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why market research is important for business

Written by Mary Kate Miller | June 1, 2021

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Components of market research

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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.”

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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 .

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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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The Importance of Market and Marketing Research in Business

Learn the difference between market research and marketing research

Laura Lake is a marketing professional and author of "Consumer Behavior for Dummies."

When it comes to running a business, making assumptions about your customers, market, competitors, or systems can cause you to waste time, money , and effort.

To make effective decisions that will grow your business and use your resources wisely, you will need to put some of those resources toward conducting market and marketing research.

Market Research vs. Marketing Research

Market research involves identifying a specific "target," and focusing exclusively on that group. It is research into a narrow group of consumers to understand their behavior and motivation.

Marketing research has a broader scope that market research. It is used to examine the entire marketing process of a company, rather than only looking at the consumers that the company is targeting.

The Importance of Market Research

Successfully running and growing your business depends on understanding your target customers. Once you have a clear picture of their goals, needs, and values, you are more able to drive them towards purchasing your products or services.

Market research is one of the best tools you have for understanding your customers. It gives you hard data that you can use to drive your marketing strategy, making both marketing and selling easier and more effective. 

Market research helps you:

  • Improve communication.  It drives your communication not only with your current customer base but with target prospects as well. Market research shows you where your customers can be reached, as well as what language will be most effective in attracting their attention and resonating with them on an emotional level.
  • Identify opportunity.  Market research helps you identify both high-level and more accessible opportunities for reaching and converting new customers. It can be the best way to discover new platforms for advertising, consumer concerns you were unaware of, and gaps within your market that you can fill.
  • Lower your risk.  Concrete data keeps you focused on the real opportunities and helps you avoid unproductive effort. When you understand your customers, you can use your resources to reach them more effectively, with less risk of wasting time, money, and effort on marketing initiatives that don't work. Market research also helps you identify low-risk, high-reward areas where your company can expand or offer new services,

The Importance of Marketing Research

Marketing research is important for evaluating what is and is not working in your business model. It includes research into your target market, as well as the systems in your business that make up your marketing conditions.

Marketing research looks at every aspect of the Four Ps of marketing: product, price, place, and promotion. This includes:

  • Public Relations
  • Modes of distribution
  • Development of new products/services
  • Promotions and advertising
  • Market conditions

Marketing research helps you learn not just what your customers want, but how successful your business is at reaching and connecting with them. It helps you identify problems and opportunities, refine your systems, and evaluate your marketing strategy.

How to Conduct Research for Your Business

Though they look at different aspects of your business, both market research and marketing research should follow the same pattern of data collection and analysis.

  • Define the problem.  Start by identifying the focus of your research. Knowing what question you are trying to answer will help you structure your research effectively.
  • Determine your budget and timeframe.  How much can you afford to spend on the research process? How soon will you need to have data collection completed? Like all the strategies that you use to grow your business, research should be conducted within your available resources. However, depending on the urgency of the questions you are answering, it may be worth spending more money to get the most comprehensive results possible.
  • Design your method and needs.  Identify what data needs to be collected and how you will gather it. Some options are observation, surveys, telephone calls, or focus groups. If you are unsure how to structure your data collection, consider working with a professional research firm.
  • Choose a sampling method. How will you select the participants for your research? You may need a random sampling from the general population of consumers, a group that all have a single lifestyle factor in common, or responses only from people who are already your customers. Create a plan for identifying and contacting your participants.
  • ​​ Plan for data analysis. Decide how you will analyze your data. Will you need quantitative data for statistical analysis or qualitative, observational data to give you a broad picture? Will you use software or do it by hand? Take time to learn about various methods of analysis to find the one that will best answer your research question.
  • Data collection.  Once you know what question you want to answer and have designed a research method to answer it within the constraints of your available budget and time, it's time to collect data. Many businesses work with professional firms or consultants to conduct their actual research.
  • Analysis of the data. No matter how straightforward your data seems at first glance, you'll want to use specific methods of analysis to ensure that you understand what it is telling you. The methods of analysis that you use will depend on the type of data you collected. This should also be when you check for errors, which can occur in your sampling method, data collection, and analysis.
  • Create your report.  The final step of the research process is drafting a report on your findings. Your report should outline the entire research process, from developing your problem statement to the results of your data analysis.

No matter what type of research you are conducting, you will need to follow the full research method to arrive at a conclusion that will benefit your business. If your findings lead to a solution to your problem statement, you will be able to decide on the next steps for your business.

If you were unable to answer your research question, that doesn't mean your research was done incorrectly. You may discover that you need to ask different questions or that the situation was more complicated than you anticipated. When that happens, it's time to continue your research until you've arrived at a solution.


Market Research: What It Is, Why It Matters, and How To Get It Right

Market Research: What It Is, Why It Matters, and How To Get It Right

What is market research?

What is market research used for? How important is it? And, how do you choose the right type of research for your business?

Sit back, take five, and I’ll explain the different types of research , what tools are best for the job, and how you can leverage them to grow your business and master your market .

Market research definition:

Market research means to systematically collect and analyze data about a target market or defined segment. It’s a multivariate process that uncovers key facts and insights to inform decisions.

Definition of market research

Whether you’re launching a new product , looking for ways to expand a business, or seeking out efficiencies in an existing company, market research is a highly effective way to flesh-out ideas, innovate, and grow. 

Advantages of market research

Market research helps you identify your greatest strengths, threats, and opportunities. It can help you find your way when markets become tough to predict and find efficient ways to grow your business .

  • Reduce costs
  • Define detailed customer personas
  • Make data-driven decisions
  • Find new opportunities for growth
  • Unpack competitor’s successes
  • Develop an informed content marketing strategy
  • Identify trends
  • Inform market analysis
  • Discover the best marketing channels to use
  • Find the best ways to communicate with customers
  • Benchmark performance against rivals

Online market research can help the whole business at any stage of its life. When practiced consistently and systematically, you can realize its many benefits.

Why is market research important?

Market research helps you identify your greatest threats. And it also gives you a clear picture of opportunities you can capitalize on for greater returns on your business investments, or ROI.

Understanding your specific market on different levels and from different perspectives helps you reach well-informed, data-informed decisions . The process can involve multiple phases. But, if you follow a systematic approach using a market research template , your efforts will pay off.

To skip ahead and start right now, download our free pack of market research templates.

Different types of market research

Market research is a questions and answers game. Once you’ve asked the important questions, you’ll need to choose the right type of research to get your answers. There are four core types of research, each of which can be applied to help you solve a problem or gather insights to inform key decisions.

4 types of market research

Primary market research

Primary market research is the first-hand collection of data. It’s data that’s not available to others, and can be obtained in a number of ways. Here are the most common.

types of primary research

  • Web Metrics Use analytics software that provides traffic and engagement metrics to understand how audiences behave.
  • Observation To observe how users behave and navigate your site, you can install software that records visits and creates heatmaps. Such tools are useful for qualitative research regarding your UX/UI and at the same time, quantify the findings.
  • Customer surveys Survey questionnaires and polls can be distributed to any number of customers through email, SMS, your site, or social media. They let you collect both qualitative and quantitative data from respondents using open-ended questions.
  • Focus groups You select a small number of people for a group discussion. A moderator leads the session with questions and records the conclusions. This is also a form of qualitative research, and you would use it to get in-depth information.
  • Face-to-face interviews Another qualitative assessment method is one-on-one interviews. Consumers representative of your target audience or a segment of it are selected to answer questions about a specific research topic.
  • Phone calls To involve a larger number of people and get more answers, you can conduct surveys over the phone. These interviews would be less specific and include fewer questions.

Helpful: A complete guide to doing primary market research

Secondary market research

Secondary research is second-hand data that has already been produced. It’s available to all who wish to consume it. Using this type of data is preferred by those who wish to keep costs low, as it can be quicker and freely available.

types of secondary research

  • Government reports and census data Annual, quarterly, and other periodic industry reports are a rich data source to tap into. Government organizations publish statistics in areas of trade, ecommerce, and finance.
  • Academic papers and educational resources University research is a source of high-quality information. This is useful for in-depth background information on a broad scale.
  • Online articles and case studies, public and commercial sources Industry-specific publications can be a valuable source of information for market segmentation, providing you with data and insights on market trends or a specific market segment or niche.

Further reading: A complete guide to doing desk research

Qualitative market research

Qualitative market research is one of the best ways to understand how people think or feel about a brand, product, or service. It takes more time to plan and analyze the results than other market research types. However, with tools like market research surveys , there are quick and effective ways to do it.

types of qualitative market research

As some of the methods are outlined in the primary and secondary research sections, I’ve included a short list of qualitative research methods below.

  • Focus groups
  • Case study or whitepaper 
  • Online forums
  • Biometrics 
  • Ethnography

Helpful: Read the complete guide to qualitative research and 83 qualitative research questions & examples

Quantitative market research

Quantitative market research is all about numbers. It collects numerical data to help answer specific research questions . The information collected can be easily quantified and analyzed to establish trends, insights, and patterns.

With this type of research, you’ve got three core data collection methods. However, you’ve also got to consider the design of the research, which can impact which method is used.

What is market research used for?

The applications for market research are virtually limitless. Market research can help you unravel the most complex of business challenges to reach data-driven decisions , and when used consistently, it can help you navigate turbulent times, fuel growth, and support your success . Here are just a few examples of what market research is used for, with a few real-world examples thrown in for good measure.

1. Company research

Market research allows you to shine a spotlight on any business and unpack its wins and losses for your own gain. Let’s say you are doing market research for a business plan ; you’ll likely want to evaluate the successes of others in your industry. Doing systematic company research is a proven way to inform a SWOT analysis .

Doing industry analysis can show you who your industry leaders are , along with any emerging players showing exponential growth.

Industry Leaders from Similarweb's Market Research Tool

Let’s say I want to find out which companies to research, I would use Similarweb Digital Research Intelligence to analyze an industry. Here, I can see who my top companies to watch are instantly. It also shows me other companies showing rapid growth in my market.

Read More: How to Research a Company: The Ultimate Guide

2. Competitive benchmarking

Most of your relevant data will come from your competition. If you plan to offer something that’s new for you but already exists in the market, learn from other’s mistakes and successes. If your goal is to evaluate and optimize, collect competitors’ data, and compare it to yours. See what works for them, find their weak spots, and improve on them.

What is market research for - competitive analysis

What market research gives you here, is the ability to systematically compare each of your rivals. And, it’s not as complex as it sounds either. Simply choose a type of competitive analysis frameworks to use, complete the template for each; then compare the results to uncover relevant insights.

Read More: The Why and How of Competitive Benchmarking

3. Trendspotting

Another objective for market researchers is to forecast upcoming trends. Data collection over time helps you understand the dynamics of the market. Some markets have strong seasonal fluctuations. Increased shopping during December is an obvious example, but often these shifts are not always evident unless you measure and analyze them specifically.

With the data from your historical market research, you can evaluate their impact and the likelihood you will keep seeing these trends. Based on that, you can make predictions about future developments.

4. Audience analysis

Who will find your product most useful and why? 

Examining the size of your audience and the existing demand for your product or services is crucial. Understanding  your target audience allows you to build your product offering and marketing strategy more efficiently. You also want to learn first-hand where people buy this type of product and how much they are willing to spend so that you can estimate your reachable market share .

Audience Data from Similarweb Audience Analysis Tools

Here’s a quick example of how we use Similarweb to do effective audience analysis . You can unpack key audience demographics for any site you choose. And get up-to-date stats about gender, age, location, interests, browsing habits, and more.

5. Market segmentation

There are lots of ways to segment a market. Doing this well can deliver higher conversions, reduce costs, redefine marketing strategies, and help you connect with customers on a more personal level. Market research can help you do most types of market segmentation, the most widely adopted of all is demographic segmentation. Here, you look for shared but specific characteristics of a target audience.

Demographic segmentation example

Using Similarweb, I can view audience demographics for a website, and compare it side-by-side with rival sites. In this example, I am looking at hotel booking sites to try and spot any difference between the respective audiences of each.

Helpful: Read our complete guide to market segmentation

6. Marketing strategy

Market research can also help you reach the right decision regarding where to advertise or market your business. After analyzing the data, you’ll know which marketing channels are most effective with your target audience. You can also use research to look at the specific keywords and ad creatives that are generating the best responses and ROI.

marketing channels overview

Similarweb Digital Research Intelligence makes this type of research effortless. Within the marketing channels tab, you can analyze an entire industry or hone in on a specific site of interest. View the various channels across social media, email, direct, organic search, paid search, and display ads to see which channels convert and where the highest channel traffic comes from.

7. Customer experience

Market research is your best way to get information that isn’t naturally visible but that may significantly affect your business. Just think, the fact that your users don’t complain doesn’t necessarily mean they are all delighted with what you offer.

While some customers tend to keep their criticism to themselves, others will be vocal and leave reviews online. Market research is a powerful tool to help inform improvements to services and products alike. Asking for feedback, listening to it, and looking at the feedback left for rivals in your market can uncover telling insights that can shape service offerings, marketing campaigns, and new feature development.

To see what people use market research for and view real-world instances of research in action, head over to our market research examples page.

Tools for market research

When we look at what market research is, the answer is always rooted in data . Over 100 years ago, vehicle manufacturers undertook extensive research to help them develop different models to suit various segments of society. Fast-forward 100 years, and we find similar applications still exist. However, what’s changed are the tools being used and, more importantly, the accessibility of those tools to a far broader audience .

There are more market intelligence tools in existence today than ever before. Here’s a quick summary of a few you can use to collect information for your market research.

  • Google Trends Google Trends is a valuable resource for quantitative research data about market tendencies and user behavior.

Snapshot of Google trends

  • Similarweb Research Intelligence Get the freshest digital intelligence from a platform that shows the insights that count. With the ability to analyze an entire market in an instant and unpick competitors’ wins and losses online, you can count on it to help you perform quick and effective market research.
  • Hotjar The digital tool lets you observe and record user behavior on your website. It also creates heatmaps of your pages so you can analyze how visitors navigate.
  • SurveyMonkey Create your own online survey with this free tool. SurveyMonkey provides templates for questionnaires and lets you distribute them through your various channels, then collect and interpret results.
  • YouGov This platform offers its users daily with thousands of data points and statistics on consumer attitudes, opinions, and behavior.
  • Pew Research Center This non-profit organization conducts and publishes public opinion polling, demographic research, content analysis, and other data-driven social science research.
  • Living Facts The site provides current statistics about the American population, including demographics, social and health issues, opinions, and more.

Read this post to see what market research tools are hot right now.

Wrapping up: what is market research

Market research is insight. It gives you information to fuel key decisions in your business. Without it, companies must navigate their market uncertainly and make key decisions based on instinct or outdated data.

Similarweb transforms the way companies do market research . There’s no expensive outlay for prolonged research reports that take an age to produce. The data is the freshest there is; it’s credible and shows traffic trends and comparable performance like no other.

Try using it to answer your next big market research question.

Stop Guessing, Start Analyzing

Get actionable insights for market research here

What are the benefits of market research?

Effective market research helps businesses understand and improve their position while also identifying potential threats and opportunities, while also spotting emerging trends .

What is the main purpose of market research?

The main benefit of market research is insight. It can give you access to the data you need to make decisions in your business. Before you invest money or time in any venture, use market research to inform your decision.  

What’s the difference between primary and secondary market research?

Primary research is research you conduct on your own that uses numbers and metrics, and secondary research is research that was done by someone else with a qualitative focus.

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Why Is Market Research Important: We Give You 7 Reasons

Market Research

Planning and conducting market research is a critical component of any business. It provides decision-makers with important information to decide the course of the company, launch a new product, or to keep a tab on what competitors are doing.

Data indicates that market research is a growing industry of 47.36bn USD , globally – and rightly so. For a business to succeed, all its resources – financial and otherwise – must be invested in areas where they are needed the most. Conducting market research helps you identify those areas. It also helps you discover and understand your customers’ needs so you can innovate better, expand when the time is right, and work with more focus.

In this article below, we will share a few pointers with you about why market research is important for every business – big and small. But first, let’s talk about the types of market research.

Types Of Market Research

Depending on the purpose of your research, you can choose either of the two main types of market research. These are primary research and secondary research.

– Primary Research

Primary research is direct research that you conduct yourself or hire someone else to do it for you. It involves reaching out to your target market, asking them questions, collecting data, and analyzing the information gathered. Based on the data, strategies are devised, decisions are made, and policies are created.

Primary research helps you explore issues, dig deeper, and ask specific questions that are relevant to what you are looking for. Because it takes more time and effort, it may also cost a bit more than secondary research but it is more effective and helps you gain a solid picture of what’s going on.

– Secondary Research

Secondary research is using somebody else’s primary research for your business purposes. Research that is already conducted, organized, and published is often used by small businesses to gauge market trends, current economies, and to devise plans.

A lot of government agencies conduct market research for various purposes. If you’re on a budget, going to one of those agencies may help you out a lot as most of that research is freely available to the public. If you want to access a private market research company’s report, you may have to pay a fee to access the complete file.

However, there are private companies that publish their reports publicly. Additionally, you can also go online and conduct Google searches looking for specific phrases relevant to your research purpose to find valuable data.

Why Is It Important?

Now that we know what market research is and what different kinds it has, it’s time to learn why it is important, and why you should invest in it if you want to become a successful entrepreneur.

1. It Helps You Identify The Problem Areas As Well As Strong Areas

Knowing what you are good at and what you’re not, help you take profitable risks in life. It’s true in business too. Accurate market research helps you identify business areas that are performing well, those that need more attention, and also those that you should perhaps give up.

