If you want to know about the different types of market research available to you – and how to use them – then you’re in the right place! In this comprehensive guide, I’m going to cover:
- Why market research is still valuable today
- Where it can be used to help guide important business decisions
- The broad buckets of traditional market research
- 21 different types of market research and how to use them + plenty of recommended tools
Why market research is still valuable today
In a world of Minimal Viable Products and lean startup methodology, where the cost of launching a software business is so incredibly cheap, are market research methods still useful?
The simple answer is yes, because while the cost of launching a software business financially is low, the cost of investing your time – potentially years – into a project with no market potential is as high as ever.
And then of course there’s the fact that only a small percentage of new businesses launched every year are actually software businesses.
By comparing the figures provided by Tech City UK for investors, and those provided by the Government on the number of businesses operating in the UK in 2016, only 7% would be classed as digital technology startups.
Which means that over 90% of businesses still have the traditional startup costs associated with them, and need to be pretty confident there is a market for their products or services, which of course is where market research comes in handy.
Where else market research can be used
But understanding the different types of market research available to you isn’t just useful for new businesses.
It’s also handy for existing businesses who are looking to find new customer segments and markets for their existing products or services.
Or, if they’re launching a new product/service, then they can employ market research to better understand the demand for it, the competitive dynamics and their best route to market.
There is also good reason for existing companies to periodically get a thorough understanding of their brand – how their business is perceived – as a company health check.
And finally, every company undergoes regular (typically annual) strategic planning cycles, and you can always use several of the market research methods available to you for informing your decisions, or helping to put together a SWOT or PEST analysis.
So now we’re sure that market research can be helpful, let’s take a look at what different types of market research are available these days.
Firstly, let’s cover off the basic types of market research, which are generally bucketed into the following categories:
Primary or Secondary Market Research
Primary market research is where you go out and get original (exclusive) insights into a market. For example this could be though observing people’s behaviour (such as how much foot traffic an area of town gets), focus groups or surveys.
Secondary market research is where you utilise existing data points, such as industry reports, government statistics and publicly available analytics tools.
Qualitative or Quantitative Market Research
Qualitative research is essentially where you ask someone’s opinion, so get you get more context and depth but often at a lower volume (e.g. interviews); while quantitative research limits the kinds of answers you can get back (e.g. a multiple choice survey), but usually lets you get a lot more responses back.
Ok, so that’s all very well and good in theory, but how do you go about taking advantage of all the digital tools now available to you, to make market research easier (and cheaper) than ever before?
Here’s a rundown of all the 21 different types of market research available to you right now.
There’s no one right way to do competitive analysis, and you’ll want to use several vectors to figure out whether the marketplace is an opportunity both big enough for you, and one where you can carve out a niche against incumbents. The following methods should give you plenty of insight on which to base you decisions.
- SimilarWeb (other’s data)
A great tool for looking at other website’s traffic, SimilarWeb will give a pretty reasonable estimate of their overall traffic volume, how it has varied over the last 6 months, average visit duration, and bounce rate.
It also breaks down their main sources such as direct, referral, SEO, social and paid; and if there’s enough volume of traffic and data, it will even break things down further, like showing what the breakdown of their social networks are, or their top referring domains. This is all for free.
Their paid service, as you would imagine, is even more rich in useful data if you need to get – or specific – about competitive analysis.
Alexa is often cited as a similar service, but they don’t offer the same level of detail for free (and I’ve never had the chance to use their paid service.)
- Keyword analysis (competitiveness etc.)
There are so many tools for this, I’ve just lumped them together into the tactic rather than calling one out.
Essentially with this market research method you’re looking to see how difficult it will be for you to compete with existing products or businesses, on the kinds of terms your potential customers are searching for. So look out for things like their domain authority, and also how many backlinks they have.
You should also check how much search volume there is – if there’s lots, then there could be enough to sustain several competitors. If it’s very niche though, it might be a ‘winner takes all’ market – or else you’re going have to do a lot of work to educate (i.e. build) the market to raise overall awareness of the problem you’re solving.
- Social Media (sentiment etc.)
Social media is a treasure trove of publicly available information just waiting to be parsed into useful insights. It could be used for any of the different market research goals we’ve outlined, but here let’s focus on competitive analysis.
One way to do this is to look at the overall strength of your competitor’s social following. However, that doesn’t tell you much – it could be largely bought, or irrelevant…and often it doesn’t correlate to engagement and click through traffic anyway.
So what should you look for? I’d look for the overall sentiment of people’s conversations about them (or maybe about the overall market).
Is it generally positive, with a lot more loyal and happy customers than dissatisfied ones? (Bear in mind that even the world’s greatest companies have a detractor here and there, so don’t let one or two isolated rants fool you into thinking they’re doing a bad job.)
Or is there some widespread dissatisfaction across the social networks (and I don’t just mean with their followers), which indicates they’re overpriced, or under-delivered, or have poor customer service?
- Financials (DueDil)
DueDil is still a UK-only company for now (there may be international competitors I’m not aware of), but it’s also worth trying to dig into the financials and background of your competitors too.
