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What Is Market Research?

• How It Works
• Primary vs. Secondary
• How to Conduct Research

The Bottom Line

• Marketing Essentials

How to Do Market Research, Types, and Example

Joules Garcia / Investopedia

Market research examines consumer behavior and trends in the economy to help a business develop and fine-tune its business idea and strategy. It helps a business understand its target market by gathering and analyzing data.

Market research is the process of evaluating the viability of a new service or product through research conducted directly with potential customers. It allows a company to define its target market and get opinions and other feedback from consumers about their interest in a product or service.

Research may be conducted in-house or by a third party that specializes in market research. It can be done through surveys and focus groups, among other ways. Test subjects are usually compensated with product samples or a small stipend for their time.

Key Takeaways

• Companies conduct market research before introducing new products to determine their appeal to potential customers.
• Tools include focus groups, telephone interviews, and questionnaires.
• The results of market research inform the final design of the product and determine how it will be positioned in the marketplace.
• Market research usually combines primary information, gathered directly from consumers, and secondary information, which is data available from external sources.

Market Research

How market research works.

Market research is used to determine the viability of a new product or service. The results may be used to revise the product design and fine-tune the strategy for introducing it to the public. This can include information gathered for the purpose of determining market segmentation . It also informs product differentiation , which is used to tailor advertising.

A business engages in various tasks to complete the market research process. It gathers information based on the market sector being targeted by the product. This information is then analyzed and relevant data points are interpreted to draw conclusions about how the product may be optimally designed and marketed to the market segment for which it is intended.

It is a critical component in the research and development (R&D) phase of a new product or service introduction. Market research can be conducted in many different ways, including surveys, product testing, interviews, and focus groups.

Market research is a critical tool that companies use to understand what consumers want, develop products that those consumers will use, and maintain a competitive advantage over other companies in their industry.

Primary Market Research vs. Secondary Market Research

Market research usually consists of a combination of:

• Primary research, gathered by the company or by an outside company that it hires
• Secondary research, which draws on external sources of data

Primary Market Research

Primary research generally falls into two categories: exploratory and specific research.

• Exploratory research is less structured and functions via open-ended questions. The questions may be posed in a focus group setting, telephone interviews, or questionnaires. It results in questions or issues that the company needs to address about a product that it has under development.
• Specific research delves more deeply into the problems or issues identified in exploratory research.

Secondary Market Research

All market research is informed by the findings of other researchers about the needs and wants of consumers. Today, much of this research can be found online.

Secondary research can include population information from government census data , trade association research reports , polling results, and research from other businesses operating in the same market sector.

History of Market Research

Formal market research began in Germany during the 1920s. In the United States, it soon took off with the advent of the Golden Age of Radio.

Companies that created advertisements for this new entertainment medium began to look at the demographics of the audiences who listened to each of the radio plays, music programs, and comedy skits that were presented.

They had once tried to reach the widest possible audience by placing their messages on billboards or in the most popular magazines. With radio programming, they had the chance to target rural or urban consumers, teenagers or families, and judge the results by the sales numbers that followed.

Types of Market Research

Face-to-face interviews.

From their earliest days, market research companies would interview people on the street about the newspapers and magazines that they read regularly and ask whether they recalled any of the ads or brands that were published in them. Data collected from these interviews were compared to the circulation of the publication to determine the effectiveness of those ads.

Market research and surveys were adapted from these early techniques.

To get a strong understanding of your market, it’s essential to understand demand, market size, economic indicators, location, market saturation, and pricing.

Focus Groups

A focus group is a small number of representative consumers chosen to try a product or watch an advertisement.

Afterward, the group is asked for feedback on their perceptions of the product, the company’s brand, or competing products. The company then takes that information and makes decisions about what to do with the product or service, whether that's releasing it, making changes, or abandoning it altogether.

Phone Research

The man-on-the-street interview technique soon gave way to the telephone interview. A telephone interviewer could collect information in a more efficient and cost-effective fashion.

Telephone research was a preferred tactic of market researchers for many years. It has become much more difficult in recent years as landline phone service dwindles and is replaced by less accessible mobile phones.

Survey Research

As an alternative to focus groups, surveys represent a cost-effective way to determine consumer attitudes without having to interview anyone in person. Consumers are sent surveys in the mail, usually with a coupon or voucher to incentivize participation. These surveys help determine how consumers feel about the product, brand, and price point.

Online Market Research

With people spending more time online, market research activities have shifted online as well. Data collection still uses a survey-style form. But instead of companies actively seeking participants by finding them on the street or cold calling them on the phone, people can choose to sign up, take surveys, and offer opinions when they have time.

This makes the process far less intrusive and less rushed, since people can participate on their own time and of their own volition.

How to Conduct Market Research

The first step to effective market research is to determine the goals of the study. Each study should seek to answer a clear, well-defined problem. For example, a company might seek to identify consumer preferences, brand recognition, or the comparative effectiveness of different types of ad campaigns.

After that, the next step is to determine who will be included in the research. Market research is an expensive process, and a company cannot waste resources collecting unnecessary data. The firm should decide in advance which types of consumers will be included in the research, and how the data will be collected. They should also account for the probability of statistical errors or sampling bias .

The next step is to collect the data and analyze the results. If the two previous steps have been completed accurately, this should be straightforward. The researchers will collect the results of their study, keeping track of the ages, gender, and other relevant data of each respondent. This is then analyzed in a marketing report that explains the results of their research.

The last step is for company executives to use their market research to make business decisions. Depending on the results of their research, they may choose to target a different group of consumers, or they may change their price point or some product features.

The results of these changes may eventually be measured in further market research, and the process will begin all over again.

Benefits of Market Research

Market research is essential for developing brand loyalty and customer satisfaction. Since it is unlikely for a product to appeal equally to every consumer, a strong market research program can help identify the key demographics and market segments that are most likely to use a given product.

Market research is also important for developing a company’s advertising efforts. For example, if a company’s market research determines that its consumers are more likely to use Facebook than X (formerly Twitter), it can then target its advertisements to one platform instead of another. Or, if they determine that their target market is value-sensitive rather than price-sensitive, they can work on improving the product rather than reducing their prices.

Market research only works when subjects are honest and open to participating.

Example of Market Research

Many companies use market research to test new products or get information from consumers about what kinds of products or services they need and don’t currently have.

For example, a company that’s considering starting a business might conduct market research to test the viability of its product or service. If the market research confirms consumer interest, the business can proceed confidently with its business plan . If not, the company can use the results of the market research to make adjustments to the product to bring it in line with customer desires.

What Are the Main Types of Market Research?

The main types of market research are primary research and secondary research. Primary research includes focus groups, polls, and surveys. Secondary research includes academic articles, infographics, and white papers.

Qualitative research gives insights into how customers feel and think. Quantitative research uses data and statistics such as website views, social media engagement, and subscriber numbers.

What Is Online Market Research?

Online market research uses the same strategies and techniques as traditional primary and secondary market research, but it is conducted on the Internet. Potential customers may be asked to participate in a survey or give feedback on a product. The responses may help the researchers create a profile of the likely customer for a new product.

What Are Paid Market Research Surveys?

Paid market research involves rewarding individuals who agree to participate in a study. They may be offered a small payment for their time or a discount coupon in return for filling out a questionnaire or participating in a focus group.

What Is a Market Study?

A market study is an analysis of consumer demand for a product or service. It looks at all of the factors that influence demand for a product or service. These include the product’s price, location, competition, and substitutes as well as general economic factors that could influence the new product’s adoption, for better or worse.

Market research is a key component of a company’s research and development (R&D) stage. It helps companies understand in advance the viability of a new product that they have in development and to see how it might perform in the real world.

Britannica Money. “ Market Research .”

U.S. Small Business Administration. “ Market Research and Competitive Analysis .”

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Home Market Research

Market Research: What it Is, Methods, Types & Examples

Would you like to know why, how, and when to apply market research? Do you want to discover why your consumers are not buying your products? Are you interested in launching a new product, service, or even a new marketing campaign, but you’re not sure what your consumers want?

LEARN ABOUT: Market research vs marketing research

To answer the questions above, you’ll need help from your consumers. But how will you collect that data? In this case and in many other situations in your business, market research is the way to get all the answers you need.

In this ultimate guide about market research, you’ll find the definition, advantages, types of market research, and some examples that will help you understand this type of research. Don’t forget to download the free ebook available at the end of this guide!

LEARN ABOUT: Perceived Value

Content Index

Three key objectives of market research

Why is market research important.

• Types of Market Research: Methods and Examples

Steps for conducting Market Research

Benefits of an efficient market research, 5 market research tips for businesses, why does every business need market research, free market research ebook, what is market research.

Market research is a technique that is used to collect data on any aspect that you want to know to be later able to interpret it and, in the end, make use of it for correct decision-making.

Another more specific definition could be the following:

Market research is the process by which companies seek to collect data systematically to make better decisions. Still, its true value lies in the way in which all the data obtained is used to achieve a better knowledge of the market consumer.

The process of market research can be done through deploying surveys , interacting with a group of people, also known as a sample , conducting interviews, and other similar processes.  

The primary purpose of conducting market research is to understand or examine the market associated with a particular product or service to decide how the audience will react to a product or service. The information obtained from conducting market research can be used to tailor marketing/ advertising activities or determine consumers’ feature priorities/service requirement (if any).

LEARN ABOUT: Consumer Surveys

Conducting research is one of the best ways of achieving customer satisfaction , reducing customer churn and elevating business. Here are the reasons why market research is important and should be considered in any business:

• Valuable information: It provides information and opportunities about the value of existing and new products, thus, helping businesses plan and strategize accordingly.
• Customer-centric: It helps to determine what the customers need and want. Marketing is customer-centric and understanding the customers and their needs will help businesses design products or services that best suit them. Remember that tracing your customer journey is a great way to gain valuable insights into your customers’ sentiments toward your brand.
• Forecasts: By understanding the needs of customers, businesses can also forecast their production and sales. Market research also helps in determining optimum inventory stock.
• Competitive advantage: To stay ahead of competitors market research is a vital tool to carry out comparative studies. Businesses can devise business strategies that can help them stay ahead of their competitors.

LEARN ABOUT: Data Analytics Projects

Types of Market Research: Market Research Methods and Examples

Whether an organization or business wishes to know the purchase behavior of consumers or the likelihood of consumers paying a certain cost for a product segmentation , market research helps in drawing meaningful conclusions.

LEARN ABOUT: Behavioral Targeting

Depending on the methods and tools required, the following are the types:

1. Primary Market Research (A combination of both Qualitative and Quantitative Research):

Primary market research is a process where organizations or businesses get in touch with the end consumers or employ a third party to carry out relevant studies to collect data. The data collected can be qualitative data (non-numerical data) or quantitative data (numerical or statistical data).

While conducting primary market research, one can gather two types of information: Exploratory and Specific. Exploratory research is open-ended, where a problem is explored by asking open ended questions in a detailed interview format usually with a small group of people, also known as a sample. Here the sample size is restricted to 6-10 members. Specific research, on the other hand, is more pinpointed and is used to solve the problems that are identified by exploratory research.

LEARN ABOUT: Marketing Insight

As mentioned earlier, primary market research is a combination of qualitative market research and quantitative market research. Qualitative market research study involves semi-structured or unstructured data collected through some of the commonly used qualitative research methods like:

Focus groups :

Focus group is one of the commonly used qualitative research methods. Focus group is a small group of people (6-10) who typically respond to online surveys sent to them. The best part about a focus group is the information can be collected remotely, can be done without personally interacting with the group members. However, this is a more expensive method as it is used to collect complex information.

One-to-one interview:

As the name suggests, this method involves personal interaction in the form of an interview, where the researcher asks a series of questions to collect information or data from the respondents. The questions are mostly open-ended questions and are asked to facilitate responses. This method heavily depends on the interviewer’s ability and experience to ask questions that evoke responses.

Ethnographic research :

This type of in-depth research is conducted in the natural settings of the respondents. This method requires the interviewer to adapt himself/herself to the natural environment of the respondents which could be a city or a remote village. Geographical constraints can be a hindering market research factor in conducting this kind of research. Ethnographic research can last from a few days to a few years.

Organizations use qualitative research methods to conduct structured market research by using online surveys , questionnaires , and polls to gain statistical insights to make informed decisions.

LEARN ABOUT: Qualitative Interview

This method was once conducted using pen and paper. This has now evolved to sending structured online surveys to the respondents to gain actionable insights. Researchers use modern and technology-oriented survey platforms to structure and design their survey to evoke maximum responses from respondents.

Through a well-structured mechanism, data is easily collected and reported, and necessary action can be taken with all the information made available firsthand.

