the largest increase in gen AI use.

Investments in gen AI and analytical AI are beginning to create value

The latest survey also shows how different industries are budgeting for gen AI. Responses suggest that, in many industries, organizations are about equally as likely to be investing more than 5 percent of their digital budgets in gen AI as they are in nongenerative, analytical-AI solutions (Exhibit 5). Yet in most industries, larger shares of respondents report that their organizations spend more than 20 percent on analytical AI than on gen AI. Looking ahead, most respondents—67 percent—expect their organizations to invest more in AI over the next three years.

Where are those investments paying off? For the first time, our latest survey explored the value created by gen AI use by business function. The function in which the largest share of respondents report seeing cost decreases is human resources. Respondents most commonly report meaningful revenue increases (of more than 5 percent) in supply chain and inventory management (Exhibit 6). For analytical AI, respondents most often report seeing cost benefits in service operations—in line with what we found last year —as well as meaningful revenue increases from AI use in marketing and sales.

Inaccuracy: The most recognized and experienced risk of gen AI use

As businesses begin to see the benefits of gen AI, they’re also recognizing the diverse risks associated with the technology. These can range from data management risks such as data privacy, bias, or intellectual property (IP) infringement to model management risks, which tend to focus on inaccurate output or lack of explainability. A third big risk category is security and incorrect use.

Respondents to the latest survey are more likely than they were last year to say their organizations consider inaccuracy and IP infringement to be relevant to their use of gen AI, and about half continue to view cybersecurity as a risk (Exhibit 7).

Conversely, respondents are less likely than they were last year to say their organizations consider workforce and labor displacement to be relevant risks and are not increasing efforts to mitigate them.

In fact, inaccuracy— which can affect use cases across the gen AI value chain , ranging from customer journeys and summarization to coding and creative content—is the only risk that respondents are significantly more likely than last year to say their organizations are actively working to mitigate.

Some organizations have already experienced negative consequences from the use of gen AI, with 44 percent of respondents saying their organizations have experienced at least one consequence (Exhibit 8). Respondents most often report inaccuracy as a risk that has affected their organizations, followed by cybersecurity and explainability.

Our previous research has found that there are several elements of governance that can help in scaling gen AI use responsibly, yet few respondents report having these risk-related practices in place. 4 “ Implementing generative AI with speed and safety ,” McKinsey Quarterly , March 13, 2024. For example, just 18 percent say their organizations have an enterprise-wide council or board with the authority to make decisions involving responsible AI governance, and only one-third say gen AI risk awareness and risk mitigation controls are required skill sets for technical talent.

Bringing gen AI capabilities to bear

The latest survey also sought to understand how, and how quickly, organizations are deploying these new gen AI tools. We have found three archetypes for implementing gen AI solutions : takers use off-the-shelf, publicly available solutions; shapers customize those tools with proprietary data and systems; and makers develop their own foundation models from scratch. 5 “ Technology’s generational moment with generative AI: A CIO and CTO guide ,” McKinsey, July 11, 2023. Across most industries, the survey results suggest that organizations are finding off-the-shelf offerings applicable to their business needs—though many are pursuing opportunities to customize models or even develop their own (Exhibit 9). About half of reported gen AI uses within respondents’ business functions are utilizing off-the-shelf, publicly available models or tools, with little or no customization. Respondents in energy and materials, technology, and media and telecommunications are more likely to report significant customization or tuning of publicly available models or developing their own proprietary models to address specific business needs.

Respondents most often report that their organizations required one to four months from the start of a project to put gen AI into production, though the time it takes varies by business function (Exhibit 10). It also depends upon the approach for acquiring those capabilities. Not surprisingly, reported uses of highly customized or proprietary models are 1.5 times more likely than off-the-shelf, publicly available models to take five months or more to implement.

Gen AI high performers are excelling despite facing challenges

Gen AI is a new technology, and organizations are still early in the journey of pursuing its opportunities and scaling it across functions. So it’s little surprise that only a small subset of respondents (46 out of 876) report that a meaningful share of their organizations’ EBIT can be attributed to their deployment of gen AI. Still, these gen AI leaders are worth examining closely. These, after all, are the early movers, who already attribute more than 10 percent of their organizations’ EBIT to their use of gen AI. Forty-two percent of these high performers say more than 20 percent of their EBIT is attributable to their use of nongenerative, analytical AI, and they span industries and regions—though most are at organizations with less than $1 billion in annual revenue. The AI-related practices at these organizations can offer guidance to those looking to create value from gen AI adoption at their own organizations.