Back in 2010 , two young tech enthusiasts launched a location-based app – Burbn – that would allow consumers to check-in, make plans of hangouts with friends, share pictures, and more. Few weeks into the launch, they realized through internal discussions and reevaluation of the market, that Burbn is cluttered and their target market is more into Foursquare and they won’t be able to budge them.

They took a long, hard look at their app again – which had already been launched – and started working on it from scratch, removing all the features and only letting the photo-sharing, liking, and commenting options intact. And thus, Instagram was born.

It also helps you discover and understand your customers’ needs so you can innovate better, expand when the time is right, and work with more focus. For example, if you plan on starting a digital marketing agency , you’d know that there’s more need for social media in your area, than for PPC services. Thus, you’ll hire more social media experts.

2. It Helps You Understand Your Customers’ Needs

It is not enough that you know your business; you got to know what your customers are saying about you – and about your competitors. If you have got your pulse on what your customer is thinking, you’d create products that solve their issues, reach out to them when they are most ready to listen, and help them become your loyal ambassadors.

A huge part of business market research is always dedicated to gauging customer satisfaction rates, their reactions to a new product, and what they are looking for next.

In 2005, when YouTube initially launched, it was for a very different purpose : dating. Pretty soon into launch, however, and by investing in robust market research (a part of which they conducted themselves) the founders realized that their video dating app is not what their customers are looking for. Analyzing the data, they discovered that there is no app or platform in the market for video sharing. The websites that were offering this service were patchy at best and not intuitive at all.

Being attuned to their customers’ needs and spotting a wide space in the market, they tweaked their video platform and launched YouTube .

Following what your customers are talking about, listening to them, and then delivering on their needs is an important task that you can fulfill with timely customer-centered market research.

3. Helps You Conduct Your Marketing Based On Informed Decisions

Launching and running a business means making decisions every day – about products, services, expansions, HR, and so much more. Without solid market research backing your decisions, all you are doing is guess-work, hoping the results will be in your favor.

With research helping your business, you are better informed about areas to invest in, gauge the potential success of new products, test new markets to expand into, and to determine what kinds of products/services will be most favored by your customers.

This is certainly what Starbucks does. The company has a whole dedicated platform ‘My Starbucks Idea’ where employees and customers and anyone who wants can pitch in and share what they think the company should do next, the flavors it should try, the new products it should launch, bring back some old favorites, and more.

The platform helps them remain informed on all important aspects of business investment and propels them towards ventures and venues that hold the most potential.

If you aren’t a humungous company like Starbucks and cannot afford to host dedicated platforms to gain important information, invest in market research whenever you have a big decision coming up. It isn’t as expensive as you think and doesn’t take that much time. Plus the results can be relevant for a lot of related areas that you may want information on.

4. Helps You Keep An Eye On Your Competitors

As a startup founder, you may think being original is all about being focused on what you’re doing and not worry about what everyone else may be up to. This approach spells long-term disaster. While you should certainly keep your focus on your own efforts, it is critical – and smart – to keep tabs on your rivals and know what they are thinking or planning.

With sound market research on your side, you can better prepare for what your competitor may be about to do next and make sure they aren’t able to put a dent in your market share. With regular research, you can not only learn to anticipate their next move but be in a better position to avert any possible damage from their end.

In addition to conducting market research , you can pair it up with regularly monitoring their social media or to increase Instagram followers , blog posts, and seeing what is trending in your market. Here is a great resource on how you can go about it.

5. Helps You Expand And Innovate

Market research can help you identify markets and geographical areas where you can expand to. It can also help you to invest in ideas that have the most potential to succeed based on what customers are looking for and what the market is lacking.

For example, if you are a retail company, conducting market research can help you identify locations where your store can profit the most. If you are planning to buy a business to increase your market share, market research can help you point towards businesses that may be ripe for acquiring. Not only that, conducting market research before you launch your business can help you figure out ways to put your best foot forward.

It guides you towards opportunities where you have the most room to innovate and take risks with the highest return potential. For example, if your competition is employing cutting edge tech such as VoIP to get better results, you can also employ the same to improve your customer care and business goals.

6. Helps You Set Business Goals

Goal-setting is one of the major parts of running a business – big and small. Goals give you directions, help you remain in sight of the bigger picture, and set you on the path of continued success. Goals can be of different kinds: short-term, long-term, department-oriented, over-arching, and such.

To set all these kinds of goals and get ready to meet them, businesses need to have a thorough and complete knowledge of their strengths and weaknesses. They need to be aware of how the market is behaving and predict what may come next.

All of this is only possible after conducting market research. With the help of focused market research, you can set achievable business goals and not follow some vague notions of instant success. These often include how to improve productivity, customer satisfaction, and business’ financial health. You can also use market research to learn ways you can reduce expenses without hurting the business, find out how to amplify your digital marketing , generate copywriting tips for research paper writers , or introduce a new employee incentive program.

7. Helps You Know Which Risks To Take And Increases Earning Potential

Risk-taking is an important component of the business. Without it, you can become stagnant and a sitting-duck for a more ambitious rival. But risk-taking cannot be a shot in the dark. To know which risks to take and when to take the plunge are attributes of successful innovators. From Dropbox’s Drew Houston who refused Steve Jobs to Google’s buying of YouTube when it was a fledgling startup, the history of business success and innovating is packed full of stories of ambitious – but informed – risk-taking.

Using market research, you can also join the ranks of informed-decision makers who do not shy away from taking risks. It prevents you from making costly mistakes that could have been avoided and take steps that result in massive profits.

Take the example of Frito-Lay . When the potato chip maker wanted to introduce a new brand , it launched online market research conducted through Facebook to ask its customer-base which flavor they would like the best. The results showed that beer-battered onion-ring flavor is a hit in California and Ohio, while New Yorkers preferred the Churros flavor idea. This research also helped him increase Instagram followers as his posts became popular over the internet.

The research helped the company come up with different flavors and market them strategically to different states. If the research would not have been done, the company would have come up with a new flavor that could have been a hit – or a miss.

Popular Instruments Of Market Research

As technology keeps advancing, market research keeps evolving. Where before you had to rely on face-to-face interviews, telephone surveys, or lengthy online questionnaires, now it’s all about short online surveys, instant case studies aided by technologies, and focused groups that are already available on your social media channels.

Below we talk about 4 popular instruments of market research that are frequently used by companies worldwide with excellent results.

– Surveys

The survey is a quantitative method of research which means it gives you numerical scores. These scores pertain to specific answers and don’t leave much room for multiple interpretations. Because they are precise, provide specific answers, and immediate interpretation, quantitative methods are popular to conduct research when you are looking for exact information: to find out how to solve a particular problem, etc.

According to a study conducted by , 26% of all market research is conducted through online quantitative methods, with online surveys accounting for a major share of 79%.

If you know how to create an easy survey online for your company, here is a great resource to get you started.

– Case Studies

Case studies are usually qualitative research methods; however, you can incorporate a mixed approach with a quantitative questionnaire thrown in for additional information. Using case studies, you focus on a single individual or single entity to research them thoroughly. The purpose of using case studies in business market research is usually to test theories of what went wrong in a particular situation or what went right.

Case studies are time-taking but provide extremely valuable information, detailed data, and in-depth analysis opportunities.

– Focus Groups

Focus groups are another popular instrument to conduct market research in business. A focus group consists of a small portion of your target audience that you can study in detail. It is a qualitative method of research and allows you to bring together a group of individuals that can take part in a guided form of discussion.

You can give them one or more focus questions that the group can talk about and share their views on. Focus groups are great to use when you’re creating a new product, researching a particular market segment, or want to know what your customers are thinking about you or your market.

Similar to case studies, focus groups give you a comprehensive view of a situation and allow you to conduct an in-depth analysis of different business elements.

Market Research Trends

The Future Of Market Research

The future of market research is bright. As a budding and burgeoning industry, it shows all the trends of continued growth. But as technology becomes more accessible and mobile devices more popular than desktops, market research is also evolving to fulfill the shifting customer needs.

The surveys are becoming shorter as nobody has got the time or interest to fill out a 10-page questionnaire. Artificial Intelligence is making the data collection process quicker and more intuitive. And as time passes, you’ll see more and more market surveys being optimized for mobile.

So use all that modern market research has to offer you and use it to propel your business for the success you’d always dreamed of.

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About The Author Kelvin Stiles

Kelvin Stiles is a tech enthusiast and works as a marketing consultant at SurveyCrest – FREE online survey software and publishing tools for academic and business use. He is also an avid blogger and a comic book fanatic.

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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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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?

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

Business intelligence insight graphic with hand showing a lightbulb with $ sign in it

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.

Build your project graphic

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.

Market Research Graphic Crunchbase

  • 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.

Enrich your database graphic

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.

Product Image Advanced Search CRMConnected

  • 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.
  • : 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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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.

Dashboard showing Facebook competitors report on Sprout Social

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.

row of product listing ads on Google for the search term "baby carrier"

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

list of sponsored results for the search term "email marketing tool"

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?

list of promotional emails from different companies including ASOS and Dropbox

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.

email from asana asking users to take a survey

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.

twitter poll from canva asking people about their color preferences for the brand logo

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.

cross channel profile performance on Sprout Social

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.

content analysis report on buzzsumo

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.

organic traffic and keywords report on ahrefs

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.

user persona example template on xtensio

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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Why Market Research Is Important

2022-06-02 Market Research

why market research is important for business

A consumer sees an ad for a product that seems perfect for them and rejoices over their luck, but this scenario likely didn’t (and shouldn’t) come down to luck. Companies make these scenarios possible through strategic market research. Equipped with valuable information about its target market, a company can develop products and create marketing campaigns that appeal directly to consumers. And the benefits don’t stop there. You can leverage the data procured through market research to propel your company to success in a variety of ways.

We’ll break down the basics of market research below to show how companies use it and explore some of the key benefits. If you’re not taking full advantage of market research to make data-driven decisions, you should start considering the ways it could help your company grow.

What Is Market Research in Business?

Market research involves gathering data to learn more about target demographics and consumers so a business can market itself more effectively and, ultimately, succeed in the market. Market research is a vital part of any business strategy, whether that business is B2B or B2C, big or small, new or old. It provides the answers companies need to make decisions that will move them forward instead of back by empowering them to base decisions on data.

Most companies know what market research is and acknowledge its importance in a general sense, but they may not realize just how crucial market research is to the success of their business. When you need to identify market trends, understand your core customer better, or achieve a long list of other important goals, market research is the answer.

why market research is important for business

Types of Market Research

Market research is a broad category. In fact, there are many varieties of market research that you can use to meet the specific goals of your business. Below, we’ll explore the different benefits of each type of market research.

  • Brand research:  Brand research is focused on creating or refining your company brand to make a bold and favorable impression on your target market. You could look into the level of brand awareness among your target audience, how loyal customers are to your brand, what sorts of qualities people associate with your brand, and other aspects of customers’ relationship with your brand.
  • Marketing campaign evaluation:  Some market research focuses specifically on  marketing campaign effectiveness . You can evaluate how many people have seen your online ads and what the click-through rate has been, for example. This type of information can help you make adjustments if needed and inform future campaigns so you reach consumers effectively and keep customer-acquisition costs down.
  • Competitor research:  Competitor research focuses on the competition to help you gain insights into how your company can pull ahead. Looking into a competitor’s marketing campaigns, brand reputation, revenue or sales volume, and other important data points can help you learn from their strengths and weaknesses.
  • Customer segmentation research:  An important type of market research, especially for new businesses, is customer segmentation. These studies divide your larger consumer base into different groups or personas. Understanding the different types of consumers you want to connect with can help you create individualized campaigns tailored for each group.
  • Consumer research:  Nearly all market research involves the consumer in some fashion, but some research is focused specifically on understanding consumers within a certain segment better. You may want to learn about their purchasing habits, interests, motivations, and more. The better you understand your consumers, the more effectively you can appeal to them.
  • Product development:  Developing products calls for market research first to ensure the concept has value and then to refine the product over time. For example, you may see sales dipping on a flagship product and discover that customers’ needs have shifted and this product should offer a new feature to be more useful or convenient.
  • Usability testing:  Similar to product development research, usability testing is focused on products. However, the focus here is on how consumers use your product. You may release a beta version of your mobile app, for example, and get feedback from users to find out if there are any bugs or other problems you need to work out.

why market research is important for business

The Benefits of Market Research

Market research can deliver valuable benefits to companies like yours. Let’s look at some of the most impactful ways market research can empower your company to succeed.

1. Maintain a Customer-Centric Approach

Market research is all about understanding your consumer base better, and that is an essential step to creating a customer-centric business. Customer-centric companies keep the customer experience at the forefront of all they do. Research has shown that customer-centric  businesses are 60% more profitable . It’s easy to see why prioritizing the customer’s needs and desires is a recipe for success.

Market research is how you come to understand those needs and desires in the first place, along with other important aspects of your target customers. You can’t effectively build a customer-centric business unless you understand your customers. Conducting market research allows you to appeal more specifically to your customers’ pain points and preferences. It’s a win-win for your customers and your business.

One of the most effective ways to be customer-centric in your market research is by using a segmentation-targeting-positioning (STP) model. This marketing model involves:

  • Segmentation:  Brainstorm the possible segments your product or service may appeal to. These segments can be defined geographically, demographically, or otherwise.
  • Targeting:  Determine which segment or segments offer the most profitable opportunities for your company so you can focus on marketing to these segments.
  • Positioning:  Develop a strategy for addressing your target segment’s needs and do it better than your competitors. You can also consider the best way to promote your solution to the target segment.

why market research is important for business

2. Connect With Your Audience More Effectively

When you understand your target customers better, that means you’ll be able to more effectively reach them. When it comes to your marketing campaign, you don’t want to waste time and money on trial and error — you want to have an informed marketing strategy. There are two main elements of effectively connecting with your audience: the marketing channels you use and the content you share.

Using a one-size-fits-all approach, regardless of your audience, can be a costly mistake when it comes to marketing channels. The print publications your audience reads, the television shows they watch, and the websites they spend time on can dramatically differ from those of the target audience for your last product.

For instance, you can reach  close to half of the urban population  by advertising or marketing on Instagram, but you’ll only reach approximately a fifth of the rural population this way. So advertising your farm equipment on Instagram is likely a poor choice.

Choosing the right marketing channels is an important first step to reach your audience, but to truly connect with them, you also need to tailor the content of your marketing materials. Everything from the features of your product you advertise to the tone and visuals you use should be crafted to speak to your target audience. When customers feel you’re “speaking their language,” they’re more likely to pay attention to what you have to say.

3. Identify Opportunities for Growth

Market research isn’t just an important step for new companies or companies launching new products. Conducting market research periodically can help you discover new opportunities to improve and grow. For example, you may discover:

  • Unreached segments:  You may come across unreached segments that, like your current customers, could benefit from your products or services. Perhaps they just don’t know about your brand yet, or they think your products are intended for someone else. This segment could be consumers of a different age, gender, income level, or geographical region, for example. A simple modification in your product or marketing strategy may be all it takes to unlock a whole new customer base.
  • Business partnerships:  Through market research, you may also discover opportunities to partner with other businesses that already have an established connection with your target audience. Joint promotions can be mutually beneficial for you and the partner company. Essentially, you can combine the power of both your brands to expand and strengthen your reach.
  • Product improvements:  Market research can reveal possible shortcomings in your product or services that, if remedied, would allow you to appeal to more customers and improve customer satisfaction. You may also discover opportunities for add-ons, product bundles, or other upsells that appeal to customers’ preferences and help you increase profits.

why market research is important for business

4. Reduce Risks by Testing Concepts

Risk is a necessary part of any business venture. If businesses didn’t take on risks, they would also limit the potential for reward. However, successful businesses tend to mitigate their risks in strategic ways. The way to avoid risk is not to avoid doing anything. Instead, businesses should use market research to minimize risks and maximize rewards.

A major way you can minimize risks is by ensuring there’s demand for a product. The reality is that many products fail. Some experts place the  failure rate as high as 95% . While that estimate is likely too high, it remains true that many new products fail to connect with consumers and end up in clearance bins. One study found that, of the 9,000 new products that were broadly distributed at a national retailer,  60% were no longer sold  within three years.

Because of the high risk involved, you should never create a product based on a mere hunch. Use thorough market research to predict whether a product concept has real potential for success. Will your product meet a need or desire your customers have, and will it do so more effectively than your competitors are doing? When you have proof of concept, you can be more confident in your efforts and more effectively attract investors.

After you’ve created your product, whether it’s a prototype or a limited run, you can employ market research again to help you refine your strategy before an official product launch. For example, you could give samples of a new food product to passersby in exchange for their feedback. You can also use market research to test reactions to a new logo, new packaging, or any number of other business decisions.

why market research is important for business

5. Make More Informed Decisions

Market research empowers companies to make more informed decisions that are backed by data. Gut feelings are not reliable means of making decisions. For instance, you may think releasing a luxury version of your product at a higher price point is a great business idea, but consumers willing to pay that price may associate your brand with budget-friendly products and opt for luxury products from luxury brands instead. The only way to know for sure is to conduct market research.

Market research data can serve as a compass, steering each choice a company makes to take them one step closer to their goal of successfully converting and retaining their target customers.

