The ABCs of Market Research
Whether you’re starting a new business or just need to test where you stand in your market, it’s imperative that you do thorough market research. So many entrepreneurs skip this step thinking it’s unimportant or that if they’ve done it before why should they bother again?
Market research is a critical to knowing the basics of your industry to stay ahead of the game and to get the specific feedback you need.
Here are the three ABC’s of market research:
A is for approach. What’s your approach to research going to be? There’s both primary and secondary research. Both are important and vastly different.
Primary research involves actual humans. Have you ever been asked to be part of a research study? Approached on the street by people in bright T-shirts wanting to ask you questions? That’s just a few of the approaches that a professional market-research group is going to take to get primary feedback. They'll ask questions to test your market theories on real, live people inside your intended demographic. There are some wrong ways to do that, but starting with a live group for primary research is important.
Secondary research is all the data collection you will need to analyze to further understand your market conditions. Market reports, government surveys, census data, ratings reports -- whatever market it is you’re looking to get into, these secondary reports can help inform you of market conditions.
B is for beware. Now that you know a little more about primary and secondary market-research methods, you need to know about some common mistakes people make when doing market research. These reasons alone might be a good prompt to hire a market-research company to run the whole process for you, but if you want to do the research yourself, then you should know be aware of these rookie mistakes.
The first big mistake is relying on only one kind of research. Most people do this by leaning only on secondary sources to save money. Secondary research takes a considerable amount of time to collect, analyze and report. While it’s relevant, it can be dated, whereas primary research gives you more recent and often more authentic individual data that can be hugely relevant. Secondary research also tends to give you more quantitative data while primary research is a great way to get qualitative data.
There's also the mistake of relying only on friends and family for your primary data. That seems like an obviously flawed approach, but many still make it. Don’t poll your friends for primary data. They have an emotional connection and reason to provide whatever answers you might want. On that same note, don’t rely only on social-media polls or online surveys as primary research. There’s a flaw to only one method of data collection and while it might be cheaper, it’s rarely as accurate.
C is for collected data. When you consider your collected data, you’re going to want to analyze it in two different buckets: quantitative and qualitative. Like primary and secondary research, having both kinds of data is important to accurately interpret what your research is really telling you.
Quantitative data is the kind you can put numbers around. For instance, if you ask questions about being for or against an issue, you’ll be able to quantify after the survey how many people fall on either side. However, that will only tell you so much and doesn’t help you dive deep into your market and their needs. Adding questions that will help you qualitatively understand your market are equally insightful as they help you develop and explain your quantitative data.
These questions can help you further define your list of “for” or “against” based on more information about a test group’s opinions and beliefs. Obviously, the better you understand your market niche’s needs, the better you can serve them.
Matthew Toren is a serial entrepreneur, mentor, investor and co-founder of YoungEntrepreneur.com. He is co-author, with his brother Adam, of Kidpreneurs and Small Business, BIG Vision: Lessons on How to Dominate Your Market from Self-Made Entrepreneurs Who Did it Right (Wiley). He's based in Vancouver, B.C.