Are they cash flow positive? Are revenues up year-on-year? Are their Director’s 100% focused on their primary businesses, or hedging their bets with fingers in many pies?
Depending on the type of company, and how long they’ve been around, DueDil should be able to give a pretty good overview of your competitors financial situation so you can separate out their press-friendly veneer from the cold hard truth of financial reality.
- Secret shopping
You can look at all the stats and data in the world, but there’s possibly no better way to get a handle on your competitors than actually purchasing their goods and services. Even if their price point is high and your budget is low, you should be able to do this and return the goods or cancel the service within 30-days – just be very sure to read the T&Cs so you’re confident you can if you need to!
If you think you might be biased (i.e. overly critical in trying to find faults), or even worried they might know you’re a competitor!, then try ‘secret shopping’ where you ask a neutral 3rd party to go through the purchase process for you.
Brand health check
When taking a brand health check to better understand your current position in the market, you should have the opportunity to utilise some more in-depth, qualitative market research methods as, in theory, you already have a relationship with your customers who will hopefully give you a little bit more time.
Arguably the easiest place to start is with a survey, and you’ve got a few choices depending on your goals.
For a more in-depth, complex survey – possibly with multiple branching options, skip logic etc. then SurveyMonkey is still the number one tool out there.
For a quicker, more quantitative approach, I’ve found the service OnePulse is great for quickly answers back. For example if you’re undergoing a brand refresh, or trying to decide on the name of a product, and want some direct feedback, you could post your question to OnePulse with the options to choose from and have the answer back within 24 hours.
I’ve also seen people do this more frequently on LinkedIn; while you could always utilise Facebook for the same purpose, or Twitter polls (just be aware these are then public forums)
A third option is to gather insights on your website, using something like Qualaroo, which is a pop-up tools that lets you ask your web visitors questions about their experience.
While your Net Promoter Score (NPS) is generally found using a survey, I’ve broken it off into its own section, because it’s such an important metric to know.
If you’re not familiar with NPS, it’s essentially a way to calculate how likely your customers are to say nice things about you to their friends (as opposed to just staying quiet, or worse, being an active critic and detractor.)
NPS is often used to gauge the success of customer service departments, but it’s a critical metrics for marketers, because if you’re battling a bad NPS, then likely your retention rate is also going to be poor and you’ll be fighting an uphill battle against customer (and market) sentiment. It’s very likely a poor NPS will correlate with plenty of negative social media comments too.
You should really calculate your NPS regularly (weekly or monthly) so you can see how it tracks over time, but if you don’t already, then at least start now and it will give you a good idea of how your customers really view you.
- Interviews (Skype etc.)
One to one interviews with customers is a more traditional forms of market research, whereby you essentially deliver the survey in person, but in return you should hope to get richer, more nuanced answers. If you’re a global (or SaaS) business with customers everywhere, doing face-to-face interviews could be cost-prohibitive.
However with VoiP calling services like Skype, Google Hangouts (and now Amazon’s Chime) all offering very good quality, free video calling there’s no reason any business can’t engage in this kind of market research.
One other thing to note before you dive in though, is that it’s actually a very specialised skillset. How to interact with your interviewee, how you ask the question, order them, respond to them etc. will all have a direct effect on how they answer and respond to you. So for the best results, you should consider hiring in a professional.
- Focus Groups and Interviews
The same goes for focus groups, which can become the most expensive form of market research because you’ll need to hire a professional, a neutral venue for hosting the focus group, and often pay the participants for their time too.
How you structure them will again come down to your ultimate goal. For example you might host a focus group with your:
- existing customers (promoters)
- lost customers (detractors)
- potential customers
depending on whether you want to know what it is you’re doing right and how to do more of it (or find other customer groups with similar tastes and needs); what you’re doing wrong; or why your messaging isn’t working / getting through.
While focus groups can be both expensive and time consuming, they of course offer a potential depth of insight unrivalled by any other market research methods.
Demand / market need
Is there even a need for your product, service or entire business? It’s a pretty fundamental question to ask – and answer – before ploughing time and money into a venture. While not all of these types of market research will be viewed as traditional methods, they’re all great windows into the size of the opportunity, and in which direction it’s going.
- Google Trends (interest over time)
While you’d never want to base your whole business plan or investor deck on the data you get back from Google Trends, it is a pretty good macro-level barometer for what’s hot in the world based on what people are searching for. If it’s trending up and to right, you’d expect to be looking at a pretty hot market (now or in the future).
But you shouldn’t discount flat lines either, so long as it’s shown consistent strength over time.
- Google Analytics (your own data)
If you’re considering launching a new product or service, then you shouldn’t always be looking for external data points. Your existing traffic (and customer behaviours) can be a great indication too.
Take a look at what people are searching for using GA’s ‘Site Search’ tab (found under ‘Behavior,’ or see if certain pages and parts of the site are becoming more popular over time. This could indicate a growing demand where you might want to extend or supplement your existing offering.