Learn more: How to conduct quantitative research

2. Secondary Market Research:

Secondary research uses information that is organized by outside sources like government agencies, media, chambers of commerce etc. This information is published in newspapers, magazines, books, company websites, free government and nongovernment agencies and so on. The secondary source makes use of the following:

• Public sources: Public sources like library are an awesome way of gathering free information. Government libraries usually offer services free of cost and a researcher can document available information.
• Commercial sources: Commercial source although reliable are expensive. Local newspapers, magazines, journal, television media are great commercial sources to collect information.
• Educational Institutions: Although not a very popular source of collecting information, most universities and educational institutions are a rich source of information as many research projects are carried out there than any business sector.

Learn more: Market Research Example with Types and Methods

A market research project may usually have 3 different types of objectives.

• Administrative : Help a company or business development, through proper planning, organization, and both human and material resources control, and thus satisfy all specific needs within the market, at the right time.
• Social : Satisfy customers’ specific needs through a required product or service. The product or service should comply with a customer’s requirements and preferences when consumed.
• Economical : Determine the economical degree of success or failure a company can have while being new to the market, or otherwise introducing new products or services, thus providing certainty to all actions to be implemented.

LEARN ABOUT:  Test Market Demand

Knowing what to do in various situations that arise during the investigation will save the researcher time and reduce research problems . Today’s successful enterprises use powerful market research survey software that helps them conduct comprehensive research under a unified platform, providing actionable insights much faster with fewer problems.

LEARN ABOUT:  Market research industry

Following are the steps to conduct effective market research.

Step #1: Define the Problem

Having a well-defined subject of research will help researchers when they ask questions. These questions should be directed to solve problems and must be adapted to the project. Make sure the questions are written clearly and that the respondents understand them. Researchers can conduct a marketing test with a small group to know if the questions are going to know whether the asked questions are understandable and if they will be enough to gain insightful results.

Research objectives should be written in a precise way and should include a brief description of the information that is needed and the way in which it will obtain it. They should have an answer to this question “why are we doing the research?”

Learn more: Interview Questions

Step #2: Define the Sample

To carry out market research, researchers need a representative sample that can be collected using one of the many sampling techniques . A representative sample is a small number of people that reflect, as accurately as possible, a larger group.

• An organization cannot waste their resources in collecting information from the wrong population. It is important that the population represents characteristics that matter to the researchers and that they need to investigate, are in the chosen sample.
• Take into account that marketers will always be prone to fall into a bias in the sample because there will always be people who do not answer the survey because they are busy, or answer it incompletely, so researchers may not obtain the required data.
• Regarding the size of the sample, the larger it is, the more likely it is to be representative of the population. A larger representative sample gives the researcher greater certainty that the people included are the ones they need, and they can possibly reduce bias. Therefore, if they want to avoid inaccuracy in our surveys, they should have representative and balanced samples.
• Practically all the surveys that are considered in a serious way, are based on a scientific sampling, based on statistical and probability theories.

There are two ways to obtain a representative sample:

• Probability sampling : In probability sampling , the choice of the sample will be made at random, which guarantees that each member of the population will have the same probability of selection bias and inclusion in the sample group. Researchers should ensure that they have updated information on the population from which they will draw the sample and survey the majority to establish representativeness.
• Non-probability sampling : In a non-probability sampling , different types of people are seeking to obtain a more balanced representative sample. Knowing the demographic characteristics of our group will undoubtedly help to limit the profile of the desired sample and define the variables that interest the researchers, such as gender, age, place of residence, etc. By knowing these criteria, before obtaining the information, researchers can have the control to create a representative sample that is efficient for us.

When a sample is not representative, there can be a margin of error . If researchers want to have a representative sample of 100 employees, they should choose a similar number of men and women.

The sample size is very important, but it does not guarantee accuracy. More than size, representativeness is related to the sampling frame , that is, to the list from which people are selected, for example, part of a survey.

LEARN ABOUT: Behavioral Research If researchers want to continue expanding their knowledge on how to determine the size of the sample consult our guide on sampling here.

Step #3: Carry out data collection

First, a data collection instrument should be developed. The fact that they do not answer a survey, or answer it incompletely will cause errors in research. The correct collection of data will prevent this.

Step #4: Analyze the results

Each of the points of the market research process is linked to one another. If all the above is executed well, but there is no accurate analysis of the results, then the decisions made consequently will not be appropriate. In-depth analysis conducted without leaving loose ends will be effective in gaining solutions. Data analysis will be captured in a report, which should also be written clearly so that effective decisions can be made on that basis.

Analyzing and interpreting the results is to look for a wider meaning to the obtained data. All the previous phases have been developed to arrive at this moment. How can researchers measure the obtained results? The only quantitative data that will be obtained is age, sex, profession, and number of interviewees because the rest are emotions and experiences that have been transmitted to us by the interlocutors. For this, there is a tool called empathy map that forces us to put ourselves in the place of our clientele with the aim of being able to identify, really, the characteristics that will allow us to make a better adjustment between our products or services and their needs or interests. When the research has been carefully planned, the hypotheses have been adequately defined and the indicated collection method has been used, the interpretation is usually carried out easily and successfully. What follows after conducting market research?

Learn more: Types of Interviews

Step #5: Make the Research Report

When presenting the results, researchers should focus on: what do they want to achieve using this research report and while answering this question they should not assume that the structure of the survey is the best way to do the analysis. One of the big mistakes that many researchers make is that they present the reports in the same order of their questions and do not see the potential of storytelling.

To make good reports, the best analysts give the following advice: follow the inverted pyramid style to present the results, answering at the beginning the essential questions of the business that caused the investigation. Start with the conclusions and give them fundamentals, instead of accumulating evidence. After this researchers can provide details to the readers who have the time and interest.

Step #6: Make Decisions

An organization or a researcher should never ask “why do market research”, they should just do it! Market research helps researchers to know a wide range of information, for example,  consumer purchase intentions, or gives feedback about the growth of the target market. They can also discover valuable information that will help in estimating the prices of their product or service and find a point of balance that will benefit them and the consumers.

Take decisions! Act and implement.

Learn more: Quantitative Research

• Make well-informed decisions: The growth of an organization is dependent on the way decisions are made by the management. Using market research techniques, the management can make business decisions based on obtained results that back their knowledge and experience. Market research helps to know market trends, hence to carry it out frequently to get to know the customers thoroughly.

LEARN ABOUT: Research Process Steps

• Gain accurate information: Market research provides real and accurate information that will prepare the organization for any mishaps that may happen in the future. By properly investigating the market, a business will undoubtedly be taking a step forward, and therefore it will be taking advantage of its existing competitors.
• Determine the market size: A researcher can evaluate the size of the market that must be covered in case of selling a product or service in order to make profits.
• Choose an appropriate sales system: Select a precise sales system according to what the market is asking for, and according to this, the product/service can be positioned in the market.
• Learn about customer preferences: It helps to know how the preferences (and tastes) of the clients change so that the company can satisfy preferences, purchasing habits, and income levels. Researchers can determine the type of product that must be manufactured or sold based on the specific needs of consumers.
• Gather details about customer perception of the brand: In addition to generating information, market research helps a researcher in understanding how the customers perceive the organization or brand.
• Analyze customer communication methods: Market research serves as a guide for communication with current and potential clients.
• Productive business investment: It is a great investment for any business because thanks to it they get invaluable information, it shows researchers the way to follow to take the right path and achieve the sales that are required.

LEARN ABOUT: Total Quality Management

The following tips will help businesses with creating a better market research strategy.

Tip #1: Define the objective of your research.

Before starting your research quest, think about what you’re trying to achieve next with your business. Are you looking to increase traffic to your location? Or increase sales? Or convert customers from one-time purchasers to regulars? Figuring out your objective will help you tailor the rest of your research and your future marketing materials. Having an objective for your research will flesh out what kind of data you need to collect.

Tip #2: Learn About Your Target Customers.

The most important thing to remember is that your business serves a specific kind of customer. Defining your specific customer has many advantages like allowing you to understand what kind of language to use when crafting your marketing materials, and how to approach building relationships with your customer. When you take time to define your target customer you can also find the best products and services to sell to them.

You want to know as much as you can about your target customer. You can gather this information through observation and by researching the kind of customers who frequent your type of business. For starters, helpful things to know are their age and income. What do they do for a living? What’s their marital status and education level?

Learn more: Customer Satisfaction

Tip #3: Recognize that knowing who you serve helps you define who you do not.

Let’s take a classic example from copywriting genius Dan Kennedy. He says that if you’re opening up a fine dining steakhouse focused on decadent food, you know right off the bat that you’re not looking to attract vegetarians or dieters. Armed with this information, you can create better marketing messages that speak to your target customers.

It’s okay to decide who is not a part of your target customer base. In fact, for small businesses knowing who you don’t cater to can be essential in helping you grow. Why? Simple, if you’re small your advantage is that you can connect deeply with a specific segment of the market. You want to focus your efforts on the right customer who already is compelled to spend money on your offer.

If you’re spreading yourself thin by trying to be all things to everyone, you will only dilute your core message. Instead, keep your focus on your target customer. Define them, go deep, and you’ll be able to figure out how you can best serve them with your products and services.

Tip #4: Learn from your competition.

This works for brick-and-mortar businesses as well as internet businesses because it allows you to step into the shoes of your customer and open up to a new perspective of your business. Take a look around the internet and around your town. If you can, visit your competitor’s shops. For example, if you own a restaurant specializing in Italian cuisine, dine at the other Italian place in your neighborhood or in the next township.

As you experience the business from the customer’s perspective, look for what’s being done right and wrong.

Can you see areas that need attention or improvement? How are you running things in comparison? What’s the quality of their product and customer service ? Are the customers here pleased? Also, take a close look at their market segment. Who else is patronizing their business? Are they the same kinds of people who spend money with you? By asking these questions and doing in-person research, you can dig up a lot of information to help you define your unique selling position and create even better offers for your customers.

Tip #5: Get your target customers to open up and tell you everything.

A good customer survey is one of the most valuable market research tools because it gives you the opportunity to get inside your customer’s head. However, remember that some feedback may be harsh, so take criticism as a learning tool to point you in the right direction.

Creating a survey is simple. Ask questions about what your customer thinks you’re doing right and what can be improved. You can also prompt them to tell you what kinds of products and services they’d like to see you add, giving you fantastic insight into how to monetize your business more. Many customers will be delighted to offer feedback. You can even give customers who fill out surveys a gift like a special coupon for their next purchase.

Bonus Tip: Use an insight & research repository

An insight & research repository is a consolidated research management platform to derive insights about past and ongoing market research. With the use of such a tool, you can leverage past research to get to insights faster, build on previously done market research and draw trendlines, utilize research techniques that have worked in the past, and more.

Market research is one of the most effective ways to gain insight into your customer base , competitors , and the overall market. The goal of conducting market research is to equip your company with the information you need to make informed decisions.

It is especially important when small businesses are trying to determine whether a new business idea is viable, looking to move into a new market, or are launching a new product or service.  Read below for a more in-depth look at how market research can help small businesses.

• COMPETITION According to a study conducted by Business Insider, 72% of small businesses focus on increasing revenue. Conducting research helps businesses gain insight into competitor behavior. By learning about your competitor’s strengths and weaknesses, you can learn how to position your product or offering. In order to be successful, small businesses need to have an understanding of what products and services competitors are offering, and their price point.

Learn more: Trend Analysis

• CUSTOMERS Many small businesses feel they need to understand their customers, only to conduct market research and learn they had the wrong assumptions. By researching, you can create a profile of your average customer and gain insight into their buying habits, how much they’re willing to spend, and which features resonate with them. Additionally, and perhaps more importantly, you can learn what will make someone use your product or service over a competitor.

Learn more: Customer Satisfaction Survey

• OPPORTUNITIES Potential opportunities, whether they are products or services, can be identified by conducting market research. By learning more about your customers, you can gather insights into complementary products and services. Consumer needs change over time, influenced by new technology and different conditions, and you may find new needs that are not being met, which can create new opportunities for your business.

Learn more: SWOT Analysis 

• FORECAST A small business is affected by the performance of the local and national economy, as are its’ customers. If consumers are worried, then they will be more restrained when spending money, which affects the business. By conducting research with consumers, businesses can get an idea of whether they are optimistic or apprehensive about the direction of the economy, and make adjustments as necessary. For example, a small business owner may decide to postpone a new product launch if it appears the economic environment is turning negative.

