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So, you’ve got the next billion-dollar idea that’ll blow the top off your profit margins. You just know you’re onto a winner! Time to throw a huge budget (or your life savings) at this idea, right?
Not so fast! You're not likely to get very far in the marketplace if you only rely on your gut instincts.
How can you know if your idea even has a chance of surviving in the cutthroat marketplace?
The answer: market research. A realistic prediction, based on data, of your chances of success. Basically, it’s a way to find out the market viability of your idea.
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If you’re new to market research, don’t be intimidated. This guide will take you from basic concepts through to advanced techniques. Plus, our in-house experts will walk you through real-life examples of how we do it here at Typeform.
What is market research and why does it matter?
Market research is the process of collecting information about your target market and customers so you can:
Learn who your customers are
Find out what they want and/or need
Gauge potential market size
Discover trends in your industry
Get wise about what your competitors are up to
Determine how you can stand out
This way, you’ll better understand how to serve your customers, prioritize, and get higher returns on your own marketing and product development efforts. Market research is an essential part of any business’s strategy, whatever the size of your company.
There are many ways to approach market research, and at Typeform, we’ve developed our own spin on it, thanks to continuous testing and the insights we get from being a market research tool ourselves (forms and surveys).
Uncertainty is an inevitable part of business—however, it’s still possible to reduce some of the uncertainty.
This is where market research is your best ally. Nothing is guaranteed, but making an informed decision based on comprehensive research beats a stab in the dark. Market research helps reduce the thickness of that fog to see what your options are and which direction you might want to take.
Convinced you shouldn’t be sleeping on market research? Great—let’s dive deeper.
Types of market research
Finding what works best for you is a must for useful and actionable market research. We don’t believe in a cut-and-paste approach for all businesses and markets, nor in one definitive “right” way to do things. However, there are some basic principles that apply across the board. Here are a few types of market research.
Secondary and primary research
Secondary market research delves into information that you don’t create yourself. It’s data that’s already out there, which you can buy or access for free, and is great for benchmarking.
Examples of secondary research:
Industry reports
Census data
Research paper
Articles in journals or newspapers
Primary market research involves collecting information yourself—this may be more expensive and time-consuming than secondary research, but it’s a better investment in the long run. Focus on your own target audience and gather information directly relevant to your goals.
Examples of primary research:
Surveys
Interviews (face-to-face or over the phone)
Focus groups
User testing
Quantitative and Qualitative
Ahh, the classic quantitative vs. qualitative dichotomy.
Quantitative market research gathers data that's numerical, descriptive, and structured. You can draw statistics from quantitative research. It involves more of the “what” questions and can be done at scale.
This type of market research is usually carried out through surveys and questionnaires and can be internal or external. Internal quantitative research examines your current customers, while external can help you identify new customers and see the actual distribution of the whole market. External is more likely to be objective, as your own customers already know you and will have formed opinions.
Examples of quantitative questions:
“Where do you live?”
“How much do you spend on electricity per month, on average?”
“Do you use this product?”
“How often do you go to the gym?”
“On a scale of 1–10, how satisfied are you with our service?”
Qualitative market research involves more of the “how” and “why” questions. It’s done at a much smaller scale, is less structured and more exploratory, aiming for insight rather than certainty. It helps you find out how customers feel about your product, their opinions and preferences—in other words, things that can't be quantified.
Examples of qualitative questions:
“Why did you choose product A over product B?”
“How does this image make you feel?”
“What do you feel is missing from this service?
“Describe the last time you purchased something online.”
“What are your favorite brands for dog grooming products?”
Usually, this type of market research is done through surveys with open-ended questions or interviews. A small number of interviews are conducted, which are then projected to apply to a larger population.
Quantitative and qualitative research don’t need to be seen as opposite or distinct techniques. It can be an “and” instead of an “either-or.”
Market research for product development and marketing efforts
Market research tends to inform two main areas in a business: product development and marketing efforts. Whether it’s creating a new product or a new set of features, at Typeform, we always start from the end.
Who’s going to use this?
Who will buy it?
How do I justify engineers spending time on this?