Here are some examples of decisions you can make more accurately with the help of market research:

  • Choosing a different consumer base to target through a new marketing campaign
  • Determining which channels to include in your advertising campaign
  • Selecting design and personality elements to form a brand persona that will connect with your audience
  • Choosing whether to open a new retail location
  • Deciding whether a product should be discontinued or modified
  • Pricing products in a way that maintains margins and appeals to customers

Through market research, you can make these and other decisions based on data rather than guesses and, as a result, boost your chances of getting it right the first time.

6. Compete More Effectively

Solid market research can be the difference that gives you a competitive edge in the marketplace. For one, by understanding your customers better, you may be able to engage them more effectively than your competitor is doing. Additionally, competitor research can give you direct insight into your competitors so you can understand how you fit into the marketplace.

If you’re a newcomer and want to know the best ways to draw customers away from legacy brands, market research can help you find out where consumers are dissatisfied with these brands and their offerings. By pinpointing these gaps, you can appeal directly to consumers’ desires and market yourself as a disruptive company with a superior solution.

You can also use market research to help you discover underserved segments of the market. By targeting these underserved consumers, you can carve out a place in the market for yourself where you’ll excel. For example,  the founder of War Paint, a cosmetic company  marketed to men, said, “Growing up, I never felt there was a brand for me, that spoke to me.” War Paint and some other emerging cosmetic brands target male consumers who were previously not part of the equation in the makeup market.

why market research is important for business

7. Stay on Top of Trends

Market research isn’t just important for new businesses. As consumers evolve, companies must also evolve to optimize the way they connect with customers. Market research is a valuable means of staying up on relevant trends. Researching trends can often be done through secondary research. Industry reports or research from your competitors, for example, can reveal what new product features consumers are interested in.

Today’s culture changes rapidly, and market research is essential if you want to keep up. You need to stay aware of trends regarding your consumers’ purchasing behavior, the most popular advertising channels, packaging preferences, product features, relevant messaging, and much more. Mimicking what your competitor did last year isn’t a good strategy.

Trends are especially important and cycle more frequently in some industries, such as fashion and design. If your company sells light fixtures, for example, you need to conduct research frequently to see what styles appeal to modern interior designers and homeowners. You also need to be aware of any new technology you can incorporate into your product to help you stay at the cutting edge and deliver the latest and greatest products to your consumers.

why market research is important for business

How to Conduct Market Research

Companies can conduct market research through various means. First, it’s helpful to understand the difference between two main categories of sourcing market research data — primary and secondary research:

  • Primary research  is the data a company collects or an expert collects on the company’s behalf for their market research purposes. In other words, it’s field research. Some primary research is exploratory, meaning it’s more open-ended, and other forms of primary research aim to provide insight into specific questions or issues.
  • Secondary research  involves using data that already exists and is at your disposal for market research purposes. For example, you could consult government census data, industry data reports or statistics on market trends. This type of research can provide a good starting point for understanding the market more broadly and learning about the competition.

Secondary research tends to be a starting point before conducting primary research.

There are several methods of primary research companies use to learn from consumers. Some of the most popular methods include:

  • Surveys:  Surveys involve asking consumers questions they can quickly answer. Survey questions can be multiple choice or more open-ended. Surveys can be conducted in-person, over the phone, through the mail or  online . They provide a fast and simple way of reaching a large audience and getting their feedback.
  • Focus groups:  Focus groups tend not to involve as many participants as a survey. Instead, a market researcher leads a small group of consumers in a discussion to get a window into consumers’ thoughts. Because the groups are small, most companies will assemble multiple focus groups and take all the results into account. They may observe through a one-way mirror or watch a recording.
  • Interviews:  Interviews are similar to focus groups but may involve even fewer people. A one-on-one interview can be a valuable way of gaining detailed insight from one customer. These insights can be helpful, but they don’t provide statistically reliable data as you can get with a large survey.
  • Observation:  Market observation involves watching consumers to see how they behave under natural conditions, such as a retail store. These consumers may or may not know they are being observed. For example, researchers may watch security footage taken from a store to see which departments customers tend to go to first and whether they stop to look at point-of-purchase displays.
  • Field trials:  Field trials involve making a business move but doing so on a smaller scale and observing the results. For example, a restaurant chain may try a new menu item at a handful of locations and see how popular it is. If it’s a success, the company can feel more confident about adding the item to their menus throughout the region.

Companies can conduct their own market research in-house, but many choose to share their goals with a third-party expert who can create a market research strategy and execute it. By outsourcing your market research, you can streamline the process, focus on your core competencies, and receive valuable data from the experts that you can then leverage to drive your business forward.

why market research is important for business

Does Market Research Work?

Market research takes time, effort, and finances to complete, so it makes sense to spend these resources only if you’re going to get a positive return. The reality is that market research remains a crucial part of running a successful business because it is indeed worth the investment. Of course, market research alone won’t cause your business to succeed — but it will give you the information you need to make strategic decisions that will steer your company to success.

We looked at several benefits of market research but consider the inverse reality. Without market research, you could fail to connect with customers, miss out on growth opportunities, be vulnerable to risks, make poor business decisions, and ultimately lose your customers to your competitors. Some businesses get lucky without doing their research, but these instances are rare. Market research can help you avoid common pitfalls and grow your business.

Learn More About Our Market Research Tools

Market research should be a key part of your company’s recipe for success. Surveys are one of the most popular and effective means of reaching consumers and gaining insight into their values, preferences, opinions, and more. At Cint, we help brands and agencies conduct online studies that can empower them with the market research data they need. We can connect your company with millions of consumers, deliver fast results, and ensure those results are accurate through robust quality checks. Cint can help you produce the primary data you need on a tight timetable so you can make informed decisions to help you connect with customers and grow your business. To learn more about our market research tools, contact our team today.

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5 reasons why marketing research is important to your business

why market research is important

Marketing research is a critical tool that businesses and organisations use to gather valuable information about their target market and industry. By conducting research, companies can gain insights into customer needs, preferences, and behaviour, as well as market trends and the competitive landscape. In this article, we'll explore five reasons why marketing research is important for businesses and organisations.

5 reasons why marketing research is important

Is your company on the fence about investing in marketing research? If so, read on for five reasons why marketing research is important to the viability and longevity of your business.

1. Marketing research helps businesses understand their customers.

Knowing your customers is the first step in running a successful business. And while this may sound simple enough, it can be difficult to look inside the consumer psyche—one whose needs, preferences, and behaviours are ever-evolving.

Fortunately, marketing research can give you a peek behind the curtain, helping you understand what motivates current as well as potential customers. A marketing research survey , for example, can provide insight into pricing sensitivity among a segment of your target population. The data yielded may suggest that boomers are more likely to purchase a product based on price alone while millennials are more motivated by the values of the respective company. Based on this information, you can tailor your offerings to better meet these needs.

Let’s take a closer look at what else marketing research can tell you about your target audience.

a. Marketing research reveals demographic data.

Through conducting surveys, you can better understand characteristics of your buyers, like age, gender, race, and ethnicity. You can also collect socioeconomic information like education, income, and employment status. These variables can help you engage in audience segmentation, which essentially involves tweaking your brand messaging to appeal to various subgroups.

b. Marketing research illustrates purchasing behaviour.

Marketing research tools like surveys, transaction tracking, and social media tracking can also shed light on when, why, how, and what consumers are buying. A better understanding of purchasing behaviour can help your company develop brand messaging that strikes a chord with its target audience. If consumers tend to shop between the hours of 5 and 8 p.m., for instance, your company may send an email coupon at 4:45 p.m. to prime that behaviour.

c. Marketing research helps companies appeal to potential customers.

It’s important to learn as much as possible about your current customers. However, it’s equally important to learn about people who are at the beginning of the customer journey. A deeper understanding of what motivates these individuals can help your business turn clicks into conversions.

2. Marketing research helps businesses manage risk.

Risk is an intrinsic part of the business world. However, by understanding market trends and customer behaviour, businesses can anticipate changes in demand and adjust their strategies accordingly. Market research can also help businesses identify potential obstacles or challenges and develop contingency plans to mitigate those risks.

For example, let’s say a company hopes to introduce a new product to the market. Before investing significant time and financial resources into product development, market researchers may conduct a series of surveys to determine if consumers are even interested in the respective product. This mitigates the risk of introducing a good for which there is no demand.

Other examples in which marketing research can be used as a tool for mitigating risk include:

  • Conducting ad testing to determine if brand messaging resonates with consumers
  • Hosting product development focus groups to receive feedback before revealing a new product to the larger market
  • Organising customer satisfaction surveys at various points of the customer journey to determine any issues affecting sales
  • Administering price testing to determine the ideal price for a new product

3. Marketing research helps businesses stay competitive.

Marketing research gives companies a competitive edge in many ways, one being a greater awareness of the industry itself. By understanding what other businesses are doing, your company can develop strategies to differentiate itself and stay ahead of the curve. For example, if research indicates that laundry detergent manufacturers are increasing prices, a company can either decide to a) keep up with the times and increase costs, b) keep costs the same, or c) decrease pricing to appeal to a specific target market.

Marketing research also helps companies determine areas where they may be falling behind. If several healthcare conglomerates are expanding telehealth services, it would be wise for a hospital to also make moves to provide digital appointments. Otherwise, patients may take their business elsewhere.

How else can marketing research help your business stay competitive?

a. Marketing research aids in trendspotting.

It’s important for companies to keep up with industry patterns. However, it’s also important for companies to predict patterns before they even happen. The fashion industry provides a good example of this. Trend forecasters analyse decades—centuries even—of socio-cultural data in an attempt to be the first company to put out a ‘hot’ new product that appeals to modern sensibilities.

b. Marketing research allows businesses to identify gaps in the industry.

Similarly, marketing research can help companies realise a demand that has yet to be satisfied. Through marketing research surveys, for instance, an organic snack food company may see that consumers are craving more savoury gluten-free snack options. Using this data, the company can one-up competitors by introducing a new product.

4. Marketing research gives businesses the tools to measure success.

Net profit is an important indicator of a company’s success. However, if profits are plummeting, it can be difficult to know if this is because of your company’s performance or industry-wide factors like increased materials costs and decreased demand. Because of this, businesses must rely on a more holistic approach to evaluating success.

Fortunately, marketing research can be a helpful tool if you want to measure business health using more than dollar signs. Here’s how marketing research can help you gauge company success.

a. Marketing research provides insight into customer satisfaction.

Sure, your company could be making money. But if your customers aren’t satisfied, your financial gains are likely to be short-lived. To determine if customers are happy with your products or services, you can conduct a customer feedback survey questionnaire.

Alternatively, you may choose to conduct a longitudinal panel survey . Unlike an ad hoc survey, which takes a snapshot of consumer opinions and behaviours, longitudinal studies (like monthly or quarterly trackers) monitor how consumer attitudes change over time. This tool is especially helpful if you want to see how customer satisfaction changes after the introduction of new protocols or training methods.

b. Marketing research helps businesses assess employee satisfaction.

A financially profitable company isn’t necessarily successful if its employees aren’t satisfied. To assess this metric of success, you can conduct surveys, in-person interviews, or focus groups. The results from these marketing research assessments may also shed light on the efficiency of your staff.

c. Marketing research provides insight into the performance of competitors.

It can be constructive to compare your company’s performance to that of competitors. This can help you understand if dips or rises in profit are unique to your company or simply an industry trend.

5. Marketing research helps businesses make informed decisions.

For decades, companies have made key business decisions based on gut feelings alone. But the new age of marketing revolves around data-driven decision-making: a process in which business decisions are informed by metrics and analytics. This contemporary model helps companies make solid choices that reduce risk while improving performance.

Since marketing research lends itself to data generation, it’s an integral part of this equation. For example, data yielded from a brand awareness survey may illustrate that men aged 50 to 65 in a specific geographic area are the least familiar with the brand. Using this information, the company can invest marketing dollars in a way that will yield true results.

Other examples of using marketing research to support data-driven decision-making include:

  • During a focus group, a company discovers that 60% of women are dissatisfied with the playback speed options of an audiobook app. In response, software developers dedicate time and financial resources to adjusting that feature.
  • Survey data reveals that as the price of microwaves increases, so does customers’ perceived value of the product. With this in mind, a company chooses to increase prices by 30%.
  • A popular food chain conducts a series of phone interviews to assess customer service at various locations. Afterward, the company mandates that employees at the restaurants with the lowest reviews take customer service training courses.

All this to say, marketing research has many different applications. By gathering data about customer preferences, market trends, and industry dynamics, businesses can make decisions based on facts rather than assumptions or intuition. This can help businesses avoid costly mistakes and increase their chances of success.

Conduct high-quality marketing research with Kantar

Marketing research is a critical tool that businesses and organisations can use to gather valuable information about their target market and industry. By conducting research, businesses can gain insights into customer needs and behaviour, stay competitive, make informed decisions, manage risk, and measure success.

And during VUCA times (volatile, uncertain, complex and ambiguous), keeping a consistent pulse on consumer sentiment and behaviour is essential to driving the right decisions for business growth.

However, in today's rapidly changing business landscape, marketing research can feel complicated and overwhelming. That’s where Kantar comes in. As an industry leader, we provide tips and tools to help you navigate each step of the marketing research process, from survey design to data visualisation.

Want to get started? Speak to our award-winning team  to learn how we can help you conduct marketing research.

For research tips direct to your inbox each month, sign up using the form below.

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Home Market Research

Importance of Market Research + Types & How to Plan it.


Market research will help you develop a successful marketing strategy. It is one of the reasons why market research is so important for organizations that want to make informed decisions. This article will highlight the relevance of market research and importance of market research.

For your products and services to be well-accepted by customers, you must know the choices and preferences of your target audience . Market research provides you with essential information about your competitors and existing products. 

The results offer you insights into what it would take to succeed in the market. Hence, organizations base their business decisions on good market research, such as sales and marketing strategies.

LEARN ABOUT: Market research vs marketing research

Market research helps reduce risk by allowing you to determine product features, pricing, and promotions from the outset. It also helps you focus resources where they will be most effective.

LEARN ABOUT: Marketing Insight

This blog will discuss the importance of market research, its types, and how to plan it for your business.

Content Index

What is market research?

Types of market research, the importance of market research for your business, how to plan market research, how questionpro helps in market research.

Market research is a systematic process of gathering, evaluating, and interpreting data. It is the basis of any business that does well. The data could be about a target market, customers, competitors, or the industry as a whole. The research serves a variety of reasons, ranging from identifying a new market to launching a new business.

Market research assists entrepreneurs in making sound business decisions. It may remove the guesswork from innovation and direct resources to the most promising ideas and projects. Different companies conduct market research for different purposes.

Businesses use various types of market research to gather information about their target market, competitors, and market research industry trends . There are two main types of market research: 

  • Quantitative research.
  • Qualitative research.


Quantitative research

Quantitative research focuses on generating numbers, for example, what percentage of the population buys a specific product. It is conducted using surveys and questionnaires. You can do simple quantitative research yourself by talking to customers. 

More detailed quantitative research can be used to identify markets and understand customer profiles while launching a new product.

Qualitative research

Qualitative research relies on facts and figures to discover what people think and feel about products and what factors affect their purchasing decisions. Researchers use surveys and focus groups to gather this information while interpreting the results is a job that requires certain research skills .

To learn more about the differences and characteristics of these types of research, we recommend reading Qualitative vs. Quantitative Research .

LEARN ABOUT: Qualitative Interview

You can also conduct secondary research using existing surveys and business reports. Use free online information on market size, sales trends, customer profiles, and competitor activity.

Your customer records can give you a wealth of knowledge about purchasing patterns, the most popular services among various demographic groups, etc. 

Market research can help you analyze key trends and predict how the market will change. Here are some of the reasons why market research is important for your business:

Identifies new products and services

Market research can assist you in determining what new products or services the market requires and how you can provide them. Key issues with developing a specific product or service can be identified, allowing you to avoid costly development mistakes. 

It also assists you in determining which factors are most important to customers and how to implement them into what you want to bring to market.

Identifies potential customers

Demographic information such as gender, age, income, occupation, and lifestyle can help you better understand your customer base. If you know who your current customers are, you can target them in the future. Marketing to the wrong type of customer can lead to poor product performance.

Establishes product or service viability

If your company plans to launch a new product or service, you must first determine whether the market is ready for it. Will the product be well received? Is the product required by the customers you want to reach? Will it be workable, and what are the chances of success?

Keeps your company ahead of competitors

Comparative studies are excellent for tracking your competitors’ progress compared to your company’s. 

If they are far ahead of you, this is an excellent opportunity for you to learn what they are doing differently than you. Business strategies can be developed to help you stay ahead of your competitors.

Reduces risk and enhances profitability

Knowledge can help reduce your company’s risks and determine which risks are worth taking based on past and future market trends. 

Market research help in determining market viability , lowering the risk of failure. Understanding your customers’ needs is also important for risk reduction. At the end of the day, lowering risk helps to increase profitability.

Helps to understand existing customers

Your customers are complex, and what they require previously may not be what they require now. To be successful, you must constantly monitor the pulse of your customer base. Market research can help you better understand your current customers. 

The market research also helps to determine customer satisfaction levels. If you discover their low satisfaction levels, you can figure out why and fix it. If it is high, you can figure out why and learn how to keep it that way.

Helps set realistic goals

You can set realistic goals by using current data about your market and customer base. Establishing a growth pattern over time lets you know what to expect in the future and how to really develop that growth. 

Setting attainable goals will save resources, succeed before you start, and miss out on better long-term goals for your company.

Effective market research starts with knowing what you are trying to accomplish and what information you need. You can do it yourself. 

For example, if you are considering buying or renting a store, you can analyze traffic levels at different times. Or you can talk to your potential customers.