Learn more: 300+ Market Research Survey Questionnaires

Market research and market intelligence may be as complex as the needs that each business or project has. The steps are usually the same. We hope this ultimate guide helps you have a better understanding of how to make your own market research project to gather insightful data and make better decisions.

LEARN ABOUT: Projective Techniques

We appreciate you taking the time to read this ultimate guide. We hope it was helpful! 

You can now download our free ebook that will guide you through a market research project, from the planning stage to the presentation of the outcomes and their analysis.

Sign up now, and download our free ebook: The Hacker’s Guide to Advanced Research Methodologies 

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market research

Definition of market research

Examples of market research in a sentence.

These examples are programmatically compiled from various online sources to illustrate current usage of the word 'market research.' Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback about these examples.

Word History

1920, in the meaning defined above

Dictionary Entries Near market research

market price

market-ripe

Cite this Entry

“Market research.” Merriam-Webster.com Dictionary , Merriam-Webster, https://www.merriam-webster.com/dictionary/market%20research. Accessed 23 Apr. 2024.

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How To Do Market Research: Definition, Types, Methods

Jan 2, 2024

11 min. read

Market research isn’t just collecting data. It’s a strategic tool that allows businesses to gain a competitive advantage while making the best use of their resources. Research reveals valuable insights into your target audience about their preferences, buying habits, and emerging demands — all of which help you unlock new opportunities to grow your business.

When done correctly, market research can minimize risks and losses, spur growth, and position you as a leader in your industry. 

Let’s explore the basic building blocks of market research and how to collect and use data to move your company forward:

Table of Contents

What Is Market Research?

Why is market research important, market analysis example, 5 types of market research, what are common market research questions, what are the limitations of market research, how to do market research, improving your market research with radarly.

Market Research Definition: The process of gathering, analyzing, and interpreting information about a market or audience.

Market research studies consumer behavior to better understand how they perceive products or services. These insights help businesses identify ways to grow their current offering, create new products or services, and improve brand trust and brand recognition .

You might also hear market research referred to as market analysis or consumer research .

Traditionally, market research has taken the form of focus groups, surveys, interviews, and even competitor analysis . But with modern analytics and research tools, businesses can now capture deeper insights from a wider variety of sources, including social media, online reviews, and customer interactions. These extra layers of intel can help companies gain a more comprehensive understanding of their audience.

With consumer preferences and markets evolving at breakneck speeds, businesses need a way to stay in touch with what people need and want. That’s why the importance of market research cannot be overstated.

Market research offers a proactive way to identify these trends and make adjustments to product development, marketing strategies , and overall operations. This proactive approach can help businesses stay ahead of the curve and remain agile as markets shift.

Market research examples abound — given the number of ways companies can get inside the minds of their customers, simply skimming through your business’s social media comments can be a form of market research.

A restaurant chain might use market research methods to learn more about consumers’ evolving dining habits. These insights might be used to offer new menu items, re-examine their pricing strategies, or even open new locations in different markets, for example.

A consumer electronics company might use market research for similar purposes. For instance, market research may reveal how consumers are using their smart devices so they can develop innovative features.

Market research can be applied to a wide range of use cases, including:

• Testing new product ideas
• Improve existing products
• Entering new markets
• Right-sizing their physical footprints
• Improving brand image and awareness
• Gaining insights into competitors via competitive intelligence

Ultimately, companies can lean on market research techniques to stay ahead of trends and competitors while improving the lives of their customers.

Market research methods take different forms, and you don’t have to limit yourself to just one. Let’s review the most common market research techniques and the insights they deliver.

1. Interviews

3. Focus Groups

4. Observations

5. AI-Driven Market Research

One-on-one interviews are one of the most common market research techniques. Beyond asking direct questions, skilled interviewers can uncover deeper motivations and emotions that drive purchasing decisions. Researchers can elicit more detailed and nuanced responses they might not receive via other methods, such as self-guided surveys.

Interviews also create the opportunity to build rapport with customers and prospects. Establishing a connection with interviewees can encourage them to open up and share their candid thoughts, which can enrich your findings. Researchers also have the opportunity to ask clarifying questions and dig deeper based on individual responses.

Market research surveys provide an easy entry into the consumer psyche. They’re cost-effective to produce and allow researchers to reach lots of people in a short time. They’re also user-friendly for consumers, which allows companies to capture more responses from more people.

Big data and data analytics are making traditional surveys more valuable. Researchers can apply these tools to elicit a deeper understanding from responses and uncover hidden patterns and correlations within survey data that were previously undetectable.

The ways in which surveys are conducted are also changing. With the rise of social media and other online channels, brands and consumers alike have more ways to engage with each other, lending to a continuous approach to market research surveys.

3. Focus groups

Focus groups are “group interviews” designed to gain collective insights. This interactive setting allows participants to express their thoughts and feelings openly, giving researchers richer insights beyond yes-or-no responses.

One of the key benefits of using focus groups is the opportunity for participants to interact with one another. They spark discussions while sharing diverse viewpoints. These sessions can uncover underlying motivations and attitudes that may not be easily expressed through other research methods.

Observing your customers “in the wild” might feel informal, but it can be one of the most revealing market research techniques of all. That’s because you might not always know the right questions to ask. By simply observing, you can surface insights you might not have known to look for otherwise.

This method also delivers raw, authentic, unfiltered data. There’s no room for bias and no potential for participants to accidentally skew the data. Researchers can also pick up on non-verbal cues and gestures that other research methods may fail to capture.

5. AI-driven market research

One of the newer methods of market research is the use of AI-driven market research tools to collect and analyze insights on your behalf. AI customer intelligence tools and consumer insights software like Meltwater Radarly take an always-on approach by going wherever your audience is and continuously predicting behaviors based on current behaviors.

By leveraging advanced algorithms, machine learning, and big data analysis , AI enables companies to uncover deep-seated patterns and correlations within large datasets that would be near impossible for human researchers to identify. This not only leads to more accurate and reliable findings but also allows businesses to make informed decisions with greater confidence.

Tip: Learn how to use Meltwater as a research tool , how Meltwater uses AI , and learn more about consumer insights and about consumer insights in the fashion industry .

No matter the market research methods you use, market research’s effectiveness lies in the questions you ask. These questions should be designed to elicit honest responses that will help you reach your goals.

Examples of common market research questions include:

Demographic market research questions

• What is your age range?
• What is your occupation?
• What is your household income level?
• What is your educational background?
• What is your gender?

Product or service usage market research questions

• How long have you been using [product/service]?
• How frequently do you use [product/service]?
• What do you like most about [product/service]?
• Have you experienced any problems using [product/service]?
• How could we improve [product/service]?
• Why did you choose [product/service] over a competitor’s [product/service]?

Brand perception market research questions

• How familiar are you with our brand?
• What words do you associate with our brand?
• How do you feel about our brand?
• What makes you trust our brand?
• What sets our brand apart from competitors?
• What would make you recommend our brand to others?

Buying behavior market research questions

• What do you look for in a [product/service]?
• What features in a [product/service] are important to you?
• How much time do you need to choose a [product/service]?
• How do you discover new products like [product/service]?
• Do you prefer to purchase [product/service] online or in-store?
• How do you research [product/service] before making a purchase?
• How often do you buy [product/service]?
• How important is pricing when buying [product/service]?
• What would make you switch to another brand of [product/service]?

Customer satisfaction market research questions

• How happy have you been with [product/service]?
• What would make you more satisfied with [product/service]?
• How likely are you to continue using [product/service]?

Bonus Tip: Compiling these questions into a market research template can streamline your efforts.

Market research can offer powerful insights, but it also has some limitations. One key limitation is the potential for bias. Researchers may unconsciously skew results based on their own preconceptions or desires, which can make your findings inaccurate.

• Depending on your market research methods, your findings may be outdated by the time you sit down to analyze and act on them. Some methods struggle to account for rapidly changing consumer preferences and behaviors.
• There’s also the risk of self-reported data (common in online surveys). Consumers might not always accurately convey their true feelings or intentions. They might provide answers they think researchers are looking for or misunderstand the question altogether.
• There’s also the potential to miss emerging or untapped markets . Researchers are digging deeper into what (or who) they already know. This means you might be leaving out a key part of the story without realizing it.

Still, the benefits of market research cannot be understated, especially when you supplement traditional market research methods with modern tools and technology.

Let’s put it all together and explore how to do market research step-by-step to help you leverage all its benefits.

Step 1: Define your objectives

You’ll get more from your market research when you hone in on a specific goal : What do you want to know, and how will this knowledge help your business?

This step will also help you define your target audience. You’ll need to ask the right people the right questions to collect the information you want. Understand the characteristics of the audience and what gives them authority to answer your questions.

Step 2: Select your market research methods

Choose one or more of the market research methods (interviews, surveys, focus groups, observations, and/or AI-driven tools) to fuel your research strategy.

Certain methods might work better than others for specific goals . For example, if you want basic feedback from customers about a product, a simple survey might suffice. If you want to hone in on serious pain points to develop a new product, a focus group or interview might work best.

You can also source secondary research via secondary research companies , such as industry reports or analyses from large market research firms. These can help you gather preliminary information and inform your approach.

Step 3: Develop your research tools

Prior to working with participants, you’ll need to craft your survey or interview questions, interview guides, and other tools. These tools will help you capture the right information , weed out non-qualifying participants, and keep your information organized.

You should also have a system for recording responses to ensure data accuracy and privacy. Test your processes before speaking with participants so you can spot and fix inefficiencies or errors.

Step 4: Conduct the market research

With a system in place, you can start looking for candidates to contribute to your market research. This might include distributing surveys to current customers or recruiting participants who fit a specific profile, for example.

Set a time frame for conducting your research. You might collect responses over the course of a few days, weeks, or even months. If you’re using AI tools to gather data, choose a data range for your data to focus on the most relevant information.

Step 5: Analyze and apply your findings

Review your findings while looking for trends and patterns. AI tools can come in handy in this phase by analyzing large amounts of data on your behalf.

Compile your findings into an easy-to-read report and highlight key takeaways and next steps. Reports aren’t useful unless the reader can understand and act on them.

Tip: Learn more about trend forecasting , trend detection , and trendspotting .

Meltwater’s Radarly consumer intelligence suite helps you reap the benefits of market research on an ongoing basis. Using a combination of AI, data science, and market research expertise, Radarly scans multiple global data sources to learn what people are talking about, the actions they’re taking, and how they’re feeling about specific brands.

Our tools are created by market research experts and designed to help researchers uncover what they want to know (and what they don’t know they want to know). Get data-driven insights at scale with information that’s always relevant, always accurate, and always tailored to your organization’s needs.

Learn more when you request a demo by filling out the form below:

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Market research is a cornerstone of all successful, strategic businesses. It can also be daunting for entrepreneurs looking to launch a startup or start a side hustle . What is market research, anyway? And how do you…do it?

We’ll walk you through absolutely everything you need to know about the market research process so that by the end of this guide, you’ll be an expert in market research too. And what’s more important: you’ll have actionable steps you can take to start collecting your own market research.

What Is Market Research?

Market research is the organized process of gathering information about your target customers and market. Market research can help you better understand customer behavior and competitor strengths and weaknesses, as well as provide insight for the best strategies in launching new businesses and products. There are different ways to approach market research, including primary and secondary research and qualitative and quantitative research. The strongest approaches will include a combination of all four.

“Virtually every business can benefit from conducting some market research,” says Niles Koenigsberg of Real FiG Advertising + Marketing . “Market research can help you piece together your [business’s] strengths and weaknesses, along with your prospective opportunities, so that you can understand where your unique differentiators may lie.” Well-honed market research will help your brand stand out from the competition and help you see what you need to do to lead the market. It can also do so much more.

The Purposes of Market Research

Why do market research? It can help you…

• Pinpoint your target market, create buyer personas, and develop a more holistic understanding of your customer base and market.
• Understand current market conditions to evaluate risks and anticipate how your product or service will perform.
• Validate a concept prior to launch.
• Identify gaps in the market that your competitors have created or overlooked.
• Solve problems that have been left unresolved by the existing product/brand offerings.
• Identify opportunities and solutions for new products or services.
• Develop killer marketing strategies .

What Are the Benefits of Market Research?

Strong market research can help your business in many ways. It can…

• Strengthen your market position.
• Help you identify your strengths and weaknesses.
• Help you identify your competitors’ strengths and weaknesses.
• Minimize risk.
• Center your customers’ experience from the get-go.
• Help you create a dynamic strategy based on market conditions and customer needs/demands.

What Are the Basic Methods of Market Research?

The basic methods of market research include surveys, personal interviews, customer observation, and the review of secondary research. In addition to these basic methods, a forward-thinking market research approach incorporates data from the digital landscape like social media analysis, SEO research, gathering feedback via forums, and more. Throughout this guide, we will cover each of the methods commonly used in market research to give you a comprehensive overview.