Market research is one of the most important tools to answer these questions. Nobody wants to invest time, money, and effort into making something that no one wants or needs. Market research allows you to assess the market size, its opportunities, and your competitors. This is also where user research and market research inform one another.
Segmenting the market is one of the main activities in market research, as it gives you your target audience(s). How else will you know who is buying from you already, who to market to, and which marketing messages work best?
Competitor analysis, another cornerstone of market research, helps you craft your positioning. In simple terms: How you're different from your competitors and why should buyers pick you?
How to conduct market research
So you can probably see by now how varied market research is. The way we do our own market research here at Typeform has evolved over the years through testing and experimentation. After much trial and error, we finally landed on the approach that works best for us.
Set your goals
Before we even think about launching market research of any scale, we make sure to have a clear objective in mind.
Are you trying to enhance a particular metric (such as customer numbers or customer satisfaction level), gauge potential market size, or something else?
Define your objective(s) first, then move on to the next step.
Define your audience
Whatever your approach, the next thing you should always have at the front of your mind is your customer.
Still, focusing on the customer can mean different things to different people.
Focus on jobs, not personas
Brace yourself, because we’re about to say something controversial: don’t focus on buyer personas.
This flies in the face of what most other market research guides will tell you: Research your audience to create buyer personas and frame your offering around them.
Not that buyer personas aren't important—they are. And at Typeform, we definitely use them, but we also follow the “Jobs To Be Done (JTBD)” model. This is the backbone for how we conceptualize everything, from our marketing messaging to our product development. It informs how we see our customers and how we segment them.
How many people in your business speak directly to customers? The bigger your organization, the smaller this number is likely to be, and the further removed the customer becomes from the decision-making. The job creates a consistent framework for everyone to work with and remains close to the customer’s needs.
As you identify needs that intersect, you can begin to find unique differentiators for your product.
At the end of the day, your customers don’t care about you or your product or its features. They care about the job or jobs they are trying to get done, and if you provide the best solution, they'll pay you for it. If you don’t, they'll move on to your competition faster than you can say, “job to be done.”
So how does this all relate to market research?
Rather than framing your market research efforts on creating buyer personas and targeting them, frame them around jobs your customers are trying to get done. There'll be some natural overlap with personas, but you need not be wed to them.
Market segmentation
Market segmentation is the act of dividing a target market into groups (or segments). This lets you tailor your efforts to each segment, whether that be your marketing strategy or deciding on features for your product.
The four most common methods:
Demographics: age, gender, ethnicity, income, industry, job
Psychographic: lifestyle, values, personality traits, interests
Geographic: country, region, city, town
Behavioral: spending habits, internet browsing habits
Depending on your situation, any of these might be useful focus points, and all of them no doubt provide valuable insight.
The benefits of segmentation include:
A better experience for customers: A better understanding of your customers can only really be a win-win. You’ll be able to tailor each part of your customer experience, from marketing message to product experience, based on their segment.
More targeted marketing: In other words, this means better use of your marketing resources. Rather than casting the net wide and crossing your fingers that you haven’t just thrown a lot of time and money away, your segments let you focus your efforts where they’re likely to have the most return.
Improved product development: Knowing the real demands of your target audience will allow for product development that they'll actually appreciate (read: pay for).
Developing a market research strategy
Now that you’re convinced of the importance of market research and how it can help your business, you’re probably pumped to get started. Having even a basic plan can be the difference between a piece of research that has a real and lasting impact on your business and gathering some interesting insights that are forgotten in two weeks.
Always start with the question: Why? What’s the purpose of the research?
Your objective shouldn’t be “to do some research,” nor should you select a method first, whether that be a JTBD-based questionnaire, customer interviews, etc.
Make sure you’re always starting with a question you want to answer and adapt the method to the question.
Examples of questions to think about:
“How can we increase conversions?”
“Why are people churning after two months?”
“What is the appetite for this product?”
“Which product features are most useful to our customers?”
“In which region(s) should we focus our next marketing campaign?"
Let this always be front and center as you go about planning and executing your research.