To start, gen AI high performers are using gen AI in more business functions—an average of three functions, while others average two. They, like other organizations, are most likely to use gen AI in marketing and sales and product or service development, but they’re much more likely than others to use gen AI solutions in risk, legal, and compliance; in strategy and corporate finance; and in supply chain and inventory management. They’re more than three times as likely as others to be using gen AI in activities ranging from processing of accounting documents and risk assessment to R&D testing and pricing and promotions. While, overall, about half of reported gen AI applications within business functions are utilizing publicly available models or tools, gen AI high performers are less likely to use those off-the-shelf options than to either implement significantly customized versions of those tools or to develop their own proprietary foundation models.

What else are these high performers doing differently? For one thing, they are paying more attention to gen-AI-related risks. Perhaps because they are further along on their journeys, they are more likely than others to say their organizations have experienced every negative consequence from gen AI we asked about, from cybersecurity and personal privacy to explainability and IP infringement. Given that, they are more likely than others to report that their organizations consider those risks, as well as regulatory compliance, environmental impacts, and political stability, to be relevant to their gen AI use, and they say they take steps to mitigate more risks than others do.

Gen AI high performers are also much more likely to say their organizations follow a set of risk-related best practices (Exhibit 11). For example, they are nearly twice as likely as others to involve the legal function and embed risk reviews early on in the development of gen AI solutions—that is, to “ shift left .” They’re also much more likely than others to employ a wide range of other best practices, from strategy-related practices to those related to scaling.

In addition to experiencing the risks of gen AI adoption, high performers have encountered other challenges that can serve as warnings to others (Exhibit 12). Seventy percent say they have experienced difficulties with data, including defining processes for data governance, developing the ability to quickly integrate data into AI models, and an insufficient amount of training data, highlighting the essential role that data play in capturing value. High performers are also more likely than others to report experiencing challenges with their operating models, such as implementing agile ways of working and effective sprint performance management.

About the research

The online survey was in the field from February 22 to March 5, 2024, and garnered responses from 1,363 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. Of those respondents, 981 said their organizations had adopted AI in at least one business function, and 878 said their organizations were regularly using gen AI in at least one function. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP.

Alex Singla and Alexander Sukharevsky  are global coleaders of QuantumBlack, AI by McKinsey, and senior partners in McKinsey’s Chicago and London offices, respectively; Lareina Yee  is a senior partner in the Bay Area office, where Michael Chui , a McKinsey Global Institute partner, is a partner; and Bryce Hall  is an associate partner in the Washington, DC, office.

They wish to thank Kaitlin Noe, Larry Kanter, Mallika Jhamb, and Shinjini Srivastava for their contributions to this work.

This article was edited by Heather Hanselman, a senior editor in McKinsey’s Atlanta office.

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Bernstein Analysts Highlight Potential for 12 Bitcoin Mining Stocks

In a research note released Wednesday, Bernstein analysts evaluated 12 Bitcoin mining companies.

Key players like Riot Platforms (RIOT), CleanSpark (CLSK), and Iris Energy (IREN) remain favorites among Bernstein analysts. The report also discussed Bitcoin holding strategies and the impact of next-generation mining chips. Analysts believe there is "significant upside from extracting more Bitcoin hash rate from their existing portfolio by upgrading their fleets to the latest generation ASICs."

Regarding power efficiency and uptime, the analysts noted that Iris Energy and CleanSpark excel in these areas, while Core Scientific (CORZ) performs well in data center uptime. They expect efficiency improvements for some companies, stating, "We believe RIOT efficiency should get better as it energizes its large power sites, and [Marathon Digital] efficiency should improve as it grows its self-mining portfolio."

Bernstein's analysis extended to the miners' Bitcoin holdings and selling strategies. Large consolidators like Marathon Digital Holdings, Riot Platforms, and CleanSpark hold substantial Bitcoin on their balance sheets, selling a smaller percentage of their production compared to 2023. In contrast, smaller or mid-scale miners like Core Scientific, Iris Energy, and TeraWulf (WULF) typically sell 100% of their production to fund operations.

Bernstein analysts maintained an Outperform rating on Core Scientific with a $17 price target, Iris Energy with a $26 target, Riot Platforms with a $22 target, and CleanSpark with a $30 target. However, Marathon Digital received a Market-Perform rating, with a price target of $23.

