Starting a business? Take it from us—you should never commit to an idea without first doing market research.
Why is market research important? In a nutshell, it helps you understand the industry that you’ll potentially be entering, and allows you to further develop your idea and flesh it out in greater detail.
On top of that, market research also allows you to identify potential challenges and pitfalls, and assess whether your idea is profitable enough to make it a worthwhile opportunity.
In this article, we’ll take you through the different types of market research, and outline how to conduct research for a new business.
Ready? Let’s jump right in!
Market research: Primary vs. secondary research
Here’s the difference between primary and secondary market research:
- Primary research refers to research that you conduct on your own. If you’re talking to potential customers and sending out surveys, that’s primary research.
- Secondary research refers to existing data and public records that you can tap into. If you’re looking at trend reports or charts from Statista or other market data platforms, that’s secondary research.
If you’re wondering which is better, primary or secondary research, the answer is… both! Primary and secondary research are complementary and should be used hand-in-hand.
On a macro level, secondary research helps you look at the big picture. It gives you a high-level overview of the industry, and shows you who your competitors are.
On a micro level, primary research helps you to dig deep and understand your potential customers better. This type of research is useful for uncovering insights regarding a particular topic.
For example, you might want to find out what your customers think about your competitor’s product (so that you can improve upon your competitor’s shortfalls when developing a superior product).
One caveat: When doing primary research, you might be limited by the number of responses that you can collect.
Although it might be difficult, we do recommend broadcasting your survey/questionnaire to as many people as possible. If you get 50 responses, for example, it’ll definitely be more accurate than 10 responses. The law of large numbers applies here!
Also, when conducting research and polling people, don’t just indiscriminately send out your survey to everyone under the sun. You’ll want to specifically reach out to your target audience and collect responses only from them.
What are the different types of research?
Primary and secondary research aside, what are the different types of research, and what questions can you answer with each type?
Here are a few categories to keep in mind:
| Type of research | What is it? | What questions does this answer? |
| Basic market research | Market sizing and demand research | What is the size of the market? How much revenue is generated per year? Is the market still growing, and if so, by how much? How much can you potentially make? |
| Competitive analysis | An analysis of your competitors | Who are the main players in the market? How much market share do they have? What are their SWOT (strengths, weaknesses, opportunities, threats)? |
| Pricing research | An analysis of your competitors’ pricing | How much do your competitors charge for their products? How much are your customers willing to pay? What makes demand more price elastic or price inelastic? |
| Campaign research | An analysis of your competitors’ campaigns | What are the common campaigns or promotions that are used in this industry? What campaigns are more effective than others? |
| Product/service use research | User testing or usability testing to identify how customers use your product | Is your product easy to use? Is there a learning curve and if so, how steep is it? Are your customers using your product in the intended way? |
At the very minimum, you should be doing basic market research, competitive analysis, and pricing research for any business idea that you’re trying to flesh out.
While campaign research and product/service use research are also useful, they can come at a later stage.
Conducting research for a new business
How do you conduct research for a new business? Here are the steps involved:
- Step 1: Identify all the different types of research you want to conduct: basic market research, competitive analysis, pricing research, etc
- Step 2: Comb the internet to see what data is already available
- Step 3: Identify the remaining research questions that you need to conduct primary research for
- Step 4: Come up with a budget
- Step 5: Choose your preferred channels (interviews, focus groups, etc)
- Step 6: Consolidate your research and summarize your findings
We’ve already discussed steps 1-3; once those are done, the next steps are to come up with a budget and craft your action plan with your preferred channels.
Step 4: Come up with a budget
How much should your budget be? This really depends on your resources and financing. If you do have a sizeable budget, that will definitely help, as you’ll be able to provide some sort of incentive in exchange for each participant’s time.
If you’re cash-strapped and don’t have a research budget, that’s fine too. But do try and make things as convenient as possible for your participants. For example, you can travel to meet them at their location rather than asking them to come to you, and buy them a drink if you’re meeting them at a coffee shop.
Step 5: Choose your preferred channels
There are a few channels you can utilize to conduct research, such as:
- Surveys and questionnaires
- Interviews
- Focus groups
- User testing sessions
Selecting a channel is pretty straightforward—it all depends on the type of questions you want to ask. Here’s a breakdown:
| Channel | Good for: |
| Surveys / questionnaires | Quantitative questions (On a scale of 1-10, rate the importance of pricing in your decision to purchase Product X) |
| Interviews | Qualitative or opinion-based questions (What is your impression of Brand X?) |
| Focus groups | Qualitative or opinion-based questions (What is your impression of Brand X?) |
| User testing sessions | Walkthroughs and demos (where the user attempts to use a product, tool, or software to complete a specific action) |
Step 6: Summarize your findings
Once you’re done with your research, the last step is to summarize your findings.
Now, depending on how many surveys, interviews and focus groups you have conducted, you might be sitting on a ton of data and notes that you collected.
Don’t just let your notes sit there—review them and summarize them, and come up with a set of key insights that you can use to guide your decision-making process.
This research will now act as your source of truth—but don’t forget to revisit it from time to time, and to update your research if necessary. As the market evolves and changes, you’ll need to keep abreast of the latest trends and insights, in order to maintain your competitive edge.
A final word on conducting research for a new business
We know, we know—research feels like doing homework, and that isn’t always fun.
But what separates an idea from a solid, well-thought-out business concept that has the potential to make you a lot of money? Research. Luckily, you don’t have to do it alone! Sogolytics helps you quickly launch market research projects that can give you a clearer picture of your target market.
So start Googling, drafting those surveys, and reaching out to potential customers. It’s time to evaluate your business idea and see if it’s worth your time and energy!