However, to make good business decisions , you will need a more comprehensive approach. 

For example, if you conduct a market survey , you will need survey software to design a survey, customize the look and feel and generate reports. You might also want to integrate the tool with other CRM and marketing automation software. 

Survey software can let you export results in standard formats or share the reports with others. You can also create online surveys in multiple languages and let your respondents select the language of their choice.

One of the most important aspects of planning market research is asking the right questions. Design the survey such that it collects meaningful and high-quality data.

If you want to know more about how to do this, we recommend our article: How to Write a Market Research Plan?

LEARN ABOUT:  Test Market Demand

QuestionPro is a market research software platform that assists businesses in conducting various types of market research. It has market research tools to create, distribute, and analyze surveys and other research methods. QuestionPro can assist organizations with their market research in a variety of ways, including:

Surveys: QuestionPro has a full survey builder that lets organizations make their own surveys, add questions, and choose from a variety of question types, like multiple choice, open-ended, and rating scales.

Data collection: QuestionPro enables organizations to collect data via online surveys, email, web pop-ups, and mobile devices. It also provides a variety of data collection methods, including panel sampling, random sampling, and targeted sampling.

Data analysis: To assist organizations in gaining insights from their data, QuestionPro offers a variety of data analysis tools such as cross-tabulation, descriptive statistics, and inferential statistics .

Real-time data reporting: QuestionPro provides real-time data reporting, allowing organizations to monitor the progress of their research in real-time and make changes to their survey design as needed.

Integration with other tools: QuestionPro integrates with a variety of other tools, including Google Analytics, Salesforce, and Zapier, to provide organizations with a comprehensive view of their market research data.

QuestionPro offers businesses a comprehensive platform for conducting market research and gaining valuable insights into their target audience, competitors, and industry trends. It enables businesses to make informed decisions based on data-driven insights.

LEARN ABOUT: market research trends

Market research should be well-structured, concise, and provide useful insights to help the organization make informed decisions. It should also serve as a starting point for future research and assist organizations in identifying areas for improvement in their business strategies.

Market research is an important component that summarizes the research findings and insights. It gives you a clear picture of the market and its trends, consumer behavior, and the overall competitive landscape.

If you are interested in conducting online survey research, QuestionPro can help you. Request a demo and learn how our survey software works and the advantages of using it in your next market research. Get started today!



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Why Market Research Is Important: A Complete Guide

Did you know that 66% of customers expect companies to understand their needs, while customer-centric companies are 60% more profitable than companies that aren’t. Meanwhile, over half (53%) of business executives are concerned about competition from disruptive businesses.

If you aren’t on top of your market and meeting your ideal customers’ needs, you risk being left behind. Outmanoeuvred by better informed, faster-moving competitors.

This is why market research is important: it gives you valuable insights that protect your market position. In this article, we take a deeper look at the value it can bring to your business in a comprehensive guide.

why market research is important

Defining Market Research

Market research refers to the process of gathering and analysing data about customers, competitors, and market trends to gain insights and make informed business decisions. It helps businesses understand their target audience, identify opportunities, and develop effective marketing strategies.

By undertaking market research , businesses can make data-driven decisions that drive growth, innovation and competitive advantage.

The Core Components Of Market Research

Market research comprises several essential components and methods:

A) Qualitative research

This approach focuses on exploring the underlying motivations, attitudes and perceptions of individuals or groups. It often involves techniques such as interviews, focus groups and open-ended surveys. Qualitative research helps uncover insights that quantitative data alone cannot provide, offering a richer understanding of consumer behaviour.

B) Quantitative research

In contrast to qualitative research, quantitative research relies on numerical data and statistical analysis. It involves surveys, questionnaires, experiments, and structured observations to gather data from a large sample size. Quantitative research is valuable for measuring and quantifying trends, patterns, and correlations within a market.

C) Primary research

Primary research involves collecting firsthand data specifically for the research objectives at hand. This can be done through surveys, interviews, observations or experiments tailored to the research’s unique requirements. Primary research provides fresh and specific insights but can be time-consuming and costly.

D) Secondary research

Secondary research, also known as desk research, involves the analysis of existing data and information collected by others. Researchers access databases, reports, academic papers and publicly available data to gather insights. It’s a cost-effective way to obtain a broader perspective on a market but may lack the specificity of primary research.

E) Market segmentation

Market research often involves dividing a market into distinct segments based on various criteria such as demographics, psychographics, behaviour or geographic location. Segmenting a market helps businesses target their marketing efforts more effectively and tailor their products and services to meet specific customer needs.

F) Data collection methods

Market researchers employ various data collection methods, including surveys, interviews, focus groups, observations and online analytics. The choice of method depends on the research objectives, budget and the type of data required.

G) Data analysis

Once data is collected, it must be analysed to extract meaningful insights. Statistical tools, software and expertise are often used to process and interpret data accurately.

Market research is not a one-size-fits-all activity. The choice of components and methods depends on the specific research objectives, the target audience and the resources available. It’s a dynamic and iterative process that can uncover valuable insights, guide strategic decisions and ultimately contribute to business success.

The Importance of Market Research: An Overview

In an increasingly competitive and rapidly changing business landscape, market research is important because it helps organisations of all sizes and industries. It offers critical insights, reducing uncertainty and enabling data-driven decisions. 

In this section, we’ll delve into the overarching importance of market research in today’s business environment.

1) Navigating uncertainty

Businesses operate in an environment marked by uncertainty. Market conditions can shift unpredictably due to economic fluctuations, technological advancements and global events. Market research acts as a stabilising force, helping businesses navigate uncertainty by providing a solid foundation of knowledge.

2) Risk mitigation

One of the primary roles of market research is risk mitigation. Understanding the potential risks and challenges that lie ahead allows businesses to prepare effectively. By identifying market trends, consumer preferences and competitive landscapes, organisations can anticipate challenges and develop strategies to mitigate them. This proactive approach not only safeguards businesses but also positions them for resilience and growth.

3) Strategic decision-making

The strategic decisions made by a business are pivotal to its success. Market research informs these decisions by offering insights into market dynamics, customer behaviour and industry trends. Whether it’s expanding into a new market, launching a new product or fine-tuning marketing strategies, businesses can align their actions with market realities, increasing the likelihood of success.

4) Customer-centric approach

In the age of customer-centricity, understanding the needs, preferences and expectations of consumers is paramount. Market research places the customer at the heart of business operations. By collecting and analysing customer feedback, businesses can tailor their products, services and marketing efforts to resonate with their target audience. This customer-focused approach enhances customer satisfaction and loyalty.

5) Competitive advantage

In a crowded marketplace, gaining a competitive edge is a constant pursuit. Market research provides the tools to outmanoeuvre competitors by offering insights into their strategies, strengths and weaknesses. Armed with this knowledge, businesses can differentiate themselves, identify unexplored opportunities and stay ahead of the competition.

6) Financial planning & resource allocation

Efficient resource allocation is essential for a company’s financial health. Market research informs budgeting decisions by identifying areas where investments will yield the highest returns. Whether it’s allocating marketing budgets, research and development funds, or capital for expansion, businesses can optimise their resource allocation based on data-driven insights.

7) Adaptation to change

Change is the only constant in the business world. Market research equips businesses with the agility to adapt to shifting market dynamics. By staying attuned to emerging consumer trends, economic shifts, and unforeseen events, organisations can pivot their strategies effectively. This adaptability is crucial for survival and growth, particularly in fast-paced industries.

8) Measurable outcomes

A well-executed market research strategy comes with measurable outcomes. Businesses can track the impact of their decisions, assess the effectiveness of marketing campaigns, and adjust strategies in real-time based on data-driven insights. This leads to less waste, improved efficiency and better results.

9) A strategic asset

Market research is not an optional extra but a strategic asset. It is the compass, the risk mitigator and the foundation upon which successful businesses are built. It guides organisations through uncharted waters, helping them make informed choices, seize opportunities and navigate challenges.

How To Conduct Market Research

Market research is a process that involves gathering, analysing and interpreting data to gain insights into markets, consumers and competitors. 

Conducting effective market research requires careful planning and the use of various research methods and techniques. In this section, we will outline the steps and strategies involved in conducting market research.

Step 1: Define your research objectives

Before diving into research, it’s essential to clearly define your objectives. What specific information are you seeking to obtain through market research? Are you interested in understanding consumer preferences, evaluating market trends or assessing the competitive landscape? Clearly defined research objectives will guide your research efforts and help you stay focused.

Step 2: Choose your research methodology

Market research can be broadly categorised into two main types: primary research and secondary research .

Primary research : Involves collecting original data directly from sources via methods such as surveys, interviews and observations, offering specific and current insights aligned with research goals.

Secondary research : Entails analysing existing data from sources like market reports and academic studies, providing cost-effective access to valuable context and background information.

Select the research methodology that aligns with your research objectives, timeline and budget. Often, a combination of primary and secondary research is used to gain a comprehensive understanding of the market.

Step 3: Design your research instruments

If you choose to conduct primary research, you’ll need to design research instruments such as surveys, questionnaires or interview guides. Ensure that your research instruments are clear, unbiased and designed to collect relevant data. Pilot testing your instruments with a small group can help identify and address any issues before full-scale data collection.

Step 4: Collect data

Data collection is a critical phase of market research. For primary research, you’ll administer surveys, conduct interviews or organise focus groups to gather data from participants.

Ensure that data collection methods are consistent, and follow ethical guidelines when handling sensitive information. For secondary research, you’ll access and review existing data sources, extracting relevant information for your analysis.

Step 5: Analyse data

Once you’ve collected data, the next step is data analysis. This involves organising, cleaning and interpreting the data to extract meaningful insights. Data analysis may include statistical techniques, content analysis or qualitative coding, depending on the nature of the data.

6) Interpret findings

After analysing the data, it’s essential to interpret the findings in the context of your research objectives. What do the data and insights reveal about the market, consumers and competitors? Consider the implications of your findings and how they relate to your business goals.

7) Make informed decisions

The ultimate goal of market research is to inform decision-making. Based on your research findings, make informed decisions about product development, marketing strategies, target audiences, pricing and other aspects of your business. Use the insights gained from market research to enhance your competitive advantage.

8) Continuous monitoring

Market research is not a one-time activity. Markets evolve, consumer preferences change and competitors adapt. Therefore, it’s important to establish a system for continuous monitoring and updating your market research efforts. Regularly gather new data, track market trends and reassess your strategies to remain competitive.

Final Thoughts

To conclude, market research is vital in today’s business landscape. M arket research is a dynamic and iterative process that empowers businesses to make informed decisions, minimise risks and stay competitive . By understanding customer preferences, industry trends, and competitive landscapes, businesses can tailor their strategies for success.

Market research is the compass that guides product development, marketing campaigns and expansion efforts, ensuring resources are invested wisely. By following these steps and adopting a research-driven mindset, organisations can unlock valuable insights and position themselves for success in today’s ever-changing business landscape.

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How to Conduct Market Research for a Startup

Entrepreneur conducting 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.

Which HBS Online Entrepreneurship and Innovation Course is Right for You? | Download Your Free Flowchart

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.

why market research is important for business

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5 Tips to Market Research Like a Pro

Mark Fairlie

Table of Contents

Market research provides businesses with valuable insights into their competitors, customers and industry trends. Do it well and you can spot new opportunities before others. You’ll also be better able to anticipate future trends and improve profitability. But where to get started? Five simple strategies can form the basis of your market research plan .

How to conduct effective market research

Most effective market research strategies don’t cost anything but time and labor. Others, however, may require spending some ad dollars or ponying up for a survey platform. All are worthwhile, however, for better understanding the market your business is in and the customers you want to reach. We specifically recommend the following research methods.

1. Develop buyer personas.

Buyer personas, also known as customer personas , give you a much more thorough understanding of your customers and who they are. They are essentially fictional creations based in reality — you imagine your ideal customer and build a realistic persona around them.

Market research tools can help you develop buyer personas based on your target customers’ interests, problems and lifestyles. The more personas you have, the better, as understanding why customers buy from you is perhaps the most valuable piece of information any business owner could have. Do they buy to meet a need or desire, address a problem, or exploit an opportunity to its fullest? Your marketers can zero in on this information to create advertising campaigns that generate inquiries by appealing to customers’ needs and wants. Likewise, this insight will help your sales team sell more and your development team iterate better in the future.

As you build buyer personas, harnessing demographic details like age, location, education level, parental status and income levels is very useful. These details can help you develop a communication style and tone of voice that connects with customers. An appreciation of cultural nuances, especially in a diverse country like America, can also benefit you through a better understanding of consumption patterns, attitudes, and product or service preferences.

Buyer personas can also shed light on the people, organizations and institutions that shape customers’ views and opinions. Take influencer marketing as an example. Partnering with an influencer your customers like and respect can generate a lot of sales. Identifying the influences, values and psychology of your audience can help you understand how emotions play a part in their decision-making. [Read related article: The Psychology of Sales ]

2. Conduct a survey.

A problem that many new businesses face is they don’t have a lot of customer information to use for their own market research. To gather more information about the people who buy — or may buy — your product, consider adding a survey form to your website or sending a survey to email addresses you collect.

Surveys allow you to solicit feedback from prospective and existing customers. When you create a questionnaire, try to include a few questions with text boxes so respondents can type in their own answers. You want to solicit as much information as possible — without making your survey so overwhelming that people won’t want to take it — so you can use the answers to build successful, accurate profiles for your market research.

You can also use surveys as a means to get more sales. Some business owners find that adding the option to do a survey in exchange for a discount, such as giving 10 percent off an order, is enough incentive for customers to answer your questions. Everybody benefits. You learn more about your customers and generate revenue at the same time.

Google’s Keyword Planner is one of the best market research tools you can use to determine which words and phrases you should bid for in digital advertising campaigns.

3. Upload your lead list to Facebook Ads.

Social media marketing tools, specifically the Facebook Ads program, are an effective way to carry out market research on your audience.

Look for a feature called “Custom Audiences” on your Meta Business Manager dashboard and upload your customer email list to it. The platform then automatically finds the profiles of the people on your list. After analyzing their Facebook pages, it builds charts that showcase trends among the people you added. You can see what habits and interests these people have and use this information to conduct more precise market research. 

For example, Facebook may tell you that many of your customers use YouTube. If that’s the case, you may want to advertise on it as well as create video content and a YouTube channel for your target audience.

4. Study your competitors.

All businesses benefit from a better understanding of their competitors. That’s especially so with larger companies that offer similar products to you. They didn’t get big by accident — they must have done something very well consistently over an extended period to grow so large. You want to learn what that is.

Competitors’ websites are a good place to start when researching why they have a greater market share. You can use tools like Ahrefs and SEMRush to understand the aspects of their content marketing that cause their sites to rank so highly. This is great for technical SEO planning , and it’s also good for getting an idea of why their content resonates so well with the target audiences you have in common. 

There are certain things your rivals do better than you that their customers appreciate. Try to uncover what their clients value the most and make those products or services part of your proposition. On the flip side, there are some things you do better than everyone else in the minds of consumers. Find out from your customers what they are and then build on them further to retain your competitive advantage.

On an operational level, there are important insights you can extract by studying your competition. Where are they advertising? What new products or improvements for existing products are they working on? They may have spotted an opportunity before you did.

You’ll find Semrush and other useful services on our list of the best business tools and technology.

5. Set up multiple small email campaigns.

Another way to enhance your market research is through conducting small email campaigns. Once you’ve gathered customer data using the above strategies, you can develop applicable email marketing campaigns and gauge their performance. [See our top picks for high-quality email marketing and survey software .]

Segment your email database into groups that share certain characteristics (like average spend, frequency of purchase, age, annual income, internet habits and so on). Market to each group separately to see who interacts with your emails more by clicking through to your site and making a purchase.

These small tests can provide detailed insight into what kind of marketing works with your audience. While you’re likely to make sales from all segments of customers you contact, you can focus more time on experimenting with the most active groups to incrementally increase engagement with each subsequent campaign.

As explained in our Campaigner review , you can segment customer databases as a list manager in your email marketing platform.

Why market research is important

Market research is time-consuming, yet it’s important for launching and expanding a successful business. When you know your customers and what they want — and you understand the market you’re competing in — the information you collect can help you grow your company, win sales, and build strong relationships with the people who buy your product.

As you conduct your market research, you’ll discover that people are complex and diverse. They have specific wants and needs that they want someone to solve for them. If you use your data properly, you can build great products that truly help people.

Take the five strategies above and start to implement them in your market research activities. Gather data, keep notes, learn what people like, and you could soon build in future success and stability to your business. 

Syed Balkhi contributed to this article. 


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Market Research: 9 Key Benefits You Might Not Have Considered

why market research is important for business

Why Is Market Research Important?

Is conducting market research worth it, benefits of market research, 1. customer-centric business approach, 2. effective communication with customers, 3. decreased investment risk, 4. data-driven decisions, 5. identifying potential threats and opportunities (swot analysis), 6. understanding the target market and personas, 7. keep up with emerging trends, 8. keep up with competition, 9. identifying the right marketing channels, learn about market research and more.

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Why is Market Research Important?

Posted november 10, 2023 by makenna crocker.

why market research is important for business

Your favorite grocery store items are placed at eye level on shelves for a reason.

Those ads for cat trees you see in your Instagram feed know you’re planning on adopting a kitten.

The emails popping into your inbox offering meal kit delivery discounts were targeted to your specific consumer behavior. 

What do all of these scenarios have in common? 

Market research into our buying habits informed those marketing decisions.