Primary vs. Secondary Market Research

Primary and secondary are the two main types of market research you can do. The latter relies on research conducted by others. Primary research, on the other hand, refers to the fact-finding efforts you conduct on your own.

This approach is limited, however. It’s likely that the research objectives of these secondary data points differ from your own, and it can be difficult to confirm the veracity of their findings.

Primary Market Research

Primary research is more labor intensive, but it generally yields data that is exponentially more actionable. It can be conducted through interviews, surveys, online research, and your own data collection. Every new business should engage in primary market research prior to launch. It will help you validate that your idea has traction, and it will give you the information you need to help minimize financial risk.

You can hire an agency to conduct this research on your behalf. This brings the benefit of expertise, as you’ll likely work with a market research analyst. The downside is that hiring an agency can be expensive—too expensive for many burgeoning entrepreneurs. That brings us to the second approach. You can also do the market research yourself, which substantially reduces the financial burden of starting a new business .

Secondary Market Research

Secondary research includes resources like government databases and industry-specific data and publications. It can be beneficial to start your market research with secondary sources because it’s widely available and often free-to-access. This information will help you gain a broad overview of the market conditions for your new business.

Identify Your Goals and Your Audience

Before you begin conducting interviews or sending out surveys, you need to set your market research goals. At the end of your market research process, you want to have a clear idea of who your target market is—including demographic information like age, gender, and where they live—but you also want to start with a rough idea of who your audience might be and what you’re trying to achieve with market research.

You can pinpoint your objectives by asking yourself a series of guiding questions:

• What are you hoping to discover through your research?
• Who are you hoping to serve better because of your findings?
• What do you think your market is?
• Who are your competitors?
• Are you testing the reception of a new product category or do you want to see if your product or service solves the problem left by a current gap in the market?
• Are you just…testing the waters to get a sense of how people would react to a new brand?

Once you’ve narrowed down the “what” of your market research goals, you’re ready to move onto how you can best achieve them. Think of it like algebra. Many math problems start with “solve for x.” Once you know what you’re looking for, you can get to work trying to find it. It’s a heck of a lot easier to solve a problem when you know you’re looking for “x” than if you were to say “I’m gonna throw some numbers out there and see if I find a variable.”

How to Do Market Research

This guide outlines every component of a comprehensive market research effort. Take into consideration the goals you have established for your market research, as they will influence which of these elements you’ll want to include in your market research strategy.

Secondary Data

Secondary data allows you to utilize pre-existing data to garner a sense of market conditions and opportunities. You can rely on published market studies, white papers, and public competitive information to start your market research journey.

Secondary data, while useful, is limited and cannot substitute your own primary data. It’s best used for quantitative data that can provide background to your more specific inquiries.

Find Your Customers Online

Once you’ve identified your target market, you can use online gathering spaces and forums to gain insights and give yourself a competitive advantage. Rebecca McCusker of The Creative Content Shop recommends internet recon as a vital tool for gaining a sense of customer needs and sentiment. “Read their posts and comments on forums, YouTube video comments, Facebook group [comments], and even Amazon/Goodreads book comments to get in their heads and see what people are saying.”

If you’re interested in engaging with your target demographic online, there are some general rules you should follow. First, secure the consent of any group moderators to ensure that you are acting within the group guidelines. Failure to do so could result in your eviction from the group.

Not all comments have the same research value. “Focus on the comments and posts with the most comments and highest engagement,” says McCusker. These high-engagement posts can give you a sense of what is already connecting and gaining traction within the group.

Social media can also be a great avenue for finding interview subjects. “LinkedIn is very useful if your [target customer] has a very specific job or works in a very specific industry or sector. It’s amazing the amount of people that will be willing to help,” explains Miguel González, a marketing executive at Dealers League . “My advice here is BE BRAVE, go to LinkedIn, or even to people you know and ask them, do quick interviews and ask real people that belong to that market and segment and get your buyer persona information first hand.”

Market research interviews can provide direct feedback on your brand, product, or service and give you a better understanding of consumer pain points and interests.

When organizing your market research interviews, you want to pay special attention to the sample group you’re selecting, as it will directly impact the information you receive. According to Tanya Zhang, the co-founder of Nimble Made , you want to first determine whether you want to choose a representative sample—for example, interviewing people who match each of the buyer persona/customer profiles you’ve developed—or a random sample.

“A sampling of your usual persona styles, for example, can validate details that you’ve already established about your product, while a random sampling may [help you] discover a new way people may use your product,” Zhang says.

Market Surveys

Market surveys solicit customer inclinations regarding your potential product or service through a series of open-ended questions. This direct outreach to your target audience can provide information on your customers’ preferences, attitudes, buying potential, and more.

Every expert we asked voiced unanimous support for market surveys as a powerful tool for market research. With the advent of various survey tools with accessible pricing—or free use—it’s never been easier to assemble, disseminate, and gather market surveys. While it should also be noted that surveys shouldn’t replace customer interviews , they can be used to supplement customer interviews to give you feedback from a broader audience.

Who to Include in Market Surveys

• Current customers
• Past customers
• Your existing audience (such as social media/newsletter audiences)

Example Questions to Include in Market Surveys

While the exact questions will vary for each business, here are some common, helpful questions that you may want to consider for your market survey. Demographic Questions: the questions that help you understand, demographically, who your target customers are:

• “What is your age?”
• “Where do you live?”
• “What is your gender identity?”
• “What is your household income?”
• “What is your household size?”
• “What do you do for a living?”
• “What is your highest level of education?”

Product-Based Questions: Whether you’re seeking feedback for an existing brand or an entirely new one, these questions will help you get a sense of how people feel about your business, product, or service:

• “How well does/would our product/service meet your needs?”
• “How does our product/service compare to similar products/services that you use?”
• “How long have you been a customer?” or “What is the likelihood that you would be a customer of our brand?

Personal/Informative Questions: the deeper questions that help you understand how your audience thinks and what they care about.

• “What are your biggest challenges?”
• “What’s most important to you?”
• “What do you do for fun (hobbies, interests, activities)?”
• “Where do you seek new information when researching a new product?”
• “How do you like to make purchases?”
• “What is your preferred method for interacting with a brand?”

Survey Tools

Online survey tools make it easy to distribute surveys and collect responses. The best part is that there are many free tools available. If you’re making your own online survey, you may want to consider SurveyMonkey, Typeform, Google Forms, or Zoho Survey.

Competitive Analysis

A competitive analysis is a breakdown of how your business stacks up against the competition. There are many different ways to conduct this analysis. One of the most popular methods is a SWOT analysis, which stands for “strengths, weaknesses, opportunities, and threats.” This type of analysis is helpful because it gives you a more robust understanding of why a customer might choose a competitor over your business. Seeing how you stack up against the competition can give you the direction you need to carve out your place as a market leader.

Social Media Analysis

Social media has fundamentally changed the market research landscape, making it easier than ever to engage with a wide swath of consumers. Follow your current or potential competitors on social media to see what they’re posting and how their audience is engaging with it. Social media can also give you a lower cost opportunity for testing different messaging and brand positioning.

SEO Analysis and Opportunities

SEO analysis can help you identify the digital competition for getting the word out about your brand, product, or service. You won’t want to overlook this valuable information. Search listening tools offer a novel approach to understanding the market and generating the content strategy that will drive business. Tools like Google Trends and Awario can streamline this process.

Ready to Kick Your Business Into High Gear?

Now that you’ve completed the guide to market research you know you’re ready to put on your researcher hat to give your business the best start. Still not sure how actually… launch the thing? Our free mini-course can run you through the essentials for starting your side hustle .

About Mary Kate Miller

Mary Kate Miller writes about small business, real estate, and finance. In addition to writing for Foundr, her work has been published by The Washington Post, Teen Vogue, Bustle, and more. She lives in Chicago.

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• What Is Market Research?

Summary: Market research is a structured process to identify, gather, and analyze information to support business decisions. Market research can provide insights into the customer journey and guide decisions related to product development, marketing strategy, pricing strategy, and points of sales (online and offline) to create a customer experience that supports customer acquisition and retention.

8 minutes to read. By author Michaela Mora on July 10, 2021 Topics: Relevant Methods & Tips , Business Strategy , Market Research

Market research is a discipline with roots in psychology and sociology and involves the identification, collection, analysis, and use of information to make business decisions.

Market research and marketing research are so connected that the nuances are lost and both terms are used interchangeably in practice. For this article, I’ll use the term market research.

We use market research to identify and solve problems in different business areas, often connected to the four Ps in marketing:

• Place (distribution, point of sale)
• Promotion (advertising)

Overall, these four aspects of any product or service are drivers of the customer experience as customers interact with each of them through the customer journey from product development, pre-sale, point-of-sale, and post-sale.

Market Research to Identify Problems

The use of market research to identify problems aims at the discovery of what we don’t know. It is often called “generative research” in the context of product development as we look for new product ideas. At a very high level is exploratory in its goals and it can use qualitative and quantitative data collection and analysis techniques.

We use market research for problem discovery when we design research to:

• Identify unmet market needs and their market potential.
• Size the market share for specific products or services.
• Monitor brand image issues of our brand and competitors.
• Profile market segments.
• Analyze sales trends.
• Forecast future trends.
• Identify business trends.

Market Research to Solve Problems

Once a business discovers market opportunities through an understanding of unmet needs, or issues related to its branding, pricing of distribution that may impact the customer experience, the next step is to generate solutions and validate them.

The solutions may be new products and services, new product features to improve the customer experience, a pricing strategy, a brand positioning, a marketing strategy including customization of marketing messages and content for different marketing channels, a redesign of points of sales (online and offline), an internal reorganization to align systems and employees with the customer experience, etc.

For each need or issue discovered there are many potential solutions limited by resources available to the business. The more limited the resources are, the higher the need to use them effectively. Market research can help design solutions for high business impact.

We use market research to solve problems when we design research to:

• Identify actionable market segments for products or services (digital or physical)
• Develop new products (digital or physical)
• Establish a pricing strategy and identify optimal price points.
• Determine effective ways to advertise products and services and optimize marketing channels.
• Identify distribution issues and barriers to the path to purchase.
• Improve customer experience to support customer acquisition and retention strategies.

The Market Research Process

For any given market research project, the process usually includes six major steps:

• Business problem definition and translation to a research problem
• Development of an approach to the research problem
• Research design selection
• Data collection or fieldwork
• Data processing
• Analysis and reporting

Market Research Design Categories

There are different ways to categorize market research depending on:

• The focus on the problem at hand: Primary vs. Secondary.
• The research design goal: Exploratory vs. Descriptive, vs. Causal
• The type of data and collection methods used: Qualitative vs. Quantitative.

Each of these categories helps us guide how to select different research designs, data collection methods, and analysis techniques to gather the information we need to help solve the research problem and provide insights to support business decisions.

Primary Vs. Secondary

First, we try to determine whether we need to conduct secondary or primary research.

Primary research is based on data collection designed to address specific problems.

Secondary research is based on data that have already been collected for other purposes but may be related to the topic at hand. Secondary research should be a prerequisite to the collection of primary data, which would be appropriate when the secondary data sources have been exhausted or yield minimal returns.

Exploratory vs. Descriptive vs. Causal

Exploratory research designs are used to provide insights into problems we don’t fully understand or have not been discovered yet. This is often the type of research we start with when we use market research to identify problems.

We conduct descriptive market research when we try to describe characteristics of target markets or segments of interest, frequency of certain behaviors, attitudes, and perceptions, market trends, etc.

Causal market research, on the other hand, tries to find evidence of cause-and-effect relationships to understand which variables are the cause of behaviors, attitudes, perceptions , or other phenomena of interest.

Qualitative vs. Quantitative

This categorization helps us separate data collection and analysis methods based on their:

• Objectives.
• Sample design.
• Type of data and analysis they allow.
• Type of decisions they support.

Generally, qualitative research helps us explore and get a deeper understanding of a problem, while we use quantitative research to quantify and validate findings and test hypotheses. The latter may come from qualitative research, secondary research, or just assumptions made by the business.

Note that different combinations of the four criteria mentioned may render a research design qualitative or quantitative. For example, surveys with small samples may provide only directional results more appropriate for qualitative analysis.

Primary Market Research Data Collection Methods

As describe above, once we decide to design research to answer a specific business and research problem, we are on our way to conduct primary research.

We use a myriad of data collection methods in primary market research depending on the research objectives and research design selected.

Ideally, we should combine qualitative and quantitative methods since they provide different types of data and insights.