Alternatively you can view where your users are coming from, or how their demographics are changing. Again over time this may suggest new customer segments that are looking for what you have to offer.
- Observation (A/B Testing, User testing, heat maps etc.)
If you want to take observation even more seriously, then you can consider all these other methods too, from A/B testing different value propositions, to User Testing a prototype, to checking heatmaps so you understand where people are clicking or hover at a granular level.
Taken together they’ll give you a rich and detailed look at people’s behaviour around your product (or potential product), which you can use to make further development decisions.
- Online forums (Product Hunt etc.)
Forums can be a great source of market research in two ways.
Firstly, you can search them for people asking questions relating to your target market. Particularly if they’re asking if others have a solution to a problem (and you see this asked in various ways, across various forums, over and over again), e.g. does anyone know good tools to solve X?
The other way is to launch an alpha/beta/MVP of your product/service on a popular forum, such as Product Hunt or Hacker News, and see how much traction and interest it generates.
- The humble landing page
There are plenty of services who offer ‘coming soon’ landing pages (with LaunchRock being one of the most established), helping potential businesses gauge the interest of the market based on how many emails they capture.
Though as Joel Gascoine, founder of Buffer points out, this isn’t necessarily the point…you need to get qualitative feedback from those sign-ups too. However Buffer are a great example of how effective the landing page method can be.
I’m going to characterise crowdfunding as a bit like a cross between online forums and landing pages on steroids, because real money is involved – and often a lot.
Crowding has become a phenomena and an industry in itself because of how effective it is at helping great ideas become real products (and businesses), so it’s an excellent happy medium between something as non-committal as a landing page, but not as full-on as launching an MVP (more on that below).
And it allows non-software companies to take part too.
- Start a blog / newsletter / social media group
Another way to test market demand is by seeing if you can build an audience with shared interests first, and then figuring out a potential product offering later.
HARO started out this way, as a Facebook Group. Content Marketing Institute, now a multi-media group that exited for $17.6m last year started life as blog. There are plenty of other examples too, but the principle is the same – test your market demand by seeing if there’s an audience in the first place, before investing in building a solution.
- MVP / lean startup
If you take the opposite approach and want to launch a product right off the bat, then you can still take it as a market research opportunity, if you’re flexible enough to pivot until you find the right product-market fit (so this only really works well for software companies).
This is the ‘Lean Startup’ approach to market research, where you go to market with a real live ‘minimal viable product’ and then iterate from there based on observable behaviours, such as whether people are actually willing to pay for what you’ve built…or whether you can acquire customers for less than their Life Time Value.
- Host an event (Eventbrite)
Back to audience building, but with another slant. Something it’s easy to think of digital as the best way to everything these days, but that’s not necessarily the case.
Sure, if you want to build a billion dollar unicorn, you probably will need to find a global audience – or at least a large national one – but not all businesses need this scale.
And in fact even those huge businesses tend to start local, so why not consider hosting an event? It’s pretty easy to get one set-up and start inviting people to attend with tools like Eventbrite.
Can you start by finding a group of like-minded enthusiasts who want to meet regularly? If so, you just might be onto something.
- Experiment / Field trials
Speaking of offline, some products you just need to see in the field if you’re going to do valuable market research.
Whether it’s watching how people interact with it, to whether they pick it up at all, observing people – and your product – in real life can offer invaluable qualitative and quantitative feedback that will help you shape your decisions.
Last but not least, if you’re engaged in market research to help write your strategic plan, investor deck, SWOT analysis or other documentation, then you’ll often want to turn to trusted, independent sources to back up the rest of your proprietary research.
- Trusted Publications
If you’re in the tech / software space, then one such source that’s really made a name for itself is CB Insights. Although I’m not a paid up member, their research is being referenced across a ton of quality publications. And I also happen to love their newsletter.
For other industries, there will also probably be a notable report publisher or data provider; while other trusted sources might include trade press, prominent bloggers and industry associations.
This is where the final type of market research come in…
- Google Search (looking for reports etc.)
When all else fails, you can always turn to Google!
If you don’t already know the best places to hunt for quality secondary research, then you can use Google in a couple of ways.
Firstly, you could use search operators, for example searching only for pdf documents (simply by typing .pdf into the search bar), and then building up the complexity from there e.g. excluding certain years or regions or other keywords with then – symbol, and so on.
Or secondly, you could try Google Scholar, which searches only for academic papers, which should general be peer reviewed and enjoy some level of additional credibility.
It’s always hard to summarise a 3000+ word blog post, but I’d mostly like you to take this away…
Market research isn’t just for new businesses, and it’s not just for new digital / software businesses either.
It can be useful to all businesses, whatever their type and size, and whether or not they’re just a gleam in the eye of their founder, or an established incumbent.
It’s also not a once and done practice, nor is it only the responsibility of the founder or CEO. Marketing, product, strategy, design, customer success…just about every part of a business can benefit.
So with that as the key take-away, hopefully this is a resource you can bookmark and come back to the next time you’re thinking about what different types of market research methods there are, and how to use them for making important business decisions.