Why market research is important for your business

Market research arms your business with insights into customers and competitors. During times of economic uncertainty, it’s even more critical for businesses to ensure their marketing strategies are targeted specifically to their customers’ needs. 

“Market research is any data and information that informs the market that your business is in,” says Sabrina Parsons, CEO of Palo Alto Software. 

“It helps you understand that market from an industry, customer, and competitor perspective.”

Understand your target audience

At its simplest, market research helps you figure out who wants to buy what you are selling . Like a reality check for your business ideas, it tells you if there’s an audience who is actually interested in what you’re doing.

It uncovers basic information about your target customers , like:

  • Age and gender breakdown
  • Income and education levels
  • Interests and hobbies

It also addresses behavioral insights into their purchasing decisions :

  • Where do they shop? 
  • How do they use products? 
  • What makes them choose one brand over another? 

Conducting this research ensures that your marketing strategy aligns with what your target market is looking for and meets them where they’re looking for it. 

Start your plan

Validate business ideas

Is there even a market for your business?

Market research plays a critical role in validating your business idea . Researching your customers helps you assess their reactions to your idea and gives you an objective evaluation of your concept’s potential. 

Here’s how research contributes to the validation process:

🧪Concept Testing : Market research facilitates testing your idea in the real world, enabling you to understand its appeal and functionality.

🍽Market Appetite : It reveals the true level of demand for your product or service, offering a glimpse into expected market performance.

📉Risk Reduction : By validating your idea through research, you can sidestep the pitfalls of investing in a concept that the market may not welcome.

🤔Informed Business Decisions : With insights gained from market research, you’re better equipped to make data-backed decisions that increase the likelihood of your business’s success.

Minimize business risks

Market research is not about getting rid of all risks — it’s about acquiring enough knowledge to manage them intelligently. 

“If you do market research correctly, you can minimize your risk by understanding what your competitors are doing,” Sabrina says. “And if you understand what your competitors are doing, then you know what you bring to the table.”

Although risk is inherent in any business , conducting market research before you make big decisions gives you a sense of the risks and opportunities of any possible move.

Stay competitive

Monitoring the competitive landscape requires continuous market research. It can be as simple as keeping track of businesses in your area that offer similar products or services. 

But taking time to dig deeper into your competitors can uncover valuable data points to inform your decisions:

  • Track Competitor Moves : Understand competitor strategies for product launches and market positioning.
  • Evaluate Your Standing : Compare your offerings to identify strengths and areas for improvement.
  • Identify Gaps : Spot unaddressed market needs and create a plan to fill them.
  • Improve Offerings : Assess competitor weaknesses to enhance your services or products.
  • Adapt Quickly : Use fresh data to swiftly adjust to market changes and consumer trends.

Optimize marketing efforts

Marketing your business does more than increase your visibility for potential customers. It informs them exactly how your product or service will address their pain points . 

Your messaging needs to resonate with them. So you’ll need to identify the right channels to get their attention. 

That’s where research informs effective marketing tactics :

💌Tailor Messages : Use market research to understand customer needs and craft messages that connect.

📲Select Channels : Determine where your audience is most active (social media, email, blogs, etc.)

💰Budget Efficiency : Allocate your marketing spend to channels and messaging that yield the best ROI.

By fine-tuning your marketing strategies with the guidance of solid market research, your marketing budget is spent more efficiently.

Allocate resources based on market realities

Setting realistic targets is essential for the growth and sustainability of your business:

“When you look at customer information and competitor and pricing, that’s what you need to set realistic expectations,” Sabrina says. “You really need to understand how many potential customers there are in the area that you’re selling. Finding that is all based on market research.”

You only have so much money to dedicate to marketing. So you need to make sure you’re putting your resources where they’ll really help your business grow . 

Here’s how market research aids in this process:

  • Market Understanding : Gauge the market size and potential to set informed goals.
  • Areas of Focus : Depending on market conditions, concentrate on market share expansion, customer retention, or increasing customer lifetime value.
  • Informed Investments : Direct resources towards products and services showing high profitability and demand.
  • Refined Offerings : Focus on enhancing and expanding services that receive positive customer feedback.

Market research provides the intelligence to make strategic decisions about where to invest in your business. It tells you which parts of your business are worth the extra budget and which parts need to be trimmed down.

Build credibility with investors

Any business owner writing a business plan for a bank loan or investor must create forward-looking financial projections forecasting how their business will grow .

Grounding that financial plan in market research shows potential funders that you’re prepared for the realities of ongoing business management.

“Investors are going to ask you questions. If you can talk them through the answers, they’ll know you’ve done your homework,” Sabrina says. 

“Sometimes people just pull numbers out of nowhere. But you need to validate those numbers. That bottom-up forecasting shows that you understand how many customers there are, so you can outline what percentage of them you’ll reach and what you’ll charge them. 

So that research gives you an actual revenue number based on data and facts.”

Measure business success

Understanding if your business is doing well isn’t just about tallying your cash flows. It’s also about understanding why things are going the way they are.

Are customers who purchase from your business returning to you? What types of feedback are you getting, and how does that feedback compare to what people say publicly about competing businesses?

Ongoing market research gives you the clear picture you need to measure the success of your business:

  • Establish KPIs : Identify crucial metrics like sales, market share, and customer loyalty.
  • Monitor Performance : Consistently compare these metrics against collected market data to gauge progress.
  • Identify Preferences : Determine what customers value where they want to see improvement.
  • Refine Tactics : Utilize the insights gained to fine-tune or overhaul strategies as necessary.

Going forward

Market research is critical for any business plan—providing a clear view of what customers want and the competitive landscape. 

Integrating market insights into your business plan allows for agility and relevance in a changing environment – it transforms your plan into a dynamic tool that helps your business evolve and thrive.

Ready to get started? Check out our guide covering the basics of market research for beginners.

You can also get instant access to industry benchmarks and statistics with LivePlan to help you create realistic budgets and forecasts.

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Makenna Crocker

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Why market research is so important for small businesses

Table of Contents

Why market research is a good idea and when to do it

Market research methods, where to begin, data analysis.

Market research describes the process that businesses go through to better understand their product or target customer, or to identify a new market in an industry. It’s an invaluable tool for anyone starting a new business and has a range of purposes. It can help a business owner gather information about competitors, find a gap in the market or gauge how successful a new product might be. Effective market research can even help you to find a profitable niche that otherwise may have eluded you.

Read on to learn more about: 

  • What is market research?

According to UK business magazine Business Matters , “Regardless of the differences that are unique to each business, one thing remains important – knowing what your customer base wants, and then work on fulfilling their needs in order to survive the competition”

Market research methods are used by businesses at several stages of their growth. It could be that you have an idea for a new business venture, and you need to know if there’s an appetite for it. Or maybe you’re moving in a different direction and want to understand the client base better. It’s even a useful tool for businesses that have been running for some time – checking in to make sure you still understand your target customer is always a good idea.

And of course, it’s a useful tool to periodically look at competitors – what they’re up to might be what you need to do too. Or perhaps, there’s something they’ve missed an opportunity that you can identify and maximise. 

“As part of any market research, looking into what your competitors are doing is often a good place to start,” says The British Library . “By checking them out you can spot potential opportunities or gaps in your own service that you can fill.” 

If you’re thinking of starting a new business, having thorough market research at your disposal will also help you be more investable and also helps with any plans you might have for other financing. This will ultimately make financial partners more likely to invest. And with so much competition out there, a persuasive and well thought-through business plan is never a bad thing. 

There are two market research methods: primary and secondary, and they come in two forms: quantitative (numerical data) and qualitative (opinions, actions, wants and needs). Secondary research involves looking into published data from previous market research, carried out by other individuals or companies. Be aware when you begin researching, though, that not all sources are equally credible. So, if you’re looking online make sure you take your figures from sites with some authority, such as government data, trusted media sources and university research.

It might sound back-to-front, but when you’re starting your own business, secondary market research is the best place to begin. Once you’ve gathered some initial data, you can use this to tailor your own primary research. Primary research generally involves questionnaires or observational studies. Itcan be time consuming, though incredibly worthwhile. 

Online surveys are also a useful (and popular) way for small businesses to capture the views of existing and potential customers. And if you’re looking for more detailed and personal information about your customers’ thoughts and feelings, you can also conduct face-to-face research or focus groups.

Once you’re armed with all of this information, what happens next? Whether you go down the primary or secondary market research route, you’ll need to analyse the results in order to come to a conclusion about your chosen market and its trends. This will help you to understand the viability of starting your own business in this area, the likelihood your new product will be a success, or even just help you to understand how to target your market more effectively.

If this all sounds a little daunting, remember that you don’t have to do everything on your own. There are plenty of cost-effective tools out there to help you with online surveys, such as UK-based provider of digital survey solutions, Smart Survey . You’ll find various plans all geared towards helping you to create surveys and conduct market research to understand your customer better. They’ll provide you with easy-to-read data, presented in charts and graphs, and you’ll have support to help you make sense of your findings.

If you do use a service to aid your market research, remember to keep track of anything that you spend towards your business. It will all be taken into account when you submit your taxes at the end of the year. That’s why it’s also a great idea to open a business current account that keeps track of your spending. 

Countingup is the business current account and accounting software in one app. It’s ideal for small businesses who want to take the stress out of bookkeeping and financial admin. Find out more her e .


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What's Market Research? Why is it Important?

Felix Rose-Collins

  • Aug 29, 2023

What's Market Research? Why is it Important?

Market research is a game-changer for businesses looking to understand their customers, outsmart the competition, and stay on top of industry trends. By diving into data and analyzing it, market research reveals invaluable insights that shape smart decisions, drive product development, and power marketing campaigns. Especially now in today's competitive business world, where things change faster than a viral meme, market research is more critical than ever. So, let's dive into the exciting world of market research, explore why it's super important, and dish out some practical tips to make it work like a charm.

The Foundation of Market Research

The Foundation of Market Research

Market research has always played a huge role across all industries. In fact, it is expected to grow even bigger to up to $86.49 billion by 2027, according to the Marketing Research And Analysis Services Global Market Report 2023 . To know more, let's discuss first what makes up market research, why it is important, and why you should do it.

What's the Buzz about Market Research?

Market research is all about getting the scoop on a specific market, target audience, or industry. It involves digging up data, both primary and secondary, to find golden nuggets of information that can make your business shine. Think of it like detective work, but instead of solving crimes, you're solving business challenges.

Why Should You Care about Market Research?

Market research is the secret sauce behind making informed decisions. It's like having a crystal ball that reveals what your customers really want, helps you spot the latest trends, and shows you how your competition is doing. It's like having a superpower to read minds (well, sort of). With market research, you can understand your customers' needs and expectations better than anyone else, create products they'll love, and stand out from the crowd.

Let's say you're running a hip skincare company. With market research, you might discover that millennials are going crazy for natural and organic products. Armed with this insight, you can whip up a line of all-natural skincare goodies that'll make customers line up your store.

Market research also helps you dodge potential disasters. Picture this: you're about to launch a new product or enter a new market. Market research can save you from facepalming moments by showing you if there's enough demand, what obstacles you might face, and if your brilliant idea has legs.

The Sweet Benefits of Market Research

Market research has tons of benefits. Here are some of the top ones:

Unleashing Market Opportunities

Market research is your treasure map to finding hidden market gems. It helps you spot untapped customer segments, emerging trends, or niche markets that others haven't noticed. It's like having a radar that detects opportunities others can't see. By jumping on these golden chances, you can outshine your competition and become the cool kid in the market.

Understanding Your Customers' Secret Desires

Market research dives deep into your customers' minds, uncovering their preferences, habits, and pain points. It's like becoming a mind reader. By understanding what makes your customers tick, you can create products and services that tickle their fancy, making them fall head over heels for your brand.

But wait, there's more! Market research reveals hidden desires and frustrations your customers have with existing products. By swooping in and fixing those pain points, you become their hero and gain an army of loyal fans. Imagine a ride-sharing company that learns from market research that long wait times are driving people crazy. By tackling this issue head-on and reducing wait times, they become knights in shining armor for their customers.

Being a Sneaky Competition Spy

To beat the competition, you need to know them like the back of your hand. Market research gives you the inside scoop on your competitor's strategies, strengths, and weaknesses. It's like having a spy network that feeds you juicy intel. By understanding what your rivals are up to, you can create strategies that outsmart them, differentiate yourself, and come out on top. There are several SEO tools that you can utilize in analyzing your competitors.

Being a Sneaky Competition Spy

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Let's say you're a trendy clothing retailer. Market research shows that while your competitors are all about fast fashion, there's a gap for sustainable clothing options. By hopping on the sustainability train and offering eco-friendly fashion, you become the eco-warrior of the fashion world.

Dodging Bullets and Taking Calculated Risks

Launching a new product or venturing into uncharted territories can be as scary as spiders (well, almost). Market research is your secret weapon to assess market demand, identify potential roadblocks, and calculate risks. It's like having a crystal ball that tells you if your brave adventure will end in fireworks or faceplants. With market research, you make informed decisions that save you from costly blunders.

Imagine you're a software company eyeing a new industry. Market research helps you figure out if there's a market for your software, who your competitors are, and what customers really need. Armed with this knowledge, you can swoop in, adapt your product to fit their needs and conquer the industry like a boss.

Market Research Methods: The Sleuth Toolkit

So how do you perform market research like a pro? Here are several tips you can follow:

Primary Research: Talking to the People

Primary research is like getting firsthand gossip from your target audience. It involves talking to them through surveys, interviews, focus groups, or even observing their behaviors. It's like having a direct line to their thoughts and feelings.

Surveys are the go-to method for gathering quantitative data from a bunch of people. It's like throwing a questionnaire party and asking everyone for their opinions. By analyzing the survey responses, you can get insights into customer demographics, preferences, buying behaviors, and if they prefer pizza or tacos.

On the other hand, interviews and focus groups are your backstage passes to deep conversations with your customers. It's like having a coffee chat with them (minus the caffeine). These methods unveil the juicy details behind their decisions, motivations, and emotions. It's like finding out why they prefer pizza over tacos and what toppings make them weak at the knees.

Secondary Research: Borrowing Wisdom from Others

Secondary research is like tapping into a library of knowledge that already exists. It involves using existing data sources like industry reports, competitor analysis , and customer databases. It's like reading books written by the smartest folks in the biz.

Industry reports and market research studies are your secret stash of information. They dish out market trends , consumer behaviors, and future forecasts. It's like having a magic crystal ball that reveals where the market is heading.

Competitor analysis is your backstage pass to your rivals' strategies and secrets. By studying their every move, you can discover opportunities they missed and craft strategies that make them go, "Wait, why didn't we think of that?"

Customer databases and online platforms are like treasure troves of information. Social media and review websites reveal what customers really think about products and brands. It's like eavesdropping on their conversations at a coffee shop (but in a totally legal way).

Quantitative vs. Qualitative Research: Numbers and Stories

Quantitative research is like crunching numbers to unlock hidden patterns. It's all about statistics, graphs, and charts. It's like going on a data adventure to uncover insights that drive decisions. Regression analysis and data modeling are like your trusty sidekicks, helping you make sense of the numbers. Trending changes in people looking for vacation rental managers

Qualitative research, on the other hand, is like exploring stories and narratives. It's about uncovering the why behind the what. Think of it as reading bedtime stories that reveal customers' hopes, dreams, and frustrations. Techniques like thematic analysis and content analysis are your Sherlock Holmes tools for uncovering the juicy details.

By blending quantitative and qualitative research, you get the best of both worlds. It's like mixing peanut butter and jelly to create a mouthwatering sandwich. Quantitative data gives you the big picture and numerical insights, while qualitative data brings in the human touch and deep understanding.

Let's say you're a sneaker brand trying to understand your customers. Through quantitative research, you analyze sales data, demographics, and purchase patterns. You discover that 70% of your customers are millennials who prefer athleisure sneakers. That's the big picture.

But to truly understand why millennials love your sneakers, you dive into qualitative research. You conduct focus groups and ask them questions like, "What makes our sneakers special?" and "How do they make you feel?" Through these conversations, you uncover that they love your brand because it represents their active lifestyle and gives them a sense of self-expression. That's the human touch.

Rocking Market Research Like a Pro

So now that you have learned some tips and techniques, it's time to put them into action. You can follow the steps below as your guide.

Setting Your Detective Goals

Before you embark on your market research adventure, set clear objectives. What do you want to uncover? What burning questions need answers? By defining your goals, you focus your efforts and make sure you're not wandering around aimlessly like a lost puppy.

For example, if you're a tech company, your goal might be to understand the pain points and challenges your target customers face with their current software. With this objective in mind, you tailor your research methods and questions to dig deep into those pain points.

Finding Your Target Audience

To get the best results, make sure you're talking to the right people. Define your ideal customer profile and ensure your research methods align with their characteristics. It's like inviting your best friends to a party rather than random strangers.

If you're a beauty brand targeting Gen Z consumers, go where they hang out. Use online surveys and social media listening to gather insights from this tech-savvy demographic. You want to hear from the TikTok-savvy, Instagram-obsessed Gen Zers who can't resist trying new beauty hacks.

Embracing the Tech Marvels

In today's digital age, businesses have a wealth of tools and technologies at their disposal, such as the best online marketing graduate programs , among others. Embracing these resources can supercharge your market research efforts. Online surveys, data analysis software, and social media monitoring tools can be your trusty sidekicks in the market research adventure.

