In this article, we’ll cover:
How does market research work?
Market research uses data about your target market demographics to inform your marketing, campaigns, and other business strategies. Whilst many companies use market research, they don't understand just how vital such research is to the success of your business.
Market research provides the answers needed for orgs of any size about where to take the direction of their business, how to engage with their customers, and address pain points.
The importance of market research
This type of research will help you decide which direction your business should take. It covers all areas that impact your chosen market and your place within it. This includes:
- Target audience
- Customer segmentation
- Brand analysis
- Campaign evaluation
- Product development
- Usability testing
- Knowing what your competitors are doing to attract your target audience will inform how you approach things like tone of voice, your choice of platform, and more.
- Conducting an analysis of the customer segments within your existing audience, and comparing it to your ideal target audience will give you knowledge about where your strategies are currently falling short.
- Conducting a brand analysis of your own company will give you answers to what your customers most interact with, helping you adjust your tone of voice, design, and advertising strategies to best attract your audience.
The five benefits of market research
We’ve gone over a few of the benefits that market research comes with, but let's get more into detail about each of these points. The following are the best benefits of conducting such research.
1 - Maintain a customer-centric focus
When researching customers in your market, there’re three components that are important to look at:
- Segmentation - This is discovering the possible customer segments your product will appeal to. This will be behavioral, geographic, demographic, or psychographic segmentation.
- Targeting - This is prioritizing the segments that’ll offer the most profit, so ideally the customers that your company is most likely to retain. Evaluating your existing customers will help with this.
- Positioning - This is about positioning yourself within the market to be most attractive to your target segments. This involves developing a strategy.
With market research comes the benefit of understanding your audience and its place within it. Depending on your industry, there may be many areas in which your customer segments overlap with your competitors’. Still, there will always be something that keeps your existing customers loyal to your brand.
Understanding what distinguishes you from your competitors goes a long way to understanding why your customers have chosen you in the first place. Is it the features you offer, the price of your product, or the way you interact with your customers?
Market research will show you why your customers stay, and what key thing makes them choose you over the competition.
This research will also tell you about the pain points for your customers. Has a competitor got a specific feature attracting your target audience? Is there a particular usability issue that customers are struggling with?
Discovering and then accommodating or solving these points will go a long way to making your audience feel heard. Customers need to understand that your company values them, otherwise what’s stopping them from going to your competitor instead?
A way to drive this point home with your research is to conduct customer research within your market research strategy.
2 - Identify new customers
Once you have a good grasp on who makes up your existing customers and who makes up your overall target audience, it becomes easier to identify the customers you’re missing.
Knowing about your customer segments will help you to create an informed marketing strategy. A one-size-fits-all approach to marketing won’t work and has the potential to turn into a costly mistake.
It may be as simple as where you choose to advertise your product. If you only conduct a campaign on TikTok and Instagram, you could be missing a whole chunk of your audience by not expanding your reach.
At the same time, if you don’t create advertising campaigns that speak to your audience, it won't matter how many platforms you advertise on. The tone of voice and brand story you choose to present will have an impact on whether your customers are going to be attracted.
3 - Set realistic targets
Setting realistic targets comes from an analysis of your current processes, your customer habits and pain points, and the current landscape of the market. Regular analysis can also offer you the opportunity to observe your company's growth through a wide variety of concepts.
- Organic Traffic - Keeping an eye on organic traffic to your site, for example, can show you the search engines and websites your customers frequent the most.
- Social engagement - Again, customer engagement shows which social media sites your audience frequents, but can also help to encourage conversions. Investment in your company's updates on social media can identify opportunities to convert customers into advocates.
- Competitive intelligence - Conducting an analysis of your competitors can help you understand your position in the market, and give you a good place to start in setting realistic goals for your company and your team.
Setting realistic KPIs or OKRs is vital to help motivate and bring direction to your work processes.
4 - Identify opportunities for growth
Look at not only your competitors but also the biggest names within that market who have come before you. Understanding how they got to where they are now will give you an idea of how they supported their growth with targets in a way that was manageable.
Market research will give you a good bird’s eye view of what your position is within that market landscape. Using this research can inform your decisions on which direction you want to take your team. It can show you:
- Unreached segments - As we said before, not advertising to groups in your target audience is a huge missed opportunity for growth.
- Business partnerships - Competitors aren’t only opportunities for some sneaky research on understanding the market, but also present the opportunity for collaboration. Working together with another business combines to expand your reach.
- Product development - Discovering the shortcomings of your product is almost more important than discovering the things people like about it. It may be a missing feature, add-on, or bundle that would speak to your audience. It offers the opportunity to give you an informed choice for improvement.
5 - Spot emerging trends
Consumer behaviors and market trends are some of the most fast-moving and changeable parts of any market. Staying on top of these is not an easy task, but doing just that can help your business keep in touch with the market environment you’re working in.
Trends will impact a variety of facts which, in turn, will impact how you conduct your business. Things like:
- Purchasing behaviors
- New competitors
- Emerging technologies
- Developing product or service features
Consider how seasonal trends, highest-hitting pages, trending keywords, and new players affect your business processes.
Customer research is a big part of market research, particularly for customer marketers. When done right, it can enhance every essential aspect of customer marketing.
Accurately marketing to your customers means knowing them from the inside and out, knowing their needs, pain points, and interests, and turning that into actionable steps to take your customer marketing to the next level.
Our Customer Research Certified course will take you through the fundamentals of conducting accurate and representative customer research, leaving no stone unturned.