Qualitative Research

Qualitative Research is one type of exploratory market research methodology based on semi-structured or unstructured data collection. Data collection methods used in primary qualitative research can be classified as direct or indirect .

Direct methods are those in which we disclose the research objective to participants. These data collection methods include:

• In-depth Interviews (IDIs) – Online , In-person, Phone
• Focus Groups , Online, In-person
• Online bulletin boards
• Diary Studies
• Usability Testing , Online, In-person
• Usability Expert Reviews
• Contextual inquiry
• Shop-alongs
• Ethnographic observation

Indirect methods are those for which the true purpose of the research is not disclosed to participants. These are based on projective techniques, which are unstructured questioning techniques to encourage respondents to reveal underlying motivations, beliefs, attitudes, and feelings regarding particular issues.

These techniques are usually embedded into direct data collection methods and are classified into four major groups:

• Association
• Construction

Quantitative Research

Primary quantitative data collection methods include surveys and observational methods .

Surveys involve the administration of a questionnaire through different modes (online, phone, mail, in-person) to groups of interest. As a best practice, we try to always use qualitative research to design good surveys .

We use the survey format, particularly in the online mode, to implement many different question types that sometimes are considered “research methods” by those new to research, especially in the UX field. Surveys used in online unmoderated, remote usability tests are an example.

These are just surveys with very special question formats for very specific purposes.

Observation, on the other hand, doesn’t include communicating with the people being observed and can be conducted through different structured and unstructured, direct and indirect methods and performed in natural or lab environments.

Quantitative observational methods include:

• Digital transaction/behavior tracking (e.g., sales tracking, web traffic tracking, A/B testing).
• Biometric measurement
• Audit and inventory analysis.
• Content analysis.
• Trace analysis from past behaviors.

Although these data collection methods are very different, they should not be seen as mutually exclusive. Each method has advantages and disadvantages and can be used productively in combination.

Market Research Career

To emphasize the value of market research in supporting business decisions and get away from being mainly associated with data collection, the market research industry went through a rebranding process a few years ago. The American Market Research Association is now called the Insights Association , and many market researchers have changed their titles to “Insights” professionals.

You will find insights professionals in research agencies, like ours, and in nonprofit and profit organizations. The latter group is often referred to as corporate researchers. They often in a group within the marketing department or as independent centralized function serving other departments or functional areas in a company. Nowadays, this group goes by names such as “Customer Insights,” “Insights & Analytics,” “Voice of the Customer,” “Consumer Insights,” and the like.

As of 2021, many digital-first companies don’t have a market research/consumer insight group. These companies tend to be organized around digital products (app, software, online service) and prioritize UX research if any research is conducted at all.

Unfortunately, many don’t understand that UX research is a specific application of market research used to solve a particular set of problems.

Market researchers in agencies or inside organizations are involved with all or some steps of the research process depending on whether they do the work themselves or partner with other research vendors in the market research ecosystem.

Market Research Ecosystem

There are many specialists in the market research echo system offering services in line with different steps of the research process or servicing specific industries.

Overall, the market research ecosystem includes providers in areas such as:

• Participant sample (online panels, phone list, mail lists, qualitative panels)
• Data collection tools for different modes (online survey tools, online qualitative tools, phone surveys, mail surveys, eye tracking, biometrics, usability testing tools)
• In-person interviewing services (for onsite, intercept interviews at public places, stores, etc.)
• Mystery shopping services
• Facilities for in-person research (focus groups, interviews, food testing, product testing)
• Data aggregators (syndicated data services, omnibus services)
• Qualitative moderation (focus group moderators, in-depth interview moderators)
• Analytic software tools (Tools for statistical analyses, crosstabulations, advanced procedures, text analytics )
• Panel and community technology platforms (to create proprietary panels and branded research communities)
• Recruitment services (for qualitative research and hard to reach audiences)
• Open-ended question coding services
• Transcription services
• Data and reporting visualization tools
• Software development for specific applications and methodologies

I hope this summary gives you an idea of what the market research/insights profession is about and how this discipline can be used to find information needed to support business decisions.

Many who are not familiar with the field confuse market research with specific data collection methods (e.g., surveys, focus groups) and tools that facilitate data collection (e.g., online survey tools), but market research is more than its tools.

As researchers, we need to have expertise in research methodology to avoid providing biased insights. This knowledge of methodology is applied in the context of business problems related to product development, customer experience, branding, and financial outcomes. Our goal is to guide decisions that have a business impact.

To read more about how to use market research, check the article 10 Key Pieces of Advice On How to Do And Use Market Research .

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Quickonomics

Market Research

Definition of market research.

Market research refers to the process of gathering, analyzing, and interpreting data about a specific market or industry. It is a systematic and objective way of collecting information about consumers, competitors, and market trends to make informed business decisions. Market research can involve various methods such as surveys, interviews, focus groups, and data analysis.

Let’s say you are planning to start a new business selling organic skincare products. Before launching your products, you want to understand the market demand, competition, and preferences of potential customers. In order to conduct market research, you can start by designing a survey to collect information from a sample of your target audience. The survey can include questions about their skincare routines, preferences, and willingness to pay for organic products.

Additionally, you can analyze existing market data and reports to understand the competitive landscape and identify market trends. This might involve examining sales figures, market share data, and consumer behavior patterns in the skincare industry.

Based on your research findings, you can make data-driven decisions on aspects such as product development, pricing, marketing strategies, and distribution channels.

Why Market Research Matters

Market research is crucial for any business because it provides valuable insights and understanding of the market environment. It helps businesses identify opportunities and potential challenges, make informed decisions, and minimize risks. By conducting market research, businesses can gain a competitive advantage, tailor their products or services to meet customer needs, and develop effective marketing campaigns. It allows businesses to stay ahead of the competition, attract and retain customers, and ultimately drive business growth and success.

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What is Market Research? Definition, Methods, Examples and Templates

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Market research is a thriving industry, full of invention and innovation. In such a busy, future-thinking industry, it can be hard for newcomers to know where to start when learning about insights. So here is FlexMR’s guide to market research, exploring the ins and outs of market research – the industry, process, methodologies, tech, tools, and current trends.

In this article, we'll cover four key areas that it's important for all research and insight professionals to understand:

•  A market research overview (definitions, approaches and technologies)
•  Common research methodologies (qual, quant, primary and secondary)
•  The market research process (recruitment, collection, analysis, activation)
•  Examples of effective research from industry leaders

An Overview of Market Research

The earliest recognised example of market research took place in the 1920s. During this period, Daniel Starch developed a theory that proposed advertising had to be remembered in order to be effective. To test this theory, he asked people on the street if they could remember specific adverts in select publications that they read. Soon after, George Gallup proposed a rival theory known as aided recall that would go on to influence media measurements for years to come.

Between those early years and the present day, the pracitice of market research has developed significantly. It now encompasses a broad range of qualitative and quantitative methods, many proposed throughout the golden age of the 1940s - 1980s. New innovations today push the boundaries not in the realms of process of methodology, but in technology - continually refining research activities and unlocking greater efficiencies.

Market Research Definition

The Oxford English Dictionary defines market research as “the action or activity of gathering information about consumers’ needs and preferences.” 

But, as noted in another of our blogs , this is a basic working definition. In fact, market research has many uses beyond identifying consumer behaviours and trends, and also works to help stakeholders understand the capabilities, efficiency and need when it comes to their own brand, products, processes and services, even the industry they operate in. Market research holds the key to understanding the current situation in all its facets and then exploring the best way to navigate into the uncertain future.

Everyone’s experience of market research differs depending on their objectives, the methodologies used, and the answers gained. Most stakeholders have a sense of how important market research is for future success, but there is still some ground to be gained from insight teams.

The main objective of market research is to provide accurate and relevant answers to stakeholder questions – anything more specific would depend on the questions themselves.

Approaches to Market Research

There is universal applicability of the insights generated from market research. Stakeholders are able to embed insights in businesses spanning all industries to inform strategies working through a range of situations and challenges, such as:

• Competition analysis and brand tracking 
• Customer profile and trend tracking
• Opportunity spotting and future-proofing
• General trend forecasting
• Product/service development and enhancement
• Effective Market Analyses
• Marketing and ad testing

Market research is a great way to find answers to more specific challenges and questions unique to the stakeholder organisation. Perhaps stakeholders have a communication strategy in place that needs updating or a particular part of their customer experience under review, or even an employment experience that needs renovating in order to attract new talent - market research is a flexible and widely applicable experience that can gain influential insights to inform all decision-making processes.

Depending on the challenge at hand and the experience of the stakeholders involved, there are a couple of different ways to approach market research:  

• If there is a challenge presenting itself, the best way would be to enlist the help of an insight team to help devise a research experience to gain insights on how to resolve the issue effectively.  
• If there is a question presenting itself that is less time-sensitive and the stakeholders have some previous experience of basic insight generation, then stakeholders might look for secondary data or previous in-house research projects to see if any answers present themselves there first before requesting more research be done.

All approaches to research must aim for the same goal: objective clarity, communicated in a way that everyone understands and can use to the full extent of their particular power.

Typically, the traditional starting format of a research experience is for stakeholders to first define the problem, hypothesis, and potential answers they expect to pop up at the end; then they commission insight professionals (in-house or agency) to create the research experience and guide them through the process of finding the right answers.

Market Research Technologies

Technology has driven innovation in the market research industry for decades now, with most of the innovation focussed on the most heavy-lifting data collection and analysis tools. In the last 30 years, our vocation has grown from face-to-face research to mostly online insight generation. With innovation injected into every aspect of the research process, the result is new research tools and creative methodologies for insight teams to take advantage of when designing new exciting research experiences.  

We have developed a large catalogue of research technologies for the research technology stacks insight teams need. Research technology stacks are uniquely tailored to each team and organisation, so the technology each team has available or will need available will need to be outlined and understood in the research brief and design stage of the research experience.

We incorporate research into everything we do. Although we conduct a lot of surveys, access to agile, qualitative options enable us to dive deeper into insight and really understand customers. Research Analyst, SkyBet

Finding the right technology vendors can be a heavy task for insight teams with all of the latest research technology on offer, so the question becomes: how do we choose which technologies should go into the research stack?

There are numerous considerations insight teams need to take into account, such as:

• How well their technology fits in with the other tools and tech the insight team are currently looking at.
• The values, objectives, and future of the vendor in question, and if they align with the values, objectives, and future of the insight team/stakeholder organisation.
• How well they understand and are able to cater towards the requirements of the insight team, whether that’s on a long-term basis or just for one project.

We have created a free template for insight teams to keep track of all the considerations they’ll need to find the right vendors to work alongside.

Research Methodologies

There are two broad ways in which market research methodologies are classified. Primary vs secondary looks at whether the data was collected first-hand or via existing sources. Whilst qualitative and quantitative methods differentiate between measures that are statistical or subjective in nature.

Primary Research

This is the type of research that most of the insights industry specialises in – where insight teams generate original data by getting in touch with customers and consumers to find out their opinion first-hand and forwarding that data onto stakeholders to influence strategic decisions within their business.

There are a couple of paths stakeholders can choose to take depending on their resources, they can either conduct the research themselves (if they have the time, experience and knowledge to do so), they can request the research be done by their in-house insight team (if their organisation has one), or they can hire an external research agency to work with them and conduct the research for them.

Each research agency will provide similar and different products and services for hire, so if stakeholders do need to hire an external agency, it’s vital they do a bit of research and speak to each agency they consider to make sure the partnership is right for all involved.

Secondary Research

This is the research that’s already been conducted by other people and published for others to use for their own purposes. Most of this data comes at a cost and is published in private or subscription-based academic or industry journals. While the data in these journals are typically well-thought-of and proven, researchers need to be wary and make sure the secondary data sources are reliable enough to factor into research experiences.

These secondary data sources were originally sourced through primary data collection and analysis, but by other researchers or teams not involved in this particular project. Secondary research sources can be used within a research experience alongside primary data collection, even going so far as to influence the primary research taking place if stakeholders are wanting to test the reliability or replicability of the secondary data gathered.

Quantitative Research

Quantitative research and data have become synonymous with market research. It is the typical numerical, statistical data that most stakeholders are used to seeing in research reports. This data is typically gathered from quantitative methodologies such as surveys, polls, questionnaires, observations and in-depth interviews. This research provides measurable statistics that work to quantify the opinions and attitudes of research participants.

The statistical output of quantitative research means that researchers are able to objectively test theories and measure the attitudes of their target audience. Surveys are usually the first thing anyone thinks of when they hear about quantitative market research, as it’s the most common quantitative research methodology used both inside and outside of the insights industry.