Embracing the Tech Marvels

Automated survey platforms make it a breeze to design, distribute, and analyze surveys. They save you time and make data collection a piece of cake. Social media monitoring tools help you rankings in search engine results , brand mentions, sentiment analysis, emerging trends, etc. It's like having a superhero gadget that scans the online world for you.

Unleashing the Power of Analysis

Collecting data is just the start. The real magic happens when you analyze and interpret the findings. Use statistical techniques, data visualization tools, and qualitative analysis methods to unlock the insights hidden within the data.

Statistical analysis lets you uncover patterns and trends in the data. Regression analysis, t-tests, and chi-square tests become your trusted allies. Data visualization tools, like charts and graphs, make the data come to life and help you spot the key takeaways.

Qualitative data analysis allows you to uncover the stories and narratives behind the data. Thematic analysis and content analysis become your storytelling tools, revealing the emotions, motivations, and desires of your customers.

Taking Action: From Insights to Impact

Market research should never end with a bunch of fancy reports gathering dust on a shelf. It's time to take action! Use the insights you've gained to make informed decisions, refine your strategies, and optimize your marketing efforts. It's like turning research into real-life superheroes.

For example, if market research reveals that your customers are craving a certain feature in your product, don't just sit on that information. Take action! Implement the feature, improve your customer support, or adjust your pricing. By putting those insights into practice, you turn them into a force that propels your business forward.

Make sure to communicate the findings and recommendations across your organization. Share the insights with your team, involve them in the decision-making process, and make sure everyone is on the same page. And don't forget to keep an eye on the results. Monitor the impact of your actions, gather feedback, and be ready to adapt if needed. It's like fine-tuning your superhero powers to save the day.

Market Research: Unlocking Business Insights

Market research is like having a superpower in the business world. It gives you insights, helps you understand your customers, and keeps you one step ahead of the competition. By conducting thorough market research and taking action based on the findings, you can make smarter decisions, drive innovation, and achieve incredible growth.

Remember, market research is an ongoing adventure. The business landscape is always changing, and customer preferences evolve faster than the latest dance craze. Stay curious, keep exploring, and embrace the power of market research to unlock your business's true potential.

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5 reasons why market research is important

Anmol Sachdeva

  • September 29, 2022

why market research is important for business

Entrepreneurship is a lot about risk-taking, and you can mitigate risks using actual data. Probably, the most important reason why market research is important. 

Every time entrepreneurs fail, they contemplate if there could have been a better way. But the thing is — most get blinded by their ‘big idea’ and fail to understand the market. In fact, 42% of startups fail due to low market demand.

Market research helps you determine if there’s demand for your product, understand your customers, competitors, and more. 

When done well, it provides you with sufficient information to plan and execute your business ideas. It allows you to validate your hypothesis, avoid rash decisions, and pave the way for success.

1. Helps you become customer-centric. 

As per a Deloitte report, customer-centric businesses are 60% more profitable than others. 

In other words, you are doomed to fail if you don’t talk about your customers and their needs, as was the case for Quibi, a mobile-first streaming startup that shut down within a year. Quibi failed to understand that no one would pay for a service in a world of free platforms like TikTok, yet they continued pushing harder with irrelevant marketing and failed in the end. 

They might have had a chance if the Quibi executives understood why market research is important, analyzed consumer behavior and built a consumer-first service. Market research saves your business from such mistakes by giving you access to data – a challenge for over 50% of business owners.

Bar graph showing business challenges which demonstrates why market research is important.

Performing in-depth market research helps you get inside your customer’s shoes and identify the real problems. It gives you insights into consumer behavior, trends, and actual industry problems. As a result, this data helps you build something customers need, making you more relatable and appealing.

2. Makes your marketing data-driven. 

Another benefit of performing market research is that it allows you to gather data for improving marketing effectiveness. Specifically, it helps your messaging become more relevant by using segmentation, targeting, and positioning.


Segmentation is when you divide your audience based on their needs, online behavior, and preferences. Positioning is how you form your messaging based on the segments,, and targeting is reaching out to the right people at the right time.

The approach allows you to become highly effective at offering personalized experiences. 

  • Personalization affects the shopping decision of 59% of the customers.
  • 44% of buyers turn into repeat customers because of a personalized shopping experience.

If you want to get better at marketing, you should take a data-driven approach. Gather consumer data using a reviews-driven market research strategy and use the insights to improve your marketing. 

3. Helps identify growth opportunities. 

To remain competitive, you must always research the market you are in or are about to enter by looking at industry trends, your competitors, your target audience, and their opinions. Analyzing this information will give you critical insights to outline your trajectory.

The ultimate goal is to identify customer opinions about existing solutions.

You can use these insights for developing a new product line or unearthing potential growth opportunities. Also, reviews can be a great place to kick-start product discovery based on underserved consumer segments.

Discovering underserved consumer segments paves the way for success as an entrepreneur. With a little research, you can find gaps ignored by other businesses.

By way of example, targeting underserved consumers helped War Paint build a successful cosmetics brand for men.

They found an underserved niche, launched a brand line and sold over 50,000 units in a short period. All thanks to a little market research.

4. Prepares you for competition. 

One of the most critical elements of startup success is understanding who you are competing with. Many business owners make the mistake of ignoring competition, which can be a path to failure.

Companies like Kodak and Nokia made the mistake of ignoring competition (and innovation) for a long time, and we all know what happened to them.

Related: Brand Repositioning Injects Life into Your Business

Market research tells you about your competition, their offerings, and if they’re serving a need well. When you understand the context and landscape well, you can discover opportunities and threats well in advance.

Knowing your competitors helps you chart your action plan based on SWOT analysis. This roadmap enables you to become a better solution and increase your market share.

5. Lowers business risks. 

Market research gives you access to data, which is critical for informed decision-making.

Being informed and prepared helps you achieve your goal and vision faster and reduce risks. When you’re prepared and well-informed, you save a lot of money that otherwise would be wasted experimenting with untested ideas or making a costly marketing mistake. 

Market research helps you find reliable answers to critical business questions, like: 

  • Is there an actual demand or desire for a product or a service? 
  • How many people will be interested in paying for your product? 
  • What is the perfect target audience, what do they expect, where do they live, their internal drives, etc.? 
  • What is the price point a customer will happily accept? 

Such answers are helpful in making informed decisions at every stage of building and growing a business. The information also helps build a framework to stay relevant and valuable at every step of the user journey, improving chances of success.

What are the main types of market research?

There are four types of market research such as primary research, secondary research, qualitative research, and quantitative research. The classification is based on the source used for gathering the information and the type of information collection. 

What is online market research?

Online market research is a type of secondary research where you use digital mediums to collect information about your audience, customers, and competitors. This is a useful tactic to start gathering useful data with a limited budget for branding, marketing and other purposes. 

Does market research work for a small business?

Yes. Market research is crucial for the success of any business, big or small. A small business can use the insights from market research for branding, marketing, product research, delighting customers, or growing their business. 

Start market research using customer reviews. 

If you’ve come this far reading the reasons why market research is important, you seem pretty serious. So, why not commit yourself to starting market research for your startup and discover the benefits first-hand?

If you have never done market research for your business, then don’t worry, getting started is easier than you think .

When you’re ready to automate the process, then reach out to us! We would love to help you discover the profitable gaps in your market!

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More From Forbes

Market research: an important investment for long-term viability.

Forbes Technology Council

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Rick Kelly is the Chief Strategy Officer at Fuel Cycle . His passion is helping brands unlock the power of customer intelligence.

Businesses must future-proof themselves to endure an ever-changing economic landscape. Focusing on creating value both internally and externally through strategic planning is crucial for a brand's long-term success. Companies that prioritize market research as a fundamental function, rather than a mere expense, have a higher likelihood of thriving amid economic uncertainty.

Traditional market research, however, is often neither scalable nor fast and is often detached from decision-making processes. To stay competitive and gather relevant insights, organizations should consider embracing cutting-edge approaches and technological advancements in the market research sector.

The Future Of Market Research And The Role Of Data

Data has transformed the way companies approach future-proofing. Employing the right tools to collect valuable insights is crucial for businesses seeking long-term viability and brand success.

Market research enables businesses to:

1. Better comprehend their target audience's demographics and segment customers effectively.

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2. Study competition and recognize market trends.

3. Guide product development and collect feedback from usability testing.

4. Assess the effectiveness of current marketing campaigns.

5. Develop powerful future marketing campaigns.

However, the life cycle of data's value has dramatically decreased. The driving force behind the speed of insights is the realization that if they take too long to generate, they may already be outdated upon arrival. It's essential for organizations to comprehend the context in which data exists, as context helps to inform the adjustments necessary for effective audience engagement.

Companies skimping on insight investment may suffer serious blows to brand perception. In fact, companies that embrace a customer-centric approach are 60% more profitable than companies that don't (pg. 5).

A lack of insights investment creates conflicts between consumer and brand alignment. Customer loyalty plummets— 80% of customers say they're more likely to switch brands after just one bad experience.

Market research leveraging real-time data creates an impact that teams can multiply exponentially through its potential to help organizations identify and address issues, pivot and even change business models.

Integrating Market Research Into Business Strategy

Gathering and utilizing market research data isn't as easy as it sounds. It can present several challenges and limitations that should be considered to maintain a balanced perspective and build trust with customers.

One challenge is the availability and accessibility of accurate data. Finding relevant and up-to-date information can be difficult depending on the industry or target market. Additionally, the quality and reliability of the data sources need to be carefully evaluated to ensure their credibility.

To start with market research, define your objectives and questions. This will guide your research efforts. Conduct an internal analysis of your business, including goals, target market and competition, to develop a research plan aligned with your strategy. Then, explore data collection methods.

Here are some key approaches.

1. Employing Online Communities: Online communities provide an invaluable source of ongoing insights from predetermined customer bases, allowing market researchers to gather the information that informs product development, gauges customer loyalty and drives innovation.

2. Focusing On Speed And Convenience In Online Community Tools: To deliver value for consumers in online communities, ensure that they are user-friendly and efficient, offering comprehensive data analytics tools, advanced qualitative research capabilities and customizable platforms.

3. Fostering Innovation: Market research should strive for continuous improvement by investing in UX research, DIY market research tools and refining AI technologies to enhance market research capabilities, improve customer experience and boost sales.

Embracing A New Mindset For Market Research

It is crucial to shift the perception of market research from an unnecessary expense to an indispensable function. Investments in research are integral to a company's operation, enabling them to identify growth opportunities and outperform competitors.

Traditional market research approaches often fall short in terms of scalability and speed while remaining too disconnected from decision-makers.

To thrive in a rapidly changing landscape, businesses must closely monitor customer sentiment by leveraging comprehensive data gathered from a centralized hub of market research tools, methodologies and intelligent processes that are designed to deliver actionable insights from a single source of truth.

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Put Marketing at the Core of Your Growth Strategy

  • Marc Brodherson,
  • Jennifer Ellinas,

why market research is important for business

Three ways to use marketing as a lever for growth, according to McKinsey research.

Companies that make the decision to put marketing at the core of their growth strategy outperform the competition, according to McKinsey research. Specifically, both B2C and B2B companies who view branding and advertising as a top two growth strategy are twice as likely to see revenue growth of 5% or more than those that don’t (67% to 33%). Yet their research also showed that few CEOs recognize the potential for marketing as a growth accelerator. They recommend three actions for CEOs to hit the reset button. The first is to define what you need from marketing. While it sounds obvious, their research found that more than half the time CEOs and CMOs in the same company were misaligned on marketing’s primary role. Second, nominate one person to serve as the chief voice of the customer. In two many organizations this is fragmented, and when everyone owns the customer, then no one does. Third, the CEO should function as a growth coach. They should have a handle on the challenges and opportunities of modern marketing, but their job is to draw up the strategy, not toss the ball down the field.

Growth is a perpetual business priority. So it’s imperative that CEOs understand how their marketing function and chief marketing officers (CMOs) can contribute to that goal. Few do — and that misalignment can be costly.

why market research is important for business

  • Marc Brodherson is a senior partner in McKinsey & Company’s New York office.
  • Jennifer Ellinas is an associate partner in McKinsey & Company’s Toronto office.
  • Ed See is a partner in McKinsey & Company’s Stamford, Connecticut office.
  • Robert Tas is a partner in McKinsey & Company’s Stamford, Connecticut office.

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Market Research for Small Businesses

Make informed business decisions with market research. Whether you’re starting a new small business or seeking growth for your existing one, market research can help optimize your business.

why market research is important for business

What is Market Research?

Market research is a key part of developing a successful small business plan, which includes collecting and analyzing data on your customers, competitors, and industry. These insights enable you to make informed business decisions, create a marketing strategy, and improve your business offer.

Why is Market Research Important for Small Businesses?

Understand your market

Benchmark against competitors

Develop a marketing strategy

Improve your product or service

Inform decision-making

Validate your market opportunity

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Regardless of where you are in your business venture, conducting market research is essential. Whether you’re in the initial stages of assessing a new business idea or fine-tuning your business plan, our free secondary market research services have you covered.

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Frequently Asked Questions:

What is the difference between primary and secondary market research.

Primary market research typically entails engaging with potential buyers of your product or service, or reaching out to businesses within your industry to get their insights on your idea. This process might help you make informed business decisions.

Secondary market research consists of conducting online searches (I.e. Google) and looking at publicly available materials from government sources, industry associations, paid databases, etc.

For a deeper understanding of the classifications between primary and secondary market research, please refer to our handout .

What market research components should be included in a business plan?

When considering adding market research to your business plan, there are 3 key areas to keep in mind: industry analysis, customers/local market assessment, and competitor analysis.   

Industry Analysis  

Include details about the historical performance of the industry, emerging industry trends, and future industry outlook.  

Customers/Local Market Assessment  

Include demographic information and primary market research findings regarding consumer behaviour and preferences to gain insights into your target market and audience.   

Competitors Analysis  

Include a comprehensive evaluation of your main competitors in relation to your company. Typically, this involves conducting a SWOT analysis to identify strengths, weaknesses, opportunities, and threats.  

Can I use both primary and secondary market research for my business?

Certainly, you can utilize a combination of primary and secondary market research for your business. Primary research involves data gathered directly from personal experiences and customer interactions, while secondary research relies on data generated online or by external sources. Both these approaches to market research offer valuable insights that can benefit your business, as they offer distinct types of information and address various questions.

How does market research help with my financial projections?

Market research will help identify the number of sales you will need to break even and cover expenses. These expenses will influence the level of demand necessary for your business and inform your strategic marketing efforts to meet that demand.

What if I don’t know what information or data I need for my business plan?

We’re here to assist you if you find yourself unsure about the specific information or data required for your business plan. Simply complete our intake form and schedule an appointment with our experienced team, who can guide you through the process of identifying your research needs.

What do I do with the data when I get it?

What you do with the data is entirely up to your business goals and objectives. This is precisely why it’s crucial to have a clear understanding of the questions you need answered before conducting research. Your specific research objectives will determine how you analyze and utilize the data effectively.

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Next-gen B2B sales: How three game changers grabbed the opportunity

Driven by digitalized operating models, B2B sales have seen sweeping changes over the recent period amid rising customer demand for more seamless and transparent services. 1 “ The multiplier effect: How B2B winners grow ,” McKinsey, April 13, 2023. However, many industrial companies are failing to keep pace with their more commercially focused peers and, as a result, are becoming less competitive in terms of performance and customer services.

The most successful B2B players employ five key tactics to sharpen their sales capabilities: omnichannel sales teams; advanced sales technology and automation; data analytics and hyperpersonalization; tailored strategies on third-party marketplaces; and e-commerce excellence across the full marketing and sales funnel. 2 “ The multiplier effect: How B2B winners grow ,” McKinsey, April 13, 2023.

Companies using all of these tactics are twice as likely to see more than 10 percent market share growth than companies focusing on just one. 3 “ The multiplier effect: How B2B winners grow ,” McKinsey, April 13, 2023. However, implementation is not as simple, requiring a strategic vision, a full commitment, and the right capabilities to drive change throughout the organization. Various leading European industrial companies—part of McKinsey’s Industrial Gamechangers on Go-to-Market disruption in Europe—have achieved success by implementing the first three of these five sales tactics.

Omnichannel sales teams

The clearest rationale for accelerating the transition to omnichannel go-to-market is that industry players demand it. In 2017, only about 20 percent of industrial companies said they preferred digital interactions and purchases. 4 Global B2B Pulse Survey, McKinsey, April 30, 2023. Currently, that proportion is around 67 percent. In 2016, B2B companies had an average of five distinct channels; by 2021, that figure had risen to ten (Exhibit 1).

Excelling in omnichannel means enabling customers to move easily between channels without losing context or needing to repeat information. Companies that achieve these service levels report increased customer satisfaction and loyalty, faster growth rates, lower costs, and easier tracking and analysis of customer data. Across most of these metrics, the contrast with analogue approaches is striking. For example, B2B companies that successfully embed omnichannel show EBIT growth of 13.5 percent, compared to the 1.8 percent achieved by less digitally enabled peers. Next to purely digital channels, inside sales and hybrid sales are the most important channels to deliver an omnichannel experience.

Differentiating inside versus hybrid sales

Best-in-class B2B sellers have achieved up to 20 percent revenue gains by redefining go-to-market through inside and hybrid sales. The inside sales model cannot be defined as customer service, nor is it a call center or a sales support role—rather, it is a customer facing, quota bearing, remote sales function. It relies on qualified account managers and leverages data analytics and digital solutions to optimize sales strategy and outreach through a range of channels (Exhibit 2).

