If you want to be in their ranks, learn your potential, define the market opportunities and properly research your target customers. Own the information and own the world!
We bet you’ve heard a lot about products like Segway, Amazon Fire Phone, or Google Glass. They all were developed and launched by different companies.
But what unites them is that customers all over the world never got around to having a deep understanding of the value of these products.
Behind the scenes, heavy advertising efforts by market giants like Google and Amazon managed to create plenty of hype, but the heavyweights failed to determine customers’ preferences in the first place.
As it turned out, people didn’t need a two-wheeled personal transporter, a fairly limited smartphone, or pricy, feature-packed glasses from the future.
But could the creators have predicted this outcome? Yes – if they had done extensive market research instead of basing their products on “our-customers-will-love-it” theories.
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What Is Market Research? Defining Goals 📝
Market research is the process of collecting data about a market segment, service, or product through research conducted directly with your target customers.
It’s used to analyze the current situation and pave the way for a product launch or increased sales.
In other words, market research is used to truly uncover who the target market of the business is while getting their feedback about the service or product at hand.
The market research definition suggests that the study will shed light on the consumer’s habits and needs, the economic shape of the industry, and the competitors’ state of affairs by conducting a competitive analysis.
Its main purpose is to discover a market opportunity for a certain business idea. Nowadays, hardly any concept or rebranding idea can succeed without prior market research.
Generally, a market research study can be conducted through product testing, customer surveys, and focus groups.
A market research project can be conducted by market researchers appointed in-house, or the market research study can take place at the hands of third-party specialists.
According to HBR, only about 3% of new consumer goods during the first year manage to top $50 million in sales, which is considered a success. Meanwhile, only 75% of them reach the $7-million bar.
These numbers clearly reveal a shortage of information about the market. But the most important fact is that market research is essential for new products and existing services and concepts.
If the business wants to scale up sales or introduce new product features, it requires knowledge of where its current customer base stands with respect to the current product version and whether they’re ready for changes.
Market research is integral to both launching a new product and supporting and improving the ongoing one.
But before plunging into it, it’s important to define clear market research and business goals. They might be as follows:
- Identify the target audience;
- Recognize the peculiarities of local customers’ buying habits;
- Explore competitors’ marketing research opportunities and strategies;
- Shape the product or service’s identity;
- Understand what clients like most/least about the existing product through customer feedback;
- Define the true unique selling proposition (USP);
- Etc.
If you dig deeper into all of the abovementioned representative sample aims, you’ll see that it’s all about potential or existing clients, and for good reason – they must determine your strategies and plans.
Understand Your Current Customers (If You Have Them) 🧑
Whether the business model is new or already popular among customers doesn't matter. In both cases, looking for market opportunities is an essential part of growth and development.
The only difference is that with current customers, it’s much easier to obtain meaningful insights about the target product, as they have customer experience with your business operations.
They have used it and gained user experience with it.
You can easily extract the necessary information using modern online tools and software.
Review Your Statistics 📊
If you have a database of current customers and use even a basic set of promotional tools, you already have statistical data you can analyze and interpret. This kind of information is available from:
- Google Analytics (see the web traffic sources, user demographics, geographic stats, etc.);
- Social network analytics (Facebook Page Insights, Twitter Analytics, etc.)
- YouTube Analytics (check out the customer’s interests and preferences)
- MailChimp reports (discover open/bounce rates, which texts and links attract more attention, etc.)
This is the first and the easiest step towards understanding your external customers. But it is surely not the only one.
Conduct A/B Testing 🧪
After evaluating the statistics, market research methods allow us to see the bigger picture and identify weak spots. If you want to eliminate these weak spots and strengthen your business marketing, A/B testing can show you the right way to do it.
If you wish to introduce a new feature or refresh the design of your website, A/B testing gives you an opportunity to learn whether your users will accept the changes before you actually implement them. You create two or more variations and let people choose which version they like the best.
This is the most efficient way to make business decisions early and save time and money.
Record The Gaps And Opportunities ⏺️
It is crucial to make note of all your discoveries, ideas, and found opportunities. Once all of them are written down, you can brainstorm, mind map, and discuss potential solutions and strategies with your team.
It is a great advantage to be able to do market research with existing customers as you already have meaningful, actionable insights.
You just need to access the available information and draw conclusions.
With a new product, the process is a bit more complicated and takes longer because first, you need to collect the data in order to have a solid understanding of your ideal customer.
Collect Market Information 💁♀️
Nowadays, research can be divided into online studies and “in the wild” exploration. Most businesses opt for web tools because they are cost-efficient and not resource-intensive but still produce thorough findings.
However, everything should be done step by step. So, before rushing to explore the best research tools and wasting marketing efforts, you need to establish your market first.
Define Niche Markets You’re Interested In 👀
If you pay close attention to, say, Kit Kat, you’ll notice that it greatly adapts to the cultural characteristics of each country where it is presented. For example, Japan has the biggest number of Kit Kat flavors (more than 200) because the Japanese are true food experimenters.
Americans and Australians, in turn, have a chance to enjoy the king-size Kit Kat because they are famous for their love for big things (big cars, big houses, etc.).
Given these facts, it’s no wonder that Kit Kat is so successful all over the world.
By defining the consumer markets you are particularly interested in, whether they are local or foreign, you find out more about their specific features. Taking them into account makes it possible to create a unique identity for the product and make it stand out among others.
Tools For Collecting Market Information 🔧
There are tons of online instruments that allow you to gather as much information as you need. They mainly can be categorized as:
1. Free, Open-Access Sources
These are usually blogs, online magazines, or report collections that are available for viewing or downloading at no charge. The most popular are Think with Google, HubSpot Research Directory, Pew Research Center, and so on.