Market research tips
Do preliminary research: Have a basic understanding of the industry and the landscape you’ll be investigating. It doesn't have to be extremely in-depth, but it’s important to have a foundation. This ensures you ask the right questions, know what to assess, and can get a more accurate vision of the market.
Align with potential stakeholders: There may be others in your organization who could benefit from the data you're about to gather. It may be worthwhile checking around to see how you could maximize your research efforts. Even just one extra question on your survey might provide essential data for someone else.
Use the right tools for your market research purposes: Make sure that whichever tools you use are fit for purpose. As technology develops, market research automation becomes more important. Using the right tools won't only save you lots of time and energy; it's also essential for correct and high-quality data.
Market research questions
The questions you ask depend on your objectives. You should write market research questions that are purposeful and will help strengthen your relationship with your customers.
You should also consider running a test first, depending on the scale of your research. Sending your survey to a smaller population and analyzing the first few responses will let you check that you’re getting useful responses that are answering your research questions.
Sometimes, until we start getting results, we’re unaware that a question is ineffective. This may be because the question uses terminology not understood by the target audience.
For example, you may ask, “What SaaS tools do you currently use?” If you get responses like “iPhone 11” and “desktop computer,” then you know you need to adapt your questions better to your audience!
Here at Typeform, we sometimes send out test emails to smaller populations (around 10% of the target audience) for this purpose and adjust our surveys if necessary.
How many responses to collect for market research
400 is the magic number.
Well, no, in fact, there is no magic number, sorry.
Generally speaking, 400 is the standard recommended sample size—this just means the number of people who responded to your market research survey.
But this number can vary greatly depending on your total population (i.e., all the people that this research will apply to) and the way you segment them.
But there’s a mathematical explanation for the popularity of 400: With 400 responses, your margin of error is 5%.
For example, say you got 400 customer responses to your market research survey. 80% of your respondents answered “yes” to the question, “Would you buy from us again?” That means there’s a 95% chance that in your total population of customers, around 80% would buy from you again.
Don’t forget that to reach your target sample size, you'll need to reach out to many more people! If sending out surveys by email, open rates tend to hover around 15-25%. The percentage of people who then go on to complete a survey will be even lower.
To increase your chances of survey opens and completions, offering an incentive is never a bad idea. Prize draws or discounts on your product have worked well for us. And, of course, the experience of answering a market research survey is paramount for completions—make sure your form is user-friendly with a smooth and beautiful interface.
Try to aim for a sample that'll be a good approximation of your overall population. There’s a risk of bias, depending on the channel through which your research survey is shared. For example, if you share it on social media, you might get a younger average age of respondents, which may not be accurately representative of your total population of customers.
Sample market research template
Below is a sample market research template for planning a piece of primary market data.
Background
A brief summary of why this research was started:
What led to this research being done/requested?
What needs to be validated or explored?
What's been done prior to this research? E.g., competitive analysis, brainstorming, previous research
What insights will this research generate?
How will these insights be used?
Business/product objectives
We can't emphasize enough the importance of having a clear goal in mind. What metric(s) are you trying to enhance? E.g., more conversions, less churn. This helps people understand the bigger picture of this research.
Decisions
State what decisions are going to be made or impacted based on the research. As a general rule, if you’re not prepared to make changes, don’t run the research.
Research objectives
State the high-level objectives for this research. Try to keep it specific, actionable, and two to three points max.
Research questions
Provide a list of market research questions you plan to answer during this research (these questions are not the interview questions).
Participant criteria
List the primary characteristics of the people you'll recruit for the research, like:
Geography
Job(s) to be done
Industry
Job title
Also decide on the minimum and maximum number of participants you'll need for your study.
Taking action on market research insights
Remember, data isn't reality—however, market research can give you a pretty decent view of reality.
Data can also be unpredictable. Missing a small detail can skew results significantly, so try to be as methodical and meticulous as you can.
Put our market research survey template to the test with customizable questions and design. Take your questionnaire to the next level with over 1 million photos, videos, and icons, or upload your own. Build your ultimate market research survey today with the help of Typeform.