We are answering challenging questions through our quantitative panel. It provides insights that help us make decisions today, as well as the capacity to continue improving products and campaigns. Customer Insights Manager, Specsavers

Quantitative data analysis is a very logical process, and as such requires a good knowledge of mathematics and statistical analysis to derive meaning from data points on graphs and tables, finding correlations without attributing them to causations, and either proving or disproving a current hypothesis. 

Find out more about quantitative research in our blog here .

Qualitative Research 

What comes to mind when you think about qualitative research? Probably not too much other than the typical focus groups and interview-based research methods. These were probably the most used in conjunction with surveys throughout market research history, and it’s only now in the past couple of decades when there were more options available to researchers and stakeholders.

With the drive of technological innovation and the need powered by the events of 2020, online focus group technology is powering stakeholder efforts to conduct more online qualitative focus groups.

But there isn’t just focus groups to consider. More creative research methods are able to provide just as good data with potentially more intriguing results. Scrapbooks, sentiment-based heat maps, diary studies, and more are suitably poised to drive the generation of deep contextual insights in research experiences - boosting quantitative data more than simple focus groups every could on their own. While it depends a lot on the insights stakeholders need, focus groups might not be the answer to gaining more contextual information from the survey data collected. Or at least not on their own. Insight teams need to try and blend research tasks, tools and methodologies to get the right insights for their stakeholders.

Find out more about qualitative research in our blog here .

Passive Research

While this is still a developing segment of the research sector, there are passive ways of generating primary data. Data mining , using social media , geolocation tracking, and eye/movement tracking technologies are being developed up to a high standard and implemented as a part of modern research experiences.

There is a lot of insight to be gained from tracking consumers behaviour rather than trusting their word alone. Observation research is one of the founding principles for this, however as we move into an increasingly technological age where most of the global population is living a life online, behavioural science principles have evolved to track online behaviours as well as offline behaviours:

• Social media is a great stage for behavioural data mining and more active research tactics such as quick polls. 
• Geolocation uses our smartphones to track our movements (when permissions allow) and businesses can use that data to get a better sense of consumers daily lives.
• Eye-tracking software can be used to see which parts of a website, advertisement or retail store is more attractive based on what we see first and which parts we linger on more.

The Market Research Process

As a key step in the marketing process, it is vital that research is carried out with care and due diligence. The following five steps outline the order in which research activities should be completed to deliver project success.

Step 1: Research Brief and Design

A market research brief is a document a client produces, detailing important information about their unique situation and research requirements – so a brief is an essential document for insight teams to obtain before even thinking about the rest of the research process.

Stakeholders create the brief, most of the time in a form produced by the insights team, defining the problem or situation they are currently encountering, the current business objectives this research would also work towards (if applicable), the research objectives they believe would be good to work towards, the constraints they’re working with (time, budget, etc.), and how involved they would like to be throughout the process.

There are a number of other factors that could go into the research brief, for example, any contextual factors stakeholders think might influence the research experience, etc. However, we created a template for a research brief that covers a lot of the criteria mentioned here for ease – feel free to download and use it to your advantage.

This brief is then the basis of the research design and planning. The insight teams involved take the brief and use the information within it and their expertise to design the most appropriate research experience possible that will generate accurate and relevant insights for the stakeholder organisation.

A plan is similar to a brief, in which is holds vital details about the market research project and is an often overlooked part of the process - but an effective plan is critical to research success. We have created a guide on how to write an effective market research plan, complete with a template to help stakeholders and insight professionals make sure they have given all aspects equal consideration.

Step 2: Recruitment 

This next stage is a little trickier. Most insight teams might do well to consider the recruitment options and planning in the research design and brief stage and reserve this part of the process for active recruitment and research platform setup.

However, for those only starting to consider recruitment, insight teams will need to take this stage for both planning and active recruitment. Consider the sample you’re looking to gain insight from, which customers or consumers might be best placed to provide the best data for insight generation. This determining of the sample can make or break a research project, with the right sample able to produce relevant and accurate data that can be applied to full effect in stakeholder decision-making processes.

Then consider the recruitment method or sample provider insight teams are working with. It might be that the sample the team needs is all active on social media, and recruitment through targeted ads might be a good DIY tactic to implement. However, to take the stress out of recruitment, commissioning a sample provider might be a better way to go. Sample or recruitment providers are skilled in this area and typically already have a database of willing participants they can put insight teams in touch with for a set fee.

However, another popular tactic is to recruit research participants out of a business's existing customer base. This means stakeholders and insight professionals know they’re engaged with the business to some degree, and the branded or business-specific research will already be completed by their target audience.

Our customers are our stakeholders; their opinions and feelings are vital to the success of the society. As such, their engagement with our research is crucial. Customer Insights Specialist, Coventry Building Society

Once the sample and provider have been determined, it’s time to sort the wheat from the chaff. It’s common to use a screener survey to make sure the sample is exactly what insight teams need, and segment the sample by demographic or other more project-specific factors, and upload them onto the platform the team are using to conduct research on. This platform might host a dedicated research community or simply a panel platform to hold the information in and create dedicated research tasks to send to research participants through email.

Step 3: Data Collection

The most recognisable stage of market research. This is where all the data collection tools and methodologies decided in the research design stage are implemented to full effect. If the research experience is designed correctly, the data gained in this stage will be accurate and relevant, ready for insight teams to analyse and pull directly actionable insights for stakeholder use.

There are numerous data collection tools and methodologies available to the  modern insight professional. Common market research methods include:

• Online, telephone and street surveys
• Online and in-person focus groups
• Written or online diary studies
• Smartboards and image markup
• Long-term, pop-up and listening communities
• Traditional, mobile and web ethnographies
• Biometric response research
• Wearable-based research
• Vox pops and video surveys
• Social media intelligence
• Augmented reality-based testing
• Gamification research

It’s hard to name all of the market research methods and tools in existence because there are so many. The tools and methods mentioned here are the ones used most often, or the ones most requested in the insights industry, and while they are varied in how they collect data, all of them provide either quantitative or qualitative data for research analysis.

Step 4: Data Analysis and Insight Generation

This is the second most recognised stage of the research process, where all the hard work collecting the data comes to light and is seen in full. The data collected in the previous stage needs to be accurate, otherwise, the insights generated at this stage of the research experience will be worthless and irrelevant to the stakeholder situation, and thus will be a waste of time, money, and effort.

For quantitative data handling, statistical analysis is the primary method of analysis. Cross-referencing data from tables, charts, and graphs to interpret the clear meaning and determine any correlations or causations of consumer behaviour. However, this mathematical ability doesn’t always come naturally, and so there are a number of statistical tools out there to help researchers gain more traction in this particular arena. Tools such as FlexMR’s NumbersMR produces both simple and complex data tables for better analysis, and graphical representation at the push of a button to make statistical analysis more available to stakeholders as well as researchers.

For qualitative data, this analysis can be slightly trickier. Qualitative data analysis can be objective but is also rooted in subjective interpretation. However, because of the more open content of the data, it can be easier for even non-researchers to derive a few insights from the raw data.

Because of recent innovations in qualitative data collection, there are up and coming methods of qualitative data analysis to match the quality of the incoming data. Video analysis tools now have a prominent place in the market researchers’ arsenal with the rise of video data collection. Tools such as our own VideoMR are rapidly gaining an appreciation for their streamlining of qualitative video analysis processes, with features such as auto-transcription and clip/montage creation making it easy to analyse and group content together, as well as provide a great new format for video clips for more engaging, connective, and immersive insight reports.

Step 5: Insight Reporting and Activation

There is a myth outside of the research world, that the research experience ends once the report has been handed over. This myth was brought to life and perpetuated through previous experience of early market research when that might have been true for most stakeholders and insight professionals; however the world has moved on, and the market research industry can offer so much more than simple insights. We are beginning to now offer the true power of knowledge with ways in which the insights provided can be activated.

To master insight activation is to harness the true power of market research and make positively impactful decisions in real-time. The best way to help this happen is to inject creativity into your reporting and be consistent in your communication.

There are a few ways we can boost the interest level of stakeholders in insight reports:

• Using video , animation, and graphic images can bring a whole new level of interest to a research report. Whether it’s using video clips of research participants for better connectivity or using the medium of video to communicate the report itself, video, animation, and graphical imagery are proven to easily engage audiences on thought-provoking topics.
• Interactive insight sessions are a great way to break through the barriers between stakeholders and insight teams. With in-person or online insight workshops and forums, researchers can deliver the insights face-to-face with stakeholders and take the time to explain the insights generated and answer any questions stakeholders have.
• Using creative methods such as interpretive art to represent insights and tell the story in physical form. Art is a powerful form of storytelling and has been proven through our Insight as Art programme to engage stakeholders in insights through intrigue and interpretation.
• Storytelling techniques are great for engaging even the most disconnected of audiences, enrapturing them in the respondents, scenarios, and challenges of the research experience through created characters, settings, and narrative plot.

Customisation is the key to a truly impactful insight report; insight teams need to understand how stakeholders like their insights communicated and what engages them in order to make the best report possible. To help, we’ve created a simple template to help insight teams present impactful results in the research report.

Now that we’ve established a few different reporting techniques, we need to talk about the importance of consistent communication. Embedding the right communication channels and practices between stakeholders and the insight team is incredibly important for the success of the research experience. Without communication , the connection between stakeholder and insight report will vanish, as will the actionability and memorability of the insights contained within the report, meaning that the impact of the insights will be zero.

There are a few communication tactics insight professionals use regularly within stakeholder organisations; for example, regular insight newsletters, insight forums and workshops, insight immersion days, and even creating data warehouses to break down departmental silos that are detrimental to the productivity of stakeholders teams throughout the organisation.

Examples of Effective Research

Today, research is considered an essential part of many strategic processes. From new product development to advertising effectiveness, brand loyalty and market expansion. Here are a number of examples of how effective market research can have a real impact on your business.

1. The Caravan and Motorhome Club

The Caravan and Motorhome Club (CMC) use market research wisely for future-proofing their business, making sure that they’re changing with the times and in accordance with their own members’ behaviours so they can provide the best services possible.  

As they operate distinctly in both the tourism and automotive industries, their recent attentions have turned to sustainable camping in the response to the advancements made to electric and hybrid technology development and the growing concerns for more environmentally friendly forms of camping.

In the InsightHub, the CMC used qualitative focus groups to gain intelligence into how their members are currently using electric and hybrid vehicles, as well as their thoughts on the future of this use in domestic and international tourism. With their ultimate purpose to use the insights to redevelop a current campsite into a sustainable one, the insight team also used image-based stimuli to spark conversations on the practicalities of developing a campsite for electric and hybrid vehicles for a more sustainable future.

Find out more about the insights the CMC gained in our case study here .

2. Specsavers

Specsavers have a long-term research panel dedicated to insight generation on a variety of different topics. Most recently and notably, the Specsavers insights team used online quantitative tools to gain some insights to inform their ‘Don’t Lose The Picture’ glaucoma health campaign, as well as glasses product testing.

Being a multi-national health service as well as a retail brand, Specsavers are recognised experts in their field of optometry and audiology, and they must remain seen as these experts while also balancing a certain amount of self-promotion to be successful in both endeavours. Their glaucoma health campaign needed to balance marketing and health awareness tactics in order to push people at risk of glaucoma to take action to prevent it from happening - and that is why they conducted market research with a sample of their customers on their research panel to make the most effective campaign since their renowned ‘Should Have Gone to Specsavers’ adverts.

To learn more about their success and the outcome of their survey research, read the case study here .

3. The Coventry Building Society

The Coventry Building Society, like all building societies, are a member-led financial institution . Their members are their stakeholders, and as such are directly involved with the strategic decision-making within the organisation through market research. The Coventry’s long-term research community use primarily qualitative research tools to relate feedback on a variety of topics from the strategic trajectory of the organisation to their general communication strategies and customer experience.

With such direct involvement and the use of new research methodologies that are purpose-built for listening to customer insights (participant-led research rather than researcher-led), this has led The Coventry to build an award-winning standard of customer experience excellence - their challenge now is to maintain this excellence by building customer experience solutions that work for everyone.

To find out how their research is going, take a look at our case study here .

Insights Empowerment and Efficiency 

Insights empowerment is the key to realising a business’ potential. Creating a culture of insights within organisations and connecting stakeholders closer to customers and consumers can revolutionise decision-making processes, with stakeholders able to make decisions more accurately in real-time through consistent access to powerful insights. 

FlexMR has designed its trademark Insights Empowerment Framework to help identify clear steps in a business’ trajectory to improve in the domains of efficiency , scale, and reach. In other words, how efficiently insights are produced and communicated across the organisation, how much they’re able to influence stakeholders that come across them, and how many stakeholders actually have access to them.