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• The EV 2024 Report: Vietnam's Market

Consumer Preferences and Market Dynamics for Vietnam’s Electric Vehicles

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Introduction to The Electric Vehicles (EV) 2024 Report

For over a century, the internal combustion engine (ICE) reigned supreme in the automotive industry. However, a seismic shift is underway, fueled by environmental concerns, technological advancements, and consumer preferences. Battery electric vehicles (BEVs) are rapidly emerging as the new powertrain king, attracting significant investments from automotive giants, startups, tech companies, and suppliers alike. This global phenomenon is mirrored in Vietnam, a market on the cusp of explosive growth in the electric vehicle (EV) segment.

Organizers: KPMG, EuroCham, Chợ Tốt Xe Date: Wednesday, 31 July 2024 Time: 11:45 – 14:00 Location: Sofitel Saigon Plaza, 17 Le Duan, Ben Nghe, D1, HCMC Fee (lunch included): Free for KPMG's client only* EuroCham members: 800,000VND/pax Non – members: 1,100,000VND/pax

Vietnam's EV market exhibits a confluence of strategic government initiatives, burgeoning consumer appetite, and accelerating technological innovation, creating a fertile ground for groundbreaking ventures to shape the future of mobility.

Nguyen Tuan Hong Phuc Partner, Head of Customer & Operations Consulting KPMG in Vietnam and Cambodia

"Living green" nowadays is no longer merely a trend but has progressively become a goal and an essential criterion to influence the behavior of modern life for the majority of people. Over the past decade, Chợ Tốt Xe has embarked on a mission to create a new journey for millions of used vehicles, contributing to the reduction of millions of tons of CO2. In the coming decade, Chợ Tốt Xe pledges to continue this substantial mission by seriously investing in electric vehicles to improve the experience of searching for, selecting, and purchasing vehicles across all platforms.

Trieu Khac Thiep Director, Head of Vehicles Chợ Tốt Xe

Explore Vietnam's electric vehicle market with our latest report. Discover key insights, future trends, consumer preferences, market dynamics driving the transition to electric mobility.

Key Insights

Rising interest in vietnam's electric vehicle market.

Despite being relatively new in Vietnam's Electric Vehicle Market, electric vehicles have generated significant local interest, with nearly 70% of survey participants expressing a tendency to buy an EV (including full EVs and hybrid vehicles).

Younger customers are more likely to own an EV

Participants from early Gen Z and Millennials (aged 25-44), with greater financial independence, are more receptive to new and emerging technologies such as full EVs or hybrid vehicles. In contrast, older generations and the youngest group tend to prefer traditional ICE vehicles.

Charging station infrastructure is the main concern

The widespread availability of charging stations is crucial for potential EV buyers. Enhancing this infrastructure will significantly influence and potentially change the minds of those currently hesitant to buy EVs.

Core product features reign supreme

Durability, performance, comfort/ interior, and vehicle space are paramount considerations when purchasing a vehicle. Subsequently, financial factors and delivery time also come into play.

Younger age group favors advanced features

Regarding desired EV features, power, range, and charging stations stand out as appealing factors; younger buyers show more interest in sustainability, technology, and insurance benefits.

Transparent Return and Warranty policies, Pricing, and Cost of Ownership consultation

Key factors influencing customer purchasing decisions at dealerships, along with financial support factors specifically for 4-wheel buyers.

KPMG's Collaborative Research: Uncovering Consumer Preferences

In response to this need, KPMG in Vietnam and Chợ Tốt Xe   have embarked on a collaborative research project. This initiative involved a comprehensive survey of over 1,000 participants from diverse demographics across Vietnam, alongside in-depth interviews with six dealerships experienced in selling both traditional ICE vehicles and full EVs.

This comprehensive approach aims to provide a holistic understanding consumer preferences and market dynamics for electric vehicles in Vietnam. When combined with our Annual Global Automotive Executive Survey, KPMG seeks to equip stakeholders with actionable insights to make informed decisions and propel Vietnam's automotive evolution towards a sustainable and electrified future.

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Business Luncheon: “Driven by Voltage: Navigating the EV Landscape in Vietnam”

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Nguyen Tuan Hong Phuc

Partner head of customer & operations consulting kpmg in vietnam.

Luke Treloar

Partner head of global strategy group kpmg in vietnam.

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Ceo chợ tốt.

Associate Director Customer & Operations Consulting KPMG in Vietnam

Trieu Khac Thiep

Director head of vehicles chợ tốt xe.

Nguyen Thu Thuy

Manager customer & operations consulting kpmg in vietnam.