The adoption of inside sales is often an advantageous move, especially in terms of productivity. In fact, inside sales reps can typically cover four times the prospects at 50 percent of the cost of a traditional field rep, allowing the team to serve many customers without sacrificing quality of service. 5 McKinsey analysis. Top performing B2B companies are 50 percent more likely to leverage inside sales.

Up to 80 percent of a company’s accounts—often smaller and medium-sized customers, accounting for about half of revenues—can be covered by inside sales teams. 6 Industry expert interviews; McKinsey analysis. The remaining 20 percent often require in-person interactions, triggering the need for hybrid sales. This pertains to highly attractive leads as well.

Hybrid sales is an innovative model combining inside sales with traditional in-person interactions. Some 85 percent of companies expect hybrid sales will be the most common job role within three years. 7 Global B2B Pulse Survey, McKinsey, December 2022. Hybrid is often optimal for bigger accounts, as it is flexible in utilizing a combination of channels, serving customers where they prefer to buy. It is scalable, thanks to the use of remote and online sales, and it is effective because of the multiplier effect of numerous potential interactions. Of companies that grew more than 10 percent in 2022, 57 percent had adopted a hybrid sales model. 8 Global B2B Pulse, April 2023.

How an industrial automation solution player implemented game-changing inside sales

In 2019, amid soaring digital demand, a global leader in industrial digital and automation solutions saw an opportunity to deliver a cutting-edge approach to sales engagement.

As a starting point, the company took time to clearly define the focus and role of the inside sales team, based on product range, customer needs, and touchpoints. For simple products, where limited customer interaction was required, inside sales was the preferred go-to-market model. For more complex products that still did not require many physical touchpoints, the company paired inside sales teams with technical sales people, and the inside sales group supported fields reps. Where product complexity was high and customers preferred many touch points, the inside sales team adopted an orchestration role, bringing technical functions and field sales together (Exhibit 3).

The company laid the foundations in four key areas. First, it took time to sketch out the model, as well as to set targets and ensure the team was on board. As in any change program, there was some early resistance. The antidote was to hire external talent to help shape the program and highlight the benefits. To foster buy-in, the company also spent time creating visualizations. Once the team was up and running, early signs of success created a snowball effect, fostering enthusiasm among both inside sales teams and field reps.

Second, the company adopted a mantra: inside sales should not—and could not—be cost saving from day one. Instead, a significant part of the budget was allocated to build a tech stack and implement the tools to manage client relationships. One of the company’s leaders said, “As inside sales is all about using tech to obtain better outcomes, this was a vital step.”

The third foundational element was talent. The company realized that inside sales is not easy and is not for everyone—so finding the right people was imperative. As a result, it put in place a career development plan and recognized that many inside sales reps would see the job as a stepping stone in their careers. Demonstrating this understanding provided a great source of motivation for employees.

Finally, finding the right mix of incentives was key. The company chose a system based on compensation and KPI leading and lagging indicators. Individual incentives were a function of whether individuals were more involved with closing deals or supporting others, so a mix of KPIs was employed. The result was a more motivated salesforce and productive cooperation across the organization.

Advanced sales technology and automation

Automation is a key area of advanced sales technology, as it is critical to optimizing non-value adding activities that currently account for about two-thirds of sales teams’ time. More than 30 percent of sales tasks and processes are estimated to be partially automatable, from sales planning through lead management, quotation, order management, and post-sales activities. Indeed, automation leaders not only boost revenues and reduce cost to serve—both by as much as 20 percent—but also foster customer and employee satisfaction. (Exhibit 4). Not surprisingly, nine out of ten industrial companies have embarked on go-to-market automation journeys. Still, only a third say the effort has achieved the anticipated impact. 9 McKinsey analysis.

Leading companies have shown that effective automation focuses on four areas:

  • Lead management: Advanced analytics helps teams prioritize leads, while AI-powered chatbots contact prospective customers via text or email and schedule follow-up calls at promising times—for example, at the beginning or end of the working day.
  • Contract drafting: AI tools automate responses to request for proposal (RFP) inquiries, based on a predefined content set.
  • Invoice generation: Companies use robotic process automation to process and generate invoices, as well as update databases.
  • Sales commission planning: Machine learning algorithms provide structural support, for example, to optimize sales commission forecasting, leading up to a 50 percent decline in time spent on compensation planning.

How GEA seized the automation opportunity

GEA is one of the world’s most advanced suppliers of processing machinery for food, beverages, and pharmaceuticals. To provide customers with tailored quotes and services, the company launched a dedicated configure, price, quote (CPQ) system. The aim of the system was to enable automated quote creation that would free up frontline sales teams to operate independently from their back office colleagues. This, in turn, would boost customer interaction and take customer care to the next level.

The work began with a bottom-up review of the company’s configuration protocols, ensuring there was sufficient standardization for the new system to operate effectively. GEA also needed to ensure price consistency—especially important during the recent supply chain volatility. For quotations, the right template with the correct conditions and legal terms needed to be created, a change that eventually allowed the company to cut its quotation times by about 50 percent, as well as boost cross-selling activities.

The company combined the tools with a guided selling approach, in which sales teams focused on the customers’ goals. The teams then leveraged the tools to find the most appropriate product and pricing, leading to a quote that could be enhanced with add-ons, such as service agreements or digital offerings. Once the quote was sent and agreed upon, the data automatically would be transferred from customer relationship management to enterprise resource planning to create the order. In this way, duplication was completely eliminated. The company found that the sales teams welcomed the new approach, as it reduced the time to quote (Exhibit 5).

Data analytics and hyperpersonalization

Data are vital enablers of any go-to-market transformation, informing KPIs and decision making across operations and the customer journey. Key application areas include:

  • lead acquisition, including identification and prioritization
  • share of wallet development, including upselling and cross-selling, assortment optimization, and microsegmentation
  • pricing optimization, including market driven and tailored pricing, deal scoring, and contract optimization
  • churn prediction and prevention
  • sales effectiveness, so that sales rep time allocations (both in-person and virtual) are optimized, while training time is reduced

How Hilti uses machine data to drive sales

Hilti is a globally leading provider of power tools, services, and software to the construction industry. The company wanted to understand its customers better and forge closer relationships with them. Its Nuron battery platform, which harvests usage data from tools to transform the customer experience and create customer-specific insights, provided the solution.

One in three of Hilti’s frontline staff is in daily contact with the company’s customers, offering advice and support to ensure the best and most efficient use of equipment. The company broke new ground with its intelligent battery charging platform. As tool batteries are recharged, they transfer data to the platform and then to the Hilti cloud, where the data are analyzed to produce actionable insights on usage, pricing, add-ons, consumables, and maintenance. The system will be able to analyze at least 58 million data points every day.

Armed with this type of data, Hilti provides customers with advanced services, offering unique insights so that companies can optimize their tool parks, ensuring that the best tools are available and redundant tools are returned. In the meantime, sales teams use the same information to create deep insights—for example, suggesting that companies rent rather than buy tools, change the composition of tool parks, or upgrade.

To achieve its analytics-based approach, Hilti went on a multiyear journey, moving from unstructured analysis to a fully digitized approach. Still, one of the biggest learnings from its experience was that analytics tools are most effective when backed by human interactions on job sites. The last mile, comprising customer behavior, cannot be second guessed (Exhibit 6).

In the background, the company worked hard to put the right foundations in place. That meant cleaning its data (for example, at the start there were 370 different ways of measuring “run time”) and ensuring that measures were standardized. It developed the ability to understand which use cases were most important to customers, realizing that it was better to focus on a few impactful ones and thus create a convincing offering that was simple to use and effective.

A key element of the rollout was to ensure that employees received sufficient training— which often meant weeks of engagement, rather than just a few hours. The work paid off, with account managers now routinely supported by insights that enrich their interactions with customers. Again, optimization was key, ensuring the information they had at their fingertips was truly useful.

Levers for a successful transformation

The three company examples highlighted here illustrate how embracing omnichannel, sales technology, and data analytics create market leading B2B sales operations. However, the success of any initiative will be contingent on managing change. Our experience in working with leading industrial companies shows that the most successful digital sales and analytics transformations are built on three elements:

  • Strategy: As a first step, companies develop strategies starting from deep customer insights. With these, they can better understand their customers’ problems and identify what customers truly value. Advanced analytics can support the process, informing insights around factors such as propensity to buy and churn. These can enrich the company’s understanding of how it wants its go-to-market model to evolve.
  • Tailored solutions: Customers appreciate offerings tailored to their needs. 10 “ The multiplier effect: How B2B winners grow ,” McKinsey, April 13, 2023. This starts with offerings and services, extends to pricing structures and schemes, and ways of serving and servicing. For example, dynamic pricing engines that model willingness to pay (by segment, type of deal, and route to market) may better meet the exact customer demand, while serving a customer completely remotely might better suit their interaction needs, and not contacting them too frequently might prevent churn more than frequent outreaches. Analytics on data gained across all channels serves to uncover these needs and become hyperpersonalized.
  • Single source of truth: Best-in-class data and analytics capabilities leverage a variety of internal and external data types and sources (transaction data, customer data, product data, and external data) and technical approaches. To ensure a consistent output, companies can establish a central data repository as a “single source of truth.” This can facilitate easy access to multiple users and systems, thereby boosting efficiency and collaboration. A central repository also supports easier backup, as well as data management and maintenance. The chances of data errors are reduced and security is tightened.

Many companies think they need perfect data to get started. However, to make productive progress, a use case based approach is needed. That means selecting the most promising use cases and then scaling data across those cases through speedy testing.

And with talent, leading companies start with small but highly skilled analytics teams, rather than amassing talent too early—this can allow them to create an agile culture of continual improvement and cost efficiency.

As shown by the three companies discussed in this article, most successful B2B players employ various strategies to sharpen their sales capabilities, including omnichannel sales teams; advanced sales technology and automation; and data analytics and hyperpersonalization. A strategic vision, a full commitment, and the right capabilities can help B2B companies deploy these strategies successfully.

Paolo Cencioni is a consultant in McKinsey’s Brussels office, where Jacopo Gibertini is also a consultant; David Sprengel is a partner in the Munich office; and Martina Yanni is an associate partner in the Frankfurt office.

The authors wish to thank Christopher Beisecker, Kate Piwonski, Alexander Schult, Lucas Willcke, and the B2B Pulse team for their contributions to this article.

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For many, being a social media influencer has transformed from a side gig into a multimillion dollar business. Creators now have more say in the sponsored content they create for brands as well as the earnings they receive. And as creators continue to prove themselves as influential brand advocates, marketers are tapping these influencers for content beyond social feeds, including TV, out-of-home, and other digital media.  

Influencers have also proven resilient amid economic uncertainty and an increasingly crowded space. Influencer marketing spend rose roughly 3.5 times faster in 2023 than social ad spending, according to EMARKETER’s July 2023 forecast. 

influencer marketing social ad spend change

In this guide, we explore the current state of influencer marketing, and why marketers, social platforms, and media companies should adjust their strategies as the power of the creator economy grows. 

  • Want to learn more about influencer marketing and other marketing trends?  Sign up for the EMARKETER Daily newsletter.

What is the creator economy?

The creator economy , also called the influencer economy, is the interconnected ecosystem of creators, audiences, digital platforms, marketers, and agencies and/or vendors. The creator economy, as defined by EMARKETER’s Creator Economy Explainer report , enables creators to generate revenues in the form of money, goods, or services through their content, usually delivered via social media platforms. Meanwhile, marketers can partner with creators to build awareness for their brands.

Because interaction among stakeholders is constantly evolving, revenue data is sparse. A March 2023 estimate from Citigroup values the creator economy at $65.2 billion in 2023. By 2024, that figure is expected to reach $74.0 billion. 

What is influencer marketing?

Influencer marketing involves a celebrity, content creator, subject matter expert, or public figure endorsing a brand’s product or service to drive social proof. 

The market is rapidly expanding as influencer types have increased, with influencers filling every conceivable niche and sub-niche interest. 

Here are the types of influencers, based on follower count and focuses:

  • Mega-influencers: Often celebrity influencers, those accounts with more than 1 million followers 
  • Macro-influencers: Influencers with a follower count of 100,000 to 999,999
  • Mid-tier influencers: Influencers with a follower count of 20,000 to 99,999
  • Micro-influencers: Followers ranging between 5,000 to 19,999 
  • Nano-influencers: A community of 1,000 to 4,999 followers 
  • Kidfluencers: Gen Alphas with social followings that often review toys and games 
  • Gaming influencers: Esport and video game players who discuss game strategy and livestream while in-game 
  • Virtual influencers: Computer-generated avatars like Noonoouri, a fashion model and digital-only popstar 

The pandemic sped up changes in influencer marketing that were already underway, such as the trend toward “unfiltered” or less-scripted content, the rise of TikTok, and the popularity of “everyday influencers” with genuine and relatable personalities like Elyse Myers. 

Industries like financial services that hadn’t invested in influencer marketing earlier are also learning to navigate the space. And as ecommerce and social media converge, influencers will become increasingly vital intermediaries, helping to connect brands with consumers on social media. 

Creators vs. influencers: What’s the difference? 

Creators create content. Influencers are creators if the content they develop can sway the purchase decisions of a population regardless of whether they are being paid to promote a product. The term refers to a wide group of people from celebrities to loyal customers. Creators are influencers if their content affects purchase decisions. 

Who is a creator? 

Everyone has the potential to be a content creator thanks to how the term is defined. Adobe estimates there could be up to 303 million creators worldwide. For context, that figure is close to the US population at the start of 2023, per the US Census Bureau. 

Most content creators worldwide are under 41, but there are creators of all ages, including Gen Xers and baby boomers, per Adobe. 

Creators over 60 years old, dubbed “granfluencers,” have found popularity on social media due to their cross-generational appeal. 

For example, Nonna Pia, a TikTok account with 4 million followers, features a grandmother who cooks classic Italian dishes while her grandson narrates. Similarly, the Instagram account “Excuse My Grandma” follows a grandmother-granddaughter duo as they discuss generational differences in dating, fashion, and more. 

Creator categories

Although there is an account for every interest and target audience—from foraging to chiropractic medicine—lifestyle, fashion, and beauty are among the top creator categories.

While broad, these top categories overlap with many other industries, including travel, health, entertainment, food and drink, and art. Cross-category appeal is ideal for brand marketers looking to expand their reach to find like-minded audience demographics. 

Areas that have seen recent growth in creator focus include:

Collegiate sports

A 2021 NCAA policy change allows college athletes to be compensated for their name, image, and likeness. College athletes already command large audiences and regularly create content on social media, per August 2022 data from Curastory.  

B2B professionals 

Industry professionals are increasingly building audiences by sharing B2B content online. For example, a “ LinkedInfluencer ” is an influencer on B2B social platform LinkedIn. 

Nearly 1 in 4 people in the US are on LinkedIn, according to EMARKETER’s May 2023 forecast, as both the creator economy and B2B ad spending grow. As buyers get younger and B2B marketing becomes increasingly digital, authenticity and experience will matter more in marketing. 

Financial services

In the financial sector, “ finfluencers ” use their social media platform to share videos that cover personal experiences, tips, and advice about investing, budgeting, financial trends, and the economy. 

Finfluencers are capitalizing on a widespread lack of financial literacy. However, the quality of the content is controversial because some creators do not have a professional background in finance. Despite concerns, 60% of investors ages 18 to 35 use social media as a source of investment information, according to a Finra Investor Education Foundation report.  

The generational response 

Younger shoppers are more likely to use social media . About 129.5 million US Gen Zers and millennials will use social media in 2024, per a May 2023 EMARKETER forecast. 

Younger shoppers are also more likely to follow and buy from accounts run by influencers. A Q2 2022 Klarna survey found that over 40% of Gen Zers and millennials worldwide follow influencers , compared with one-quarter of Gen Xers and less than 10% of baby boomers. 

US social netword users by generation


Often considered a millennial concept, influencer culture is embraced by this extremely active social media user base. Close to 70 million US millennials will use social media next year, per EMARKETER’s May 2023 forecast. 

Millennials look to trusted influencers for product recommendations, reviews, and as a discovery point for new brands. 

They’re also willing to purchase what they see being promoted by their favorite influencers on social media. Over half (54.1%) of US social network users ages 25 to 34 will make a purchase on a social platform in 2024, per September 2023 EMARKETER data. 

In 2024, 60.7 million US Gen Zers will use social media, according to EMARKETER’s May 2023 forecast. And while that growth is expected to continue through 2027, Gen Z will remain slightly behind millennial users.  

Gen Zers, however, are not as sold on following influencers as their older peers. Less than half (48.6%) use social media to view creator/influencer content, according to a July 2023 EMARKETER survey’s findings. 

Where influencers do have an outsize influence over Gen Z is women’s beauty and wellness. Close to 80% of Gen Z women rank creators as their most trusted source for beauty recommendations, a survey conducted by LTK found. 

Those recommendations are also turning into online and offline sales. Eighty-three percent of Gen Z women shop for creators’ product suggestions online, and 82% shop for those items in-store.  

Influencing by “de-influencing” 

While the majority of influencers promote what to buy, some influencers are turning to platforms like TikTok to tell their followers what not to buy. As of January 2024, #deinfluencing videos on TikTok have roughly 1.3 billion views, up considerably from 208 million in February 2023. 

Seen as a method to combat overconsumption in a tight economy, deinfluencing videos often offer economical alternatives to expensive products or discuss the pitfalls of fast-fashion shopping hauls. 

Creators also use de-influencing videos to share critical commentary to distance themselves from brand controversies and post honest reviews of products that don’t meet expectations. Doing so can help reinforce creator trust through authenticity and transparency. 

Influencer marketing spend 

In 2024, advertisers will spend $5.89 billion on influencer marketing, a 14.7% increase YoY, according to EMARKETER’s July 2023 forecast, which excludes paid media. 

US influencer marketing spend grew more than three times faster than social ad spending in 2023, and it will remain ahead through 2025, according to a July 2023 EMARKETER forecast. 

Social platforms are reliant on creators, not the other way around, as creators’ options extend and include owned channels like blogs, podcasts, and newsletters.

A number of well-known creators, such as YouTuber MrBeast and podcaster Alex Cooper, have launched their own audio and video networks.

Although not every creator has a strong enough brand or following to create a successful media business , the growing success of these ventures should signal to brand marketers and entertainment companies that creators can offer much more than an outlet to generate hype or hawk goods. 

Where influencers post sponsored content

Creators utilize a number of social media platforms. 

To be impactful, influencer content should be engaging, entertaining, and educational, and marketers should work with credible creators who have built trust with their communities. 

US marketers will allocate over $1 billion to sponsored content on each of the top four influencer marketing platforms in 2024, according to EMARKETER’s July 2023 forecast. When it comes to influencer monetization , Instagram posts were the top format that creators worldwide were paid by brands to create in December 2022, per a Later and Mavrck December 2022 survey. Here’s a look at the top social media marketing platforms for influencers.

US influencer marketing spend by platform

Instagram remains the top platform for sponsored content, per a June 2023 report from Mavrck. About 98% of US creators share brand content via Instagram feed posts, Instagram Stories, and Instagram Reels, while 69.1% go live on the platform. 

As of June 2023, more creators worldwide report being paid to create Reels (98.0%) compared with TikTok videos (89.6%). 

Creator monetization: In May 2023, Meta began testing a new payout model for Ads on Reels. The monetization program pays creators based on the performance of the Reel, rather than the earnings of the Reel ad, per TechCrunch. 

US sponsored content post types shared by creators

As TikTok’s popularity rises, brand opportunities for paid content is likely to increase as well. 

Influencer marketing spending growth on TikTok has grown 27.8%, compared with 12.7% on Instagram, according to EMARKETER’s July 2023 forecast.

In 2024, over half of marketers (54.0%) will use TikTok specifically for influencer marketing, with $1.25 billion in US influencer marketing spend going to the platform, per the same EMARKETER forecast.

Creator monetization: If an influencer promotes a brand’s product on TikTok Shop, the social app’s ecommerce tool, they can earn a commission through product sales. For both brands and influencers, TikTok Shop holds a lot of promise and room for growth. In 2024, we expect 40.7 million TikTok users to make a purchase on the app. 

YouTube, like Instagram and TikTok, has a solid hold on influencer marketing. YouTube is the top platform for US adults to follow influencers, according to March 2023 CivicScience data. 

EMARKETER forecasts that in 2024, US marketers will spend $1.07 billion on influencer content for YouTube. 

Similar to Instagram Reels, YouTube has been emphasizing Shorts as a cost-effective option for marketers.

Livestreaming is also leveraged by YouTube to connect influencers—and, ultimately, the brands they partner with—to followers. One-fourth (25.0%) of internet users say they watch creator- or influencer-led livestreams on YouTube, making it the most popular livestreaming app, ahead of TikTok (18.7%), Facebook (17.4%), and Instagram (14.0%), per an April 2023 survey by The Influencer Marketing Factory. 

Platforms used by US internet users

Creator monetization: YouTube attracts and retains creators in a number of ways. The platform offers a way to connect creator, artist, and brand stores to their YouTube channel, enabling users to more easily find and purchase featured products. YouTube also has affiliate shopping capabilities for creators interested in revenue opportunities. 

Other platforms with influencer marketing potential include Facebook, Twitch, and to a lesser extent, Snapchat and X, the social media company formerly known as Twitter. 

Despite its waning popularity among users, especially youths, Facebook is still expected to see $1.00 billion in influencer marketing spending next year, per an EMARKETER forecast. 

Popular with the esports gaming community, livestreaming app Twitch recently launched a number of features for creators. In July 2023, Twitch announced its Discovery Feed, made up of livestream clips and ad features that help creators share their content from other platforms such as YouTube, TikTok, and Reddit. 

Snap has struggled with ad monetization and commands a fraction of influencer marketing spend compared with larger platforms. In 2023, Snap crossed $40 million in influencer marketing spending, and is expected to see growth of 3.4% in 2024.  

In October 2023, Snap released Creator Collab Campaigns, a suite of tools to facilitate brand-creator partnerships on the platform. Previously, Snap’s primary focus was helping creators monetize directly on the platform through programs like ad revenue sharing. 

X (formerly Twitter)

X saw total US ad revenues decline by 54.9% in 2023 after Elon Musk’s 2022 purchase, according to EMARKETER’s October 2023 forecast, which means it is not an attractive platform for influencer marketing. 

The aforementioned June 2023 Mavrck survey found that 45.9% of US creators shared promoted tweets, while a December 2022 Later and Mavrck survey found that 8.3% of creators worldwide have been paid by a brand to post on X. 

Influencer marketing strategy

An influencer marketing strategy allows a brand to further its reach and tap new audiences, but narrowing down the right creator to work with requires an understanding of the landscape and what type of partnership will best serve the brand’s objectives.  

Influencer marketing hubs: As influencer marketing took off, agencies dedicated to influencers sprang up to help brands manage the opportunity and vice versa. 

Acting as a directory, influencer marketing hubs organize creator profiles by follower count per social platform, audience demographics, location, services offered, the price of partnership, and their interests (e.g., fashion, travel, home improvement, etc.), to take the guesswork out of selecting an influencer to partner with.  

In addition to facilitating brand-creator relationships and identifying new talent, influencer hubs create campaign narratives, determine KPIs, and amplify influencer-led social campaigns, among other responsibilities. 

For creators, working with an influencer marketing agency can be beneficial to scale and manage their own business. As influencer campaigns become more complex, an agency can manage payment, negotiate contracts, handle data analytics and reporting, and oversee other business functions.

Influencer marketing campaigns: An influencer marketing campaign is one that leverages the influence the creator has over their followers. 

When in a paid partnership with a brand, the influencer campaign’s objective is to increase awareness, engagement, and, ultimately, sales. In comparison, an unsponsored campaign, while achieving the same objectives to various degrees, can be seen as more trustworthy and authentic by the influencer’s community.  

Influencer campaigns fall into two categories: 

  • User-generated content (UGC) is organic content shared by a social media influencer to promote a brand or product without direct input from the featured brand. The influencer is not paid for UGC posts, and is often not as polished as content created with brand involvement. UGC posts range from product reviews, recommendations, tutorials, and personal experiences with a given good or service.
  • Influencer-generated content is a collaboration between a creator and partner brand. These campaigns follow a brand’s creative guidelines—including tone of voice, talking points, aesthetics, and frequency of posts—to produce content fitting for that creator’s audience. As more influencers become trusted partners, brands have loosened the reins, allowing talent to tap into their own creativity for campaigns. Like UGC, influencer-led campaigns are more authentic and engaging, and may prove more effective for the brand involved. 

Influencer posts: When paid for by a brand partner, an influencer post is a type of native advertising. When unpaid with no brand involvement, the post is considered UGC. 

Most commonly seen on social media platforms, formats include Instagram photos with captions, short-form videos on TikTok, and long-form video content posted to YouTube. Influencers can also post written content on blogging platforms like Substack. Influencers will often promote their posts across various platforms to increase reach, engagement, and effectiveness. 

While format is an important aspect of influencer marketing, the post’s creative should be at the forefront. According to EMARKETER’s Influencer Monetization 2023 report, the “three E’s” of influencer marketing should be remembered when creating posts. 

“Regardless of the format, each piece of content should be engaging, entertaining, and educational to drive the most impact,” according to EMARKETER analyst Jasmine Enberg. Brands should also trust creators’ input on creative and format decisions because they know what will resonate best with their audience, Enberg continued.   

Product launches: Influencers are an ideal way for a brand to launch new products. 

When introducing a new product, brands can expand their reach by working with influencers with a similar following as the brand’s target audience. A kitchenware brand, for instance, may work with a popular food influencer to introduce a new range of pots to show off the products, its attributes, and how to buy. 

As influencers become brands in their own right, many have launched their own product lines.

Thanks to an engaged and well-known audience, some influencers are able to develop products that align with the interests of the community they’ve built across their social media footprint. 

For example, beauty vlogger and influencer Huda Kattan launched her own line of false eyelashes in 2013 after her community expressed an interest. Kattan then expanded the line into a full range of cosmetics. Huda Beauty, named after Kattan’s YouTube channel and blog, is now sold D2C and at Sephora. 

Creators with large followings have launched food and beverage products, fitness programs, clothing lines, restaurants, and more to capitalize on their popularity and the value and willingness of their followers to support their businesses. Venturing into their own products also helps creators diversify their revenues and avoid alienating their audiences with too much sponsored content. 

Collaboration: Similar to leveraging an influencer’s help to launch a new product, brands also partner with their stable of creators for product collaborations. 

Often developed as a one-off or limited-edition product, brand-influencer collaborations can be a great source of product innovation. 

In March 2023, Chipotle added two new limited-edition menu items to its quesadilla lineup, the “Keithadilla” and the “Fajita Quesadilla Hack,” which were developed and popularized by TikTok creators Keith Lee and Aleix Frost. 

For some influencers, a brand collaboration may be a jumping-off point to developing their own product lines if the collaborative effort was deemed successful. 

Common influencer marketing KPIs

These metrics are a good way for brands to measure their return on investment for influencer marketing campaigns: 

  • Facebook engagement rates (subscribers only): Engagement rate is defined as measurable interactions on social media posts, including likes, comments, favorites, retweets, shares, replies, and reactions, and is calculated based on all these interactions divided by total follower count.  
  • Facebook posts per week  
  • Instagram affiliate engagement rate : The percentage of an affiliate influencer’s audience that interacts with an affiliate influencer’s campaign or post on Instagram; this includes likes, comments, and shares.
  • Instagram affiliate impression per follower rate : The number of affiliate-generated views that a specific post or piece of content received over a specific period of time on Instagram. 
  • Instagram affiliate reach : The percentage of followers and viewers from an affiliate influencer’s audience that is exposed to the affiliate influencer’s Instagram. 
  • Instagram affiliate view rate : The percentage of an affiliate influencer’s audience that views an affiliate influencers’ campaign or post on Instagram. 
  • Instagram engagement rates : Engagement rate is defined as measurable interactions on social media posts, including likes, comments, favorites, retweets, shares, replies, and reactions, and is calculated based on all these interactions divided by total follower count.
  • Instagram posts per week
  • Social affiliate clicks : The clicks generated by social influencer efforts, including generating traffic or leads (through affiliate links) to the company’s website.
  • Social affiliate conversion rate : The percentage of clicks generated by social influencer efforts, including generating traffic or leads (through affiliate links) to the company’s website that also result in completed orders or purchases.
  • Social affiliate engagement rate : The percentage of an affiliate influencer’s audience that interacts with an affiliate influencer’s campaign or post on a social media platform; this includes likes, comments, and shares.
  • Social affiliate orders : The orders generated by social influencer efforts, including generating traffic or leads (through affiliate links) to the company’s website.
  • Social affiliate sales : The sales or revenues generated by social influencer efforts, including generating traffic or leads (through affiliate links) to the company’s website.
  • Social affiliate view rate : The percentage of an affiliate influencer’s audience that views an affiliate influencer’s campaign or post on a social media platform.
  • TikTok affiliate engagement rate : The percentage of an affiliate influencer’s audience that interacts with an affiliate influencer’s campaign or post on TikTok; this includes likes, comments, and shares.
  • TikTok affiliate view rate : The percentage of an affiliate influencer’s audience that views an affiliate influencer’s campaign or post on TikTok.
  • X (formerly Twitter) tweets per week

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Oil Market Report - March 2024

03 March

About this report

The IEA Oil Market Report (OMR) is one of the world's most authoritative and timely sources of data, forecasts and analysis on the global oil market – including detailed statistics and commentary on oil supply, demand, inventories, prices and refining activity, as well as oil trade for IEA and selected non-IEA countries.

  • Global oil demand is forecast to rise by a higher-than-expected 1.7 mb/d in 1Q24 on an improved outlook for the United States and increased bunkering. While 2024 growth has been revised up by 110 kb/d from last month’s Report, the pace of expansion is on track to slow from 2.3 mb/d in 2023 to 1.3 mb/d, as demand growth returns to its historical trend while efficiency gains and EVs reduce use.
  • World oil production is projected to fall by 870 kb/d in 1Q24 vs 4Q23 due to heavy weather-related shut-ins and new curbs from the OPEC+ bloc. From the second quarter, non-OPEC+ is set to dominate gains after some OPEC+ members announced they would extend extra voluntary cuts to support market stability. Global supply for 2024 is forecast to increase 800 kb/d to 102.9 mb/d, including a downward adjustment to OPEC+ output.
  • Refinery crude runs are forecast to rise from a February-low of 81.4 mb/d to a summer peak of 85.6 mb/d in August. For the year as a whole, throughputs are projected to increase by 1.2 mb/d to average 83.5 mb/d, driven by the Middle East, Africa and Asia. Refining margins improved through mid-February before receding, with the US Midcontinent and Gulf Coast as well as Europe leading the gains.
  • Global observed oil inventories surged by 47.1 mb in February. Offshore stocks dominated gains as seaborne exports reached an all-time high and shipping disruptions through the Red Sea tied up significant volumes of oil on water while onshore inventories declined. Global stocks plunged by 48.1 mb in January, with OECD industry stocks at a 16-month low.
  • ICE Brent futures rose by $2/bbl during February as ongoing Houthi shipping attacks in the Red Sea kept a firm bid under crude prices. With oil tankers taking the longer route around Africa more oil was kept on water, further tightening the Atlantic Basin market and sending crude’s forward price structure deeper into backwardation. At the time of writing, Brent was trading at $83/bbl.

Oil on water

Benchmark crude oil prices were range bound in early March, as the market had already priced in the announced extension of OPEC+ voluntary production cuts through 2Q24. North Sea Dated rose by $2.13/bbl to $84.66/bbl during February as continued tanker attacks in the Red Sea lengthened supply routes and global on-land oil inventories fell for a seventh consecutive month to reach their lowest level since at least 2016.

Global onshore oil stocks fell a further 38 mb last month, taking the draw down since July to 180 mb, according to preliminary data. Over the same period, oil on water surged. Trade dislocations from the rerouting of Russian barrels and more recently due to unrest in the Middle East, have boosted oil on water by 115 mb. In February alone, oil on water surged by 85 mb as repeated tanker attacks in the Red Sea diverted more cargoes around the Cape of Good Hope. At nearly 1.9 billion barrels as of end-February, oil on water hit its second highest level since the height of the Covid-19 pandemic.

Trade flow disruptions also boosted bunker fuel use. Longer shipping routes and faster vessel speeds saw Singapore bunkering reach all-time highs. That, along with surging US ethane demand for its petrochemical sector underpins a slight upward revision to our global oil demand expectations for this year by 110 kb/d compared with last month’s Report. World oil demand growth is now forecast at 1.3 mb/d in 2024, down sharply from last year’s 2.3 mb/d expansion.

The slowdown in growth, already apparent in recent data, means that oil consumption reverts towards its historical trend after several years of volatility from the post-pandemic rebound. A weaker economic outlook further tempers oil use, as do efficiency improvements and surging electric vehicle sales. Growth will continue to be heavily skewed towards non-OECD countries, even as China’s dominance gradually fades. The latter’s oil demand growth slows from 1.7 mb/d in 2023 to 620 kb/d in 2024, or from roughly three-quarters to half of the global total, under the gathering weight of a challenging economic environment and slower expansion in its petrochemical sector.

As in 2023, non-OPEC+ oil supply growth will eclipse the oil demand expansion by some margin. Led by the United States, non-OPEC+ production is forecast to rise by 1.6 mb/d in 2024 compared to 2.4 mb/d last year when global oil output climbed by 2 mb/d to 102 mb/d. Substantial gains will also come from Guyana, Brazil and Canada, all forecast to pump at record-highs this year. Together, the non-OPEC+ Americas quartet is set to add 1.3 mb/d of new oil production in 2024.

Iran, which last year ranked as the world’s second largest source of supply growth after the United States, is expected to increase production by a further 280 kb/d this year. Output policy for the remainder of the OPEC+ bloc will be revisited when ministers meet in Vienna on 1 June to review market conditions. In this Report, we are now holding OPEC+ voluntary cuts in place through 2024 – unwinding them only when such a move is confirmed by the producer alliance (see OPEC+ cuts extended). On that basis, our balance for the year shifts from a surplus to a slight deficit, but oil tanks may get some relief as the massive volumes of oil on water reach their final destination.

1. Includes extra voluntary curbs where announced. 2. Capacity levels can be reached within 90 days and sustained for an extended period. 3. Excludes shut in Iranian, Russian crude. 4. Angola left OPEC effective 1 Jan 2024. 5. Iran, Libya, Venezuela exempt from cuts. 6. Mexico excluded from OPEC+ compliance. 7. Bahrain, Brunei, Malaysia, Sudan and South Sudan.

Definitions of key terms used in the OMR, access the OMR Glossary here.

For more info on the methodology, download the PDF below.

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IEA (2024), Oil Market Report - March 2024 , IEA, Paris

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