This game-changing way of thinking addresses the three issues insight teams face when working with stakeholders throughout their organisation and works to improve them in a timely fashion, so their insights are used to their full potential within the organisation and driving transformational change .

Find out more about FlexMR’s Insights Empowerment Framework and how it can help revolutionise your strategic decision-making processes here .

About FlexMR

We are The Insights Empowerment Company. We help research, product and marketing teams drive informed decisions with efficient, scalable & impactful insight.

About Emily James

As a professional copywriter, Emily brings our global vision to life through a broad range of industry-leading content.

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Understanding Market Research: Everything You Need to Know

Appinio Research · 13.12.2022 · 19min read

Conducting market research is the best way to ensure the success of your business idea, but it can seem daunting at times. Appinio got your back and came up with your ultimate guide for all the things market research, from the most common market research methodologies to how to identify the right method for your business case, everything you need to know is down below, keep reading.

What is market research?

Market research is the process of gathering information about consumers or markets. This information can be used to help businesses discover  more about their customers, determine what products or services to offer, and gauge customer interest in new products or services. There are different ways to do market research. Some common types of market research include primary research , secondary market research , market intelligence, market segmentation, market sizing or  market forecasting.Regardless of the method you use, market research helps you develop your products or services, and ensures that you are meeting the needs of your customers. 

If you are looking to conduct market research on your own, there are a variety of tools and resources available to help you get started. For example, online market research platforms can make it easy to gather information from large groups of people, while market data and analysis tools can help you to understand trends, market size, and competitor activity. Whether you choose to do market research on your own or work with a market research firm, the key to success is understanding the needs of your customers and adapting your products or services accordingly. With the right market research, tools and strategies, you can gain  valuable insights into your market and customers, helping you to achieve success with your business ideas. 

How is market research used?

Market research is used by businesses of all sizes to gain actionable insights into their target markets and customers. This information can be used to inform product development, help to identify new market opportunities, understand customer needs and preferences, and track competitor activity. Usually companies use market research to make well informed decisions, improve their products and services, uncover trends and opportunities, and understand consumer behavior.

Who can benefit from market research?

Any business can benefit from market research, whether they are a small startup or a large multinational corporation. Market research helps businesses to better understand their target customers, identify interesting opportunities, and gain insights into consumer behavior.Any company would benefit from knowing what their customers want, how they rank against their competitors or validate their business decisions.

How can companies profit from market research?

Conducting market research process means helping businesses to better understand their customers and trends, identifying new product or service ideas, determining the demand for existing products or services, optimizing marketing campaigns and messaging, understanding consumer behavior and preferences, tracking competitor activity and market share, and ultimately improving sales, customers’ loyalty and brand image overall.

How to conduct market research

So how does the market research process work? There are a variety of tools and techniques that you can leverage, including customer surveys, focus groups , market analysis, and online platforms. Whatever approach you choose, it is important to stay organized and ensure that your data is accurate and reliable. With the right market research strategy in place, you can gain actionable insights into your market and customers, helping to ensure that your business or business idea is positioned for success. Here are our tips for conducting your own market research project successfully including setting clear goals and objectives, choosing the right methodologies based on your market and budget constraints, leveraging online market research tools to gather information from large numbers of people quickly and easily, and analyzing and interpreting your market data to make well informed decisions for your business. With the right market research strategy and tools, you can gain valuable insights into your market and customers, helping you to build a strong foundation for your business decisions and future growth. 

Step one: define your research objectives

The first step in the market research process is to clearly define your goals and objectives. What do you want to know? Are you planning to launch a new product on the market or are you planning to launch your hero product in new unexplored markets? Depending on what you want to uncover you would need to include identifying market trends, market size, customer demographics and psychographics, competitor activity, and more.

Step two: choose the market research methods 

Once you define your research objectives, you need to pick the tools that are best suited to your needs. Are you testing a new logo or a new name? Then you may need quite a few people and the best way to reach them could be a survey. Do you want to know consumers attitudes around your existing products? Then face-to-face interviews could be the way to go.

Step three: collect and analyze 

Finally, you need to organize all the precious data into digestible data to provide actionable insights into your market and customers, usually in the form of a report and then you and your team will be able to use this information to make informed decisions, improve your business strategy and ultimately grow.

Looking forward to starting your first market research project already? Sign up for Appinio today!

Types of market research

There are quite a few types of market research but the first differentiation to make is between primary and secondary market research. Primary research is when a company collects information directly from its customers or market, while the latter involves gathering data that has already been collected by other companies or organizations. 

Primary research

Primary market research can include surveys, focus groups, market analysis tools such as SWOT or PESTLE analysis, and online platforms like Google Trends. The advantages of primary research can include a more direct understanding of customer needs and preferences, gaining market insights that are not available through secondary market research, and being able to collect specific data about the market that is most relevant to your business. The disadvantages entail time and resources spent on this type of research. Depending on the research method you may need quite some time to complete all data collection and it could also turn out to be quite costly in terms of money, as you need to invest in recruiting the people that will reply to your questions.

Secondary research

Secondary research methods, such as analyzing industry data that has already been collected by other companies or organizations, can be an efficient way to gain a broad overview of the market and identify trends, gaps in knowledge, and more. This is often easier and less expensive to conduct than primary market research. It also allows businesses to access a wealth of market data that has already been collected by other organizations and companies, which can be useful for benchmarking, identifying trends, and gaining key insights into market conditions and customer needs. However, since this information may not be relevant to your specific business needs, it is important to always triangulate your data by combining results from multiple sources.

Qualitative market research

Another important distinction is between qualitative and quantitative market research.Qualitative research is a qualitative approach to quantitatively analyzing your market and customers. It can give you great insights into customer needs and preferences, helping you to craft better products and services that meet the needs of your market. One of the main advantages of qualitative research is understanding deeply how consumers think and even being able to understand how they talk about your service and product on an everyday basis, being able to connect with your consumers on a deeper level by , quite literally, “speaking their language”.Examples of qualitative market research tools include interviews and focus groups, which can help you understand your customers' behaviors, preferences, and needs. Ethnographic studies, in-depth interviews and in general, explorative research can also be a useful tool for gaining a deeper understanding of your market and customers. 

Quantitative market research

Quantitative research is a systematic empirical investigation of quantifiable phenomena through the use of statistical, mathematical or computational techniques. In other words, quantitative research uses numbers and mathematical formulas to analyze data collected in order to understand a given problem or question. It is often used in the social sciences, business, and marketing research. This type of research has several advantages over other types of market research, including its ability to provide statistically significant results. This approach can involve gathering quantifiable data through techniques such as surveys, tracking customer activity with analytics tools, analyzing sales numbers and revenue trends, or testing new product ideas with pilot programs. Quantitative data can be used to measure customer satisfaction and loyalty. One very common example of quantitative research in marketing is the use of surveys to measure customer satisfaction. Surveys can be used to ask customers about a variety of topics, such as how satisfied they are with a product or service, how likely they are to recommend it to others, and what changes they would like to see. Quantitative market research can be an effective way to gain valuable insights into your market, customers, and competitive landscape.No matter what type of market research you choose to conduct, it is important to always stay focused on your goals and business strategies. By understanding the current state of your market, you can make well informed decisions about how to grow and expand your business in the future.It is important to keep in mind that market research is a tool, not an endpoint. Always be sure to review your market research findings carefully and critically, and use them as a guide rather than as a definitive answer to your business questions. With the right approach, market research can be an incredibly powerful tool for success providing a competitive advantage in today's marketplace.

What different methodologies can be used? 

There are many different market research methodologies that can be used, depending on the specific business needs and goals. As we mentioned above, some of the most common market research techniques include surveys, focus groups, interviews, questionnaires, field experiments, ethnographic research, explorative research, market testing, market intelligence reports, and industry analysis. Each of these methods has its own advantages and benefits, so the market research approach that is most appropriate for your business will depend on a variety of factors, including the type of market you are targeting, your budget and timeline, and the specific information you hope to glean from market research. Ultimately, choosing the most effective market research methodology is an important decision that should be made carefully and strategically, in order to get the most value from your market research investment.

Most common market research methodologies

The field of market research is wide and the methodologies vary depending on your research objectives. Once you define what you want to find out, how you'll find it out is the next step, here is a rundown of the most common market research methods. 

Market research surveys

Surveys are a popular market research method, and can be used to gather information from both consumers' attitudes and businesses. Surveys typically involve sending out questionnaires or online surveys to large groups of people, often through email or social media platforms. They are an effective way to quickly gather large amounts of data in a relatively low-cost way. Market research surveys are a common way to gather information from customers. A survey can be administered in person, over the phone, or online. It typically includes a series of questions about the customer's needs, preferences, and buying habits.Surveys can be effective for understanding customer needs and preferences, determining market size and segmentation, and gauging customer interest in new products or services.

However, care should be taken to ensure that the questions are relevant and interesting to respondents, or they may not complete the survey. 

Interviews are a one-on-one meeting with potential customers or market segments. The interviewer asks questions about the customer's needs and preferences, as well as their purchasing habits and intentions. Interviews can be conducted in person, online or over the phone, and they offer a more personal interaction with customers than other market research methods as the interviewer (a.k.a.market researcher) and the interviewee can naturally discuss the topic of interest. You can choose to go for structured, semi-structured or unstructured interviews depending on the research objective, but the main advantage of interviews is the serendipity factor, even in the most structured of interviews, the interaction between interviewer and interviewee can take unexpected turns (in a good and a bad way!).Interviews can provide actionable insights into why customers make certain purchasing decisions, their needs and wants, what might persuade them to buy a particular product or service and uncover the unexpected. However, interviews are also more expensive and time consuming than other methods and they cannot provide statistically significant results.

Focus groups

A focus group involves a small group of people (typically 8-10) who are brought together to discuss a product or service. The focus group is usually moderated by market researchers, who ask questions and encourage discussion among the participants. The aim is to get feedback on what people like and don't like about the product or service, as well as their suggestions for improvement.A focus group can provide insights into how people feel about a product or service, what features they like and don't like, and what potential improvements they would like to see. However, it is important to note that focus groups cannot provide statistically significant results, so they should be used in conjunction with other market research methods. Other common market research practices include intercept interviews, mystery shopping, market scans, social listening, and online panels.

Most common use cases in market research

Segmentation, target group analysis.

One of the most common uses of market research is to segment customers or identify a specific market segment.

Market segmentation allows you to understand your target audience more deeply and identify specific groups who may be interested in your product or service. Examples of target group analysis might include identifying geographic, demographic, or psychographic profiles for different market segments.

Utility analysis / Feature Prioritization

Another common use of market research is utility analysis or feature prioritization. This method can be used to understand which features are most important to potential customers, and how different products or services stack up against each other in terms of their functionality and usability.

MaxDiff analysis

A popular method to identify features or services to prioritize is the MaxDiff analysis (Maximum Difference Scaling, also known as "Best Worst Scaling), which involves asking participants to rate different features or options, from which they are to select the best and worst alternative for them.

Based on the results, you can identify concrete preference or importance rankings. This information can then be used to inform product development decisions and prioritize features for your customer base.

TURF Analysis

The abbreviation TURF stands for Total Unduplicated Reach & Frequency. To be precise, the TURF method is not a survey method per se, but can be applied to a variety of different question types — even after the survey is already done. The aim of the method is to determine which product portfolio, marketing mix or even product variants appeal to the highest number of customers and hence, expand the potential target group.

Conjoint Analysis 

Conjoint analysis is used to understand consumer preferences and purchasing behavior.

By quantifying the relative importance of different product features, the conjoint analysis provides insights into which features are most important to potential customers and how they compare different options against each other.

This information can then be used to inform product development and marketing decisions, as well as understand customer needs and preferences in more detail.One common approach to conducting a conjoint analysis is to create multiple "choice tasks" or versions of the product, each with different features and attributes. Participants are then asked to rate each version based on their preferences, which can be quantified using statistical techniques such as regression analysis. 

Kano analysis 

The Kano analysis helps businesses understand the factors that drive customer satisfaction. By quantifying different product features and their impact on your customers, the Kano analysis will help you identify which aspects of your product or service are most important to them, as well as features that consumers see as irrelevant, or unexpected sources of value that can help set you apart from your competitors. 

Driver Analysis

A driver analysis is a market research method that helps businesses identify the key factors driving customer behavior and purchasing decisions. By quantifying different product features and their impact on customers, the driver analysis can help businesses better understand which aspects of their products or services are most important to consumers, as well as any "drivers" or key variables that drive demand for their products.