2. Public Sources
Websites and publications provided by governmental institutions are public sources and can supply valuable data on the current state of business. You can find them at the U.S. Government Printing Office, U.S. Census Bureau, or SBA.
3. Commercial Associations
Here we’re talking about different directories of research datasets collected for specific industries and associations. They usually have paid subscription membership but provide high-quality information.
Examples of such resources include the Encyclopedia of Business Information Sources, Encyclopedia of Associations, Dun & Bradstreet, Nielsen Norman Group, etc.
4. Full–Package Platforms
These kinds of companies identify the market research process as a whole and take over to deliver the results. You just provide them with your goals and info you already have and wait for the findings.
Examples of such platforms are Loop11, Optimizely, Unbounce, etc.
5. Research Conducted By Educational Institutions.
The digital libraries of local colleges/universities may contain many publications with market insights and statistics that can define market opportunities for your product.
It is no longer necessary to spend massive funds and resources to obtain the data you need. As you can see, the number and variety of online tools have reduced the cost of the process and made it available to all kinds of businesses.
Understand Your Competitors 📒
This is another “tool” that deserves to be different from all market research opportunities.
Scrutinizing competitors can show you which strategies work and which ones fail.
If you don’t have your own client base, you can explore one of your business rivals and gain worthwhile insights.
What’s more, the information you receive will enable you to shape your product’s identity so that it will show up and be differentiated from its equivalents.
While collecting market information, it’s important to record any market opportunities you stumble upon or arrive at so as not to lose the thread.
Define Your Target Audience ✨
According to the 2017 High Growth Study, about 34% of high-growth companies examine their target audience on a quarterly or more frequent basis. This gives them the opportunity to multiply their profits and expand their spheres of influence.
These stats prove that the most central subject in your business is your customer – and that the more you know about them, the more chances you have of hitting the big time.
Conduct SEO Research And Identify Trends 🔍
SEO research presupposes that you identify the most frequent keywords and phrases that your potential or target audience uses to search for information. This way, it’s possible to determine which problems people have with a certain product or what it lacks.
Most likely, you will be also able to see how the users form key questions and what language they use. Applying this information in practice lets you be on the same page with your customers.
To gather necessary keywords, take advantage of Google Keyword Planner, Ahrefs, or UberSuggest.
As for trends, usually, users’ needs and preferences are tightly connected with the latest tendencies and hype found on Google Trends.
Do An Online Survey 📝
An online survey is one of the most powerful UX research tools you can use to obtain reliable feedback directly from customers. There are many benefits that make such surveys among the most popular types of market research instruments:
- They are affordable for small and mid-sized businesses;
- Before the launch of a new product, surveys help to determine potential customer preferences, which can be used to improve business outcomes;
- They help to measure customer satisfaction with the existing service;
- You can test how customers perceive different names/titles;
- It’s possible to segment the target audience on the basis of obtained results;
- Etc.
With modern online possibilities, organizing costly and time-consuming interviews is unnecessary.
Platforms like Survey Monkey, Type Form, Survey Gizmo, or Google Survey have a number of features that allow you to create customized polls and distribute them through different channels.
Getting information has never been so easy. But the question is: what can you do with it?
Create Customer Segments 🧑
After conducting surveys, you may have enough data to divide your target audience into different categories based on age, geography, salary, or preferences.
Market segmentation is also the first step to creating buyer personas, or avatars – that is, the average customer’s profile, which is widely used in marketing to create individual offers and optimally targeted ad campaigns.
If you're a business owner, during the whole product design market research process, it is crucial to highlight the ideas you come up with so that later you and your team can turn them into a wide range of market opportunities to reach your ideal user.
What Market Potential Is, And How To Define It Using Data 📊
The market potential is a prediction of the overall demand for a certain product at a certain time. It is always determined before the product launch to gauge whether it is worth investing time and money into the concept at all.
It can be expressed as sales values or sales volumes.
For example, the market potential of a new-edition laptop is $600 000 of yearly profit (sales value) or 100 000 items sold annually (sales volume).
The market potential is tightly connected with market research. The results of this research – and the following data in particular – are used to work out the total demand for a specific product:
- Market size: Tally the sales of your competitors or try to identify the number of potential customers if your product is new. The numbers you get will be the approximate market size. If you are already a market player, you will have your own number.
- Market growth: Review figures and facts from the previous 5-10 years in the chosen industry to see whether the market is growing or declining.
- Competition: It is necessary to estimate whether the competition is low or high to forecast which type of launch you have to use, the price you should choose for the product, and how much of the promotion will require funds.
- Target audience: This is one of the most important criteria in all stages of product development, especially when you need to identify market opportunities. By studying your ideal customers, you can get a rough estimate of how often your product will be bought or how much they are willing to pay for your services.
After assessing all these attributes and marketing efforts, you’ll come up with numbers that constitute market potential.
Keep in mind that it is unstable because many factors – like economic trends – can influence customer buying habits or completely change the market trends.
But it is still important because market potential helps to determine where you should invest resources to get the maximum profit. It shapes your marketing plan and communication strategies so you can meet client expectations – and if you do everything right, you will.
Market research generates a great deal of information, but that doesn’t mean you have to use all of it.
Be selective, and use only data relevant to your primary goal, which you will have determined beforehand.
It’s also significant to highlight all the market opportunities that arise in the process to gain maximum benefit from the market studies. In this case, knowledge is power, so obtain and use it wisely.