Market research processes can be long drawn out processes that encompass teams of people, or they can be simple and informally done. The one crucial step of market research is recording your results. You want to ensure that you record and track your results in a measurable quantified way. This is crucial because it takes the bias and personal feelings out of the equation.

The Hypothesis

It starts with a hypothesis of what you think the answer is. Your hypothesis should be what you believe the answer to a question is. For example, “I believe that X number of people care about what I offer because of [blank] buying habits.” This is a crucial step because the entire market research process should be to disprove your initial belief. This will help you get the best results because it allows you to create the greatest clarity for actions to be taken.

Segmenting

Once you have a hypothesis you next need to define who specifically, you want to research as far as demographics and psychographics which include things like, location, age, marital status, income, value system, other communities they are a part of etc. This is crucial to ensure your data is geared towards your ideal customer. Segmenting is setting qualifying parameters around who you will conduct your market research on. This segmenting also often will need to be constantly refined as your research points you in new directions. For example, you may start with married couples who live in Oregon. As you research, you may start narrowing it to married couples who live in Oregon with 1 child who has left the house and make over $60,000 per year. Each additional parameter should be added as a way to ensure you are talking to the people who will gain the greatest value from what you offer. Keep in mind at this point, you may be talking to many different segments of people before you find the right groups. Pro tip: The easiest way to ensure you have segmented enough is by applying the following criteria: Everyone in the segment has the exact problem solved by what you offer, they can financially afford what you offer, and they all gain greater value from what you offer than the financial cost of your product or service.

Research

Now is the time to conduct the research. This can be done by observation, surveys, interviewing, or 3rd party data. Which method you want to use will depend on 4 variables. How much money do you want to spend? How accurate do you want the information to be? How long do you have to conduct the research? How much do you want to be directly involved? Observation is often the cheapest way to conduct research. It involves going to a place and observing your ideal customers. This can be done by going to an event and observing the people who show up. It could be by asking people to let you shadow them for a period of time. It could also be just observing people’s social media accounts. This method is usually inexpensive if done by you. However, the information collected will be dependent upon how accurately you record things, and how much you get to interact with those people. It also tends to take quite a bit of time to observe a large enough group of people to make a qualifying decision. Surveys are often a great way to gain data quickly. Surveys can be post purchase surveys. Surveys can be part of raffles or gift cards people fill out to receive. They can be surveys that you just mass email to a list. These tend to only require a little bit of time upfront to create and afterwards to analyze. They have 2 big challenges. First, they require either a lot of money often to be given away, or they require a large audience base to ask before you can collect enough data to be sure your results are correct. The data collected can be misconstrued because there are often 2 variables that hurt survey accuracy. Depending on the length of the survey or the intelligence of the people you are asking the questions to may affect the accuracy of the answer. Keep in mind inherently all questions are asked with a psychological bias. This makes it important to have questions asked multiple ways to ensure the accuracy of the data. Interviews can be something you schedule during the sales process. It can be something you schedule with past customers. The big advantage of conducting interviews is it allows you to ensure people understand the questions, and it allows you to quickly record the results. These also have an element of relationship and personal touch that can help in bringing more thoughtful perspectives. However, these do cost a lot of time for both you and the people you interview. The cost depends on how you get people to agree to the interview. Also the timing to get enough of these scheduled for accurate data can be months of time. 3rd party data is often the fastest way to get the data you are looking for. It can be done through 3rd party resellers, market research firms, or even government resources for small businesses. This data is great for general and broad knowledge. It’s also great because it’s data that’s already collected and you merely need to analyze it for your business. This makes the timing and amount of time required to gather it often low. However, It will often become more and more expensive the more detailed that you want it to be. Also the data isn’t usually going to give you direct feedback or knowledge about your business and the customer. It will be based on an industry or generalized location. This makes it a great resource, but it rarely is what you need all by itself. Yes, there are a lot of options for you to consider when first deciding to do market research. For early on businesses, we suggest that you focus on the methods that financially make sense, and allow you to get the best results. Also consider utilizing employees, consultants, or friends to help guide potential directions that will speed up the narrowness of research. If you know that you only need to conduct research from houses that are in one specific neighborhood, then you could start with interviews on that street. Or if you have past customers, often they are a great starting point for your research, and you can utilize the interview method with them to gain some valuable insights into better segmenting and questioning your further research.