Price analysis 

Price analysis is a market research tool that helps businesses understand customer preferences and purchasing behavior around different price points. By quantifying the relative importance of different price levels, price analysis can help businesses identify the optimal pricing strategy for their products or services, as well as better understand customer demand at different price tiers.Some of the benefits of conducting price analysis include better understanding of customer preferences, more effective pricing strategies, and enhanced market insights.There are a variety of approaches to conducting price analysis.

Gabor-Granger Price Analysis

The Gabor-Granger price analysis is a market research method that uses statistical data & techniques to understand how customers respond to different pricing strategies. By quantifying the impact of different price points on customer demand. The Gabor-Granger price analysis can help businesses better understand consumer preferences and optimize their pricing strategy for maximum profitability.Some of the key advantages of Gabor-Granger price analysis include enhanced market insights, improved pricing accuracy, and more effective marketing campaigns. By understanding how customers respond to different price points, businesses can develop more targeted marketing strategies that appeal to their specific needs and preferences. Additionally, the Gabor-Granger price analysis can help businesses better understand areas where they may be missing opportunities or overcharging customers, allowing them to make more informed pricing decisions that maximize profitability. 

Van Westendorp Pricing Analysis

The Van Westendorp pricing analysis is another market research methodology that helps companies and brands understand customer preferences around different price points. By quantifying the relative importance of different price levels, Van Westendorp pricing analysis can help businesses identify the optimal pricing strategy for their products or services and gain insights into customer behavior and purchasing decisions. 

Perception and Evaluation

Implicit testing.

Implicit testing is another method for quantifying customer preferences and association. This technique involves asking participants to rate a set of products or services on various dimensions, such as quality, value, and desirability. The responses from these evaluations can then be quantified using statistical methods such as conjoint analysis and utility theory.

Best Online tools to conduct your market research project

Some of the best online tools to conduct your market research project and collect quantitative data include platforms like SurveyMonkey, Google Analytics, Qualtrics and Appinio. These tools make it easy to create an online survey, analyze data, and generate reports that can help you gain insights into your market segments.Disadvantages of market research online platforms include the potential for data bias and lower response rates from survey participants, which can impact the accuracy and reliability of your research results. Additionally, many market research platforms are subscription-based, so you will likely need to invest in a paid plan in order to take full advantage of their features and functionality. However, despite these disadvantages, online platforms offer a number of advantages that can make them a valuable tool for your market research project. First, they are often more affordable than traditional market research methods, such as focus groups and surveys. Additionally, they are quick and easy to use, and can help you generate results quickly. Finally, online platforms provide a wealth of data that you can use to analyze your target market and understand their needs and preferences.

Interested in how Appinio can help your business idea? Talk to us.

Recruitment panel partners

To conduct effective market research, you may need to work with a recruitment panel partner. Recruitment panels are groups of qualified individuals who have been selected based on specific criteria and can provide actionable insights into your target. Some of the key benefits of working with a recruitment panel partner include better understanding of your target market, more effective data collection strategies, and increased accuracy in quantifying customer preferences and behaviors as usually these partners have access to very big pools of consumers, and can often reach even very niche targets.Of course, there are also disadvantages when working with recruitment panels. One is the cost of contracting these partners, another is the potential sampling bias and other limitations that may impact the quality and reliability of your market research data, as you’re basically using a middle man to select your desired consumers.

Appinio, the all in one survey tool

If you're looking for a market research tool that can help you quickly and easily create online surveys, analyze and gather data, and generate reports, then Appinio is the perfect solution for you.Appinio is an all-in-one survey tool that makes it easy to collect data and generate beautiful charts and graphs. With Appinio, you can create surveys in minutes, and quickly analyze the results to get insights into your target market. Appinio also offers a number of handy features such as drag-and-drop question creation, automatic result analysis, and interactive graphs and charts.  One of the advantages of Appinio is that it has a large proprietary panel in more than 90 countries. This means that you can reach a large number of survey participants quickly and easily. Additionally, Appinio's panel is carefully recruited and includes only qualified individuals who can provide valuable insights into your specific market. Despite being an all-in-one platform that you can use on your own, Appinio also offers consulting services. Appinio research consultants will help you design your research, selecting the best method for your specific research needs and will guide you through the entire process.Whether you are looking to gain a better understanding of your customers' purchasing behaviors or need market sizing estimates for product positioning, Appinio has the tools and functionality you need to succeed.

So if you're ready to take your market research efforts to the next level, sign up for Appinio today!

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What Is Market Research?

With the goal of becoming a customer-focused company , organizations will follow research methods to gain a better understanding of their desired audiences and how to interact with them. Any information gathered provides insights into how companies can make their products more appealing to potential customers.  

What are the main purposes of market research?

• Knowing what people want ahead of time enables companies to make more informed business decisions.

Releasing a product or service without knowing how it will perform presents a huge risk. Market research exists to gain more insight before going all-in on a new product. Companies conduct research to determine what problems their audiences face and how their products can resolve these issues. 

Understanding customer preferences has become crucial to saving companies time and money, making market research a key component of the product development process. Rather than just releasing products into the market, businesses take the time to determine how these products will perform. This approach enables companies to spend resources more efficiently while earning the trust of consumers with more relevant products.

What are the types of market research?

• Different circumstances call for unique types of market research, which range from one-on-one interviews to focus group conversations.

Market research takes on many forms, so teams must determine the types of market research that best serve their needs. If a company wants to elicit feedback from larger samples, surveys and focus groups are ideal options. However, businesses should keep in mind that these practices deliver breadth at the expense of depth. 

Interviews cater more to companies that want to dive into specific details with customers. Unique value propositions may require these more intimate interactions as businesses pursue ways to improve customers’ experiences with their products. Observations and field tests also provide genuine customer reactions, but with a subtler approach. Companies can decide on the best method by defining the initial problem and goals for their research.

What are the steps in the marketing research process?

• Before marketing teams undertake product launches , they need to gather extensive insights into audience preferences and general market trends.

To enhance a product or service, a company must gather plenty of information on its ideal customers and competitors. Defining a target audience allows teams to get a sense of what issues customers may face and how their products can address those concerns. In addition, conducting a competitor analysis lets teams know what companies in their market are doing and how they can help their product stand out from similar ones.  

Once marketing teams sort out these details, they can focus their attention on executing a research plan. Determining the sample size and desired outcome helps members decide what type of research methods they want to employ. By following these practices, companies can craft more minimum viable products , which customers will find better suited to their needs.

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Understanding the Basics of Market Research

Marketing research is about understanding consumers, competitors, and market dynamics to make informed business decisions. While pivotal for growth, it often appears as a labyrinth of complexities. 

By breaking down marketing research's fundamental components, this article transforms this seemingly intricate process into a manageable and insightful practice. 

What Is Market Research?

Market research is a systematic process of gathering, analyzing, and interpreting information about a specific market. This includes understanding the characteristics of potential customers, the overall market size, and the competitive dynamics within that space. The primary goal is to identify opportunities, understand market challenges, and gauge the potential for products or services.

Market research can be categorized into primary and secondary research: 

• Primary research involves collecting data directly from the target audience through surveys, interviews, or observations.
• Secondary research relies on existing data from reputable sources such as government publications, industry reports, and academic studies.

Benefits of Market Research

The advantages of market research are far-reaching, empowering enterprises to unlock untapped potential and make well-informed choices. 

Minimizing uncertainty

Navigating the market without insights is akin to sailing in uncharted waters. Market research acts as a compass, providing valuable data on market conditions and customer behavior. By shedding light on the unknown, it banishes uncertainty, allowing your enterprise to make well-grounded decisions. No more second-guessing or relying on gut feelings—market research equips you with the knowledge needed to chart your course with confidence.

Identifying Opportunities

Market research helps identify unmet needs and overlooked market gaps. Armed with this information, your business can seize untapped opportunities and expand product or service offerings strategically. By staying one step ahead of the competition, your enterprise can carve out a unique space in the market and claim its share of success.

Mitigating Risks

Understanding market dynamics and potential challenges enables you to create contingency plans and make well-informed choices. By foreseeing obstacles before they appear, your enterprise can avert costly mistakes, ensuring a smoother and more assured journey to your objectives.

Enhancing Competitiveness

Market research empowers your company with a competitive edge that sharpens its ability to adapt and evolve. Armed with relevant data and insights, you can swiftly respond to shifting market trends and changing consumer demands. As competitors struggle to keep up, your enterprise can lead the way, setting the pace for innovation and progress.

Improving Customer Satisfaction

Market research bridges the gap between your company and its target audience, providing valuable insights into what makes customers tick. Armed with this knowledge, you can craft tailored offerings that resonate with your audience, leading to heightened customer satisfaction and loyalty.

Five Major Components of Market Research

Understanding and effectively leveraging market research components ensures that the process is not just a data-gathering exercise but a strategic tool that drives impactful business decisions.

Problem Definition & Research Objective

The foundation of any research lies in understanding the 'why' behind it. This step is not just about identifying a problem but also about framing it in a way that guides the entire research process. By setting clear objectives, businesses can ensure that the research remains aligned with their strategic goals, making the findings more actionable and relevant.

Research Design and Methodology

Think of this as the blueprint or roadmap for the research. It's where decisions about the type of research (exploratory or conclusive) are made. The methodology chosen, be it qualitative, quantitative, or a hybrid approach, will influence the tools and techniques employed. This phase also involves decisions about the sample—whom to survey, how many, and how to ensure the sample is representative of the larger population.

Data Collection

This phase involves gathering information from primary sources, where first-hand data is collected directly from the target audience. Additionally, secondary sources come into play, where existing data, previously collected by reputable entities, is tapped into. This meticulous process ensures that your enterprise is equipped with a robust dataset, forming the bedrock for informed decision-making.

Data Analysis

Beyond raw numbers, this phase is about uncovering the story the data tells. With the aid of statistical tools and software, data is dissected to reveal patterns, trends, and anomalies. It's here that the data transforms into insights, providing a clearer picture of the market landscape and consumer behavior.

Presentation and Reporting

Translating complex data into understandable insights is an art. This component is about packaging the research findings in a way that's both accessible and actionable for stakeholders. Whether it's a comprehensive report, a succinct presentation, or an interactive dashboard, the goal is to make the insights gleaned from the research readily usable for decision-making.

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Market Research Approaches: Qualitative, Quantitative, and Hybrid Methods

Market research is a multifaceted discipline, and the approach taken can significantly influence the insights derived. The choice between qualitative, quantitative, or a hybrid method often hinges on the nature of the research question and the depth of insight required. 

Types of Market Research

Market research is not a one-size-fits-all process. Depending on the specific objectives and the nature of the information sought, different types of research methodologies can be employed. Each type offers unique insights and serves distinct purposes. 

Exploratory Research

Ideal for situations where the problem is not clearly defined, exploratory research seeks to understand the broader picture. It's more about discovering new insights or understanding underlying motivations. Methods like focus groups or in-depth interviews are commonly used, providing qualitative insights.

Descriptive Research

As the name suggests, this type focuses on describing characteristics of a market or a demographic. It answers questions like "What is the average age of our product's user?" or "How often do consumers in a particular region make a purchase?" This research often employs large-scale surveys and is quantitative in nature.

Causal Research

When businesses need to understand cause-and-effect relationships, causal research is the go-to. For instance, "How does a change in product price impact its sales?" This type often involves experiments or controlled tests to determine the impact of one variable on another.

Comparative Research

This type of market research aims to compare two or more groups to identify differences or similarities. It's especially useful when launching a new product or entering a new market. By comparing with existing products or competitors, businesses can identify potential gaps or opportunities.

Predictive Research

Leveraging historical data and trends, predictive research aims to forecast future outcomes. Advanced statistical techniques and models are often employed to predict future sales, market growth, or even potential market disruptions.

Applied vs. Basic Research

 While applied research focuses on addressing specific business problems or decisions, basic research is broader, aiming to increase the general knowledge about markets without immediate practical application.

Whether it's understanding consumer motivations through qualitative studies, gauging market trends with quantitative data, or leveraging the comprehensive insights of a hybrid approach, the value of market research is undeniable.

However, the true strength of market research lies not just in gathering data but in its strategic application. By integrating these insights into business strategies, companies can anticipate market shifts, tailor their offerings, and ultimately drive sustainable growth. As businesses continue to adapt and innovate, market research remains a steadfast ally, illuminating the path forward and ensuring success in an increasingly competitive marketplace.

Frequently Asked Questions

What is market research, and why is it important for businesses.

Market research is a way to collect and study data about a specific market, industry, or audience. It helps businesses understand customer preferences, market trends, