Different Market Research Techniques
There are roughly eleven different market research techniques entrepreneurs employ to get a sense of market conditions. Each views the market from a different lens, from focusing on facts, figures, and more quantitative data that reveals information about consumers collectively, to techniques that speak directly with consumers to reveal more qualitative data and insights numbers can’t show. Each technique has a use, and none of them should be looked at as the only one you need. As the saying goes, “if your only tool is a hammer, every problem looks like a nail.” Sometimes, these different types of data get collected at the same time! For instance, a survey might include some interview questions to collect both quantitative and qualitative data. Techniques can even overlap! A focus group might first include some observation-based research as the group gets to handle a prototype of your product. These techniques can all be mixed, matched, and mashed to answer the questions you have before making key decisions.Early-Stage Company Techniques
Techniques can also vary in scale, from doing some informed web searching, to organizing an internal team to collect and analyzing data, to hiring a third party that specializes in that technique. Some are more effective or efficient at specific scales than others. Early-stage companies often can’t afford to throw huge dollar amounts into market research, and need to focus their efforts where they get a huge return for their investment, or can conduct the research on their own time. Buyer Personas, Company reports, Government Agency Data, Observation-Based Research, Ratings & Reviews, and White Papers specifically are all great for early-stage companies. They are largely free at smaller scales, and can yield insights even if you’re conducting the research alone. More mature organizations lean heavier on the other techniques, as they can afford third parties to conduct the research well.Buyer Personas
Buyer personas are fictional characters that represent major segments of your ideal or actual customers. These fictional bios empower companies to put a name to a type of customer, and it enables your sales and marketing departments to build scripts and content optimized to communicate to that persona the value of your company, products, and services. Questions it Best Answers: Who are my customers? What are their pain points? How do they want to interact with my company as consumers? Key Insight: This is a way to analyze and synthesize data collected by other techniques, and combine them into a representative customer profile.Company Reports
The securities exchange commission (SEC) requires all publicly traded companies in the US to file annual and quarterly reports (sometimes known as 10K reports), which are freely available to everyone online. These reports contain a wealth of information, and can help you learn about the market and competition your business faces, a company’s business model, how they generate revenue, and more. These reports can be hundreds of pages long, but knowing where to look can yield valuable information quickly. Questions it Best Answers: Who is my competition? How do they see the market? How are they responding to emerging trends? What is the total available market? What are the risks to operating in this industry? Are there government regulations governing my industry I’m not aware of? Key Insight: To find a company report, simply select a publicly traded company you want to research, go to your favorite search engine, and type in “[Company Name] IR” or “[Company Name] Investor Relations”. It should return an investor website for that company that lists its public reports, or link to where to find them. You are generally looking for annual reports. There is also an SEC resource called Edgar that is searchable. Just make sure to narrow your search to the past year, and put the filing category to “all annual, quarterly, and current reports”.Focus Groups
We’ve all seen focus groups portrayed in the media before—a moderator or two leads discussion between a group of 5-7 people in a conference room, sitting around a table. The discussion might involve participants saying how certain words, images, videos, or even physical products make them feel. Giving the focus group a sample product to manipulate, handle, or even eat (if appropriate) is also common. Focus groups, particularly if you do multiple rounds, can give you both great qualitative and quantitative data.
Questions it Best Answers: What do consumers think of your brand, product, or sales/marketing campaign? Which is the preferred item in A/B testing?
Key Insight: It is difficult to get feedback from a focus group that isn’t influenced by the moderator, unless that moderator has specialized training. For that reason, organizations typically outsource focus groups to third parties that specialize in running them.
Government Agency Data
Our government generates countless reports every year that are free to access for the public. The Bureau of Labor, Census Bureau, and Commerce Department all put out reports that are very useful for entrepreneurs. The variety in reports make it hard to provide a one-size-fits-all advice about government agency data, except to say that if you can imagine a study and report being done, it probably exists and is worth doing a search for at the relevant government agency. Questions it Best Answers: What city has the youngest population? Which city has the most bike and walking paths? Which state eats the most corn? Which counties suffer the most from flooding? Key Insight: Data.Gov alone has tons of useful reporting, like walkability indexes, geographic demographic data, auto sales data, and thousands of other reports that can help you optimize your business, particularly with geotargeting, or getting the big picture on any number of trends. You can also check the USA.gov agency index to find departments and agencies in the government that might work closely with your industry, and locate relevant reports more quickly on their government pages.Industry Statistics
In some ways, industry statistics are similar to company reports. The key difference is that industry statistics are compiled by a third party, and take a broader view of an entire industry rather than one specific company. Industry reports can be incredibly expensive to get your hands on, tens of thousands of dollars per report in some cases. Questions it Best Answers: How much money was spent in digital advertising last year? How many people eat bananas? What is the total available market for grocery goods in the United States? How many cell phones were sold last year? Is kale farming keeping pace with demand? Key Insight: There is a rise of statistics serving companies online, such as Statista, where for a fee (or limited access for free), you can search for specific statistics among reports from tens of thousands of recognizable sources. There are also research firms that provide this service directly instead of relegating it to a search box. But many entrepreneurs get their industry statistics from trade magazines, which have articles that often cite new, important, or exciting industry statistics. While trade magazines don’t provide entire studies, they might hit enough key stats to serve your needs.Interviews & Panels
Interviews might be conducted one-on-one, or with a curated group (panels) to get in depth answers from participants about any number of topics related to your business. Most of the questions are open-ended, prompting long, unique, answers. Interviews might be formal affairs, done over the phone, or you can even conduct them in person in your store less formally. Typically, there is one facilitator and one person taking notes, or making a recording (which the other party consents to). Interviews and panels are usually made up of current customers and clients, or prospective ones. There are also services that can assemble interviews and panels made up of specific sorts of people and conduct the market research for you.
Questions it Best Answers: What is it like to experience your customer’s various pain points related to your product? What problems do they hope to solve with your product? What do prospective customers most want to hear about up front?
Key Insight: Interviews and panels often get used to generate a hypothesis about the market, which can be followed up with a survey to test that hypothesis. So, imagine you interview five people. When you ask if they wish your product came in other colors, four of them say they wish it came in pink. Then you know to do a survey and ask people if they’d buy your product in pink, where that color choice may never have occurred to you without the interview or panel.
Market Segmentation
Not unlike marketing personas, segmentation is more of form of analysis than it is a data collection technique (the data often comes from surveys or reports). The basic idea is that you look at the total available market, your entire existing customer base, or your ideal customer base, and segment it into more than one group. How the groups segment might be in any number of ways—income brackets, casual users and super-users, geography, language, etc. The segments are usually made in such a way that they reveal insights about your customers, and how to best deploy sales and marketing resources to capture them. It can even influence product development, favoring the way one segment uses the product over another. Questions it Best Answers: What differences are there among my ideal customers or existing customer base? What percentage of my customers are what type of customer? Key Insight: Market Segmentation and Marketing Personas have some overlap, but the key difference is that segmentation is largely dealing with how many of your customers possess specific persona traits. So if you have three marketing personas, say Steve, Jim, and Mary, the personas give you details about the buying habits and pain points for each persona, the segmentation tells you how many Steves you have, vs Jims or Marys.Observation-Based Research
Observation-based research is just what it sounds like—watch consumers and see what they do. This might mean anything from recording product demos for later analysis, or going somewhere people use similar products in public and finding a bench. The key is to watch a consumer interact with a product, and take note of pain points, obvious frustrations, and visible satisfaction. Sometimes, this research is paired with interviews or panels after the fact to hear consumers’ thoughts or to ask questions. Questions it Best Answers: How do people interact with a product? How do they respond to in-store shelving, marketing, and packaging? Is my product intuitive to operate? Are the directions clear? Key Insight: While observation-based research is often conducted in coordination with focus testing, there are other ways to watch people interacting with your product, or similar products. Conventions and conferences, or even stores or website tracking data can give you behavior to observe.Ratings & Reviews
Getting a sense of how your own product or a competitor’s is regarded by consumers can yield valuable data, and it’s generally free to access. You can get a sense of the ratings breakdown for a specific product or business, and sort the comments and reviews into negative and positives, and draw out specific qualitative comments that you feel are emblematic of the overall body of reviews.
Questions it Best Answers: What do people value most about this product or service? What pain points do customers find using my product or competitors’ products? What expectations do consumers have for this kind of product?
Key Insight: Free online platforms like Amazon, Yelp, or even Google can serve as free platforms for ratings and reviews on your own products or similar ones from competitors.