The Analysis

The next step is recording and analyzing your data. For recording your data there are many ways you can do this. You could just use excel, or other programs geared towards analyzing data. The main key is ensuring that you do record the data in a usable way. That means you can look at and compare the data.

Pro tip: for some data that is made up of yes and no questions, you can use 1’s and 0’s as a way to record and analyze it. For questions that have varying answers like (disagree, neutral, agree) or (married, single, divorced) You can use 1-3 systems. For less straightforward answers like fill in the blank you want to look for common synonyms for words or phrases that mean a similar thing.

Once you’ve recorded your data in quantifiable means it’s time to analyze. This can be done by multiple methods. There are many great YouTube videos that explain this process well, but here is a quick breakdown.

You want to look for correlations and causations in your data. For example you may find that married women are more likely to say that your offer is within budget. However, the causation may not be the fact that they are married. It may be the fact that married women have a higher family income compared to single men or single women. This difference in causation is crucial and the causation of higher income may be a better parameter for determining the segment than being married or single.

The best way to ensure causation is to consider first if there is a correlation of a different factor that is affecting both of them. Always look for what factors might cause both numbers to appear correlated. This is the best method in determining true causation. Consider a Ferrari dealership. They may understand that all their customers make over $200k a year, and their customers all travel 2x’s per year. However, it’s not the purchase of the Ferrari that causes their customers to travel. It’s because their customers have the finances and desire to experience unique things that causes them to travel and buy a Ferrari.

This is why proper analysis of data is crucial in ensuring proper interpretation from the research conducted. This is also why it’s crucial to keep detailed records of your data.

Report

It’s possible that you won’t need to prepare a sophisticated report complete with graphs, photographs, and other elements for a small business in which you, the owner, are the one conducting the study. However these reports will be of great value in developing confidence in what you are doing if you are searching for investors or financing from banks. You will also need a report that has a more professional appearance if you are going to give this to an employee or a third party. You will want to include the findings from your study in the report that you are writing. This should contain any possible causal relationships as well as any and all correlations. After compiling all of the information, you will need to come to some kind of conclusion. Either X individuals were very enthusiastic about the offer, or X individuals were not very interested in offer A but were very enthusiastic about offer B. You should also make sure that you have highlighted probable subsequent steps that are required to validate or improve upon your results. Pro tip: A/B testing is an excellent way to attempt to better understand the fundamental buying psychographic that impacts consumers. This type of testing can be used in market research to gauge responses and interest. In many cases, just as it is with a significant portion of business in general, the secret to good market research is posing the right questions to the correct audience.

Repeat And Refine

It is important to repeat the process multiple times since your selection of samples could shift, and the results could lead you to realize you need to completely rethink your hypothesis and test the revised version again. Repeating this step may feel like a lot of work, but doing so is an absolutely necessary step in making sure that you have arrived at the right conclusions. Additionally, remember that both markets and people are subject to change over time. Market research shouldn’t stop once it’s finished, in order to maintain alignment with the market, it should be refreshed every one to two years. The wants and needs of consumers come and go just like the seasons of their favorite television shows. People might become accustomed to it, habits or patterns might shift, or new competitors might enter the market. There are a lot of different factors that will affect how much people want something. We have all seen the effect that the 2020 Covid outbreak had on face masks, hand sanitizer, toilet paper, and paper towels. Those markets had explosive growth, but by 2023 they had leveled out significantly after reaching their apex. The identical principles apply to each and every organization and always will. There are causes that will cause the market size to expand, and there are factors that will cause it to shrink. Conducting regular market research gives you the ability to adapt efficiently to shifting market conditions.

I hope the above process will help you to either get your business off to a good start or help you adjust what you are doing to match your market and grow your business. Please use our free chatbots to discuss the details of your business to get ideas and insights as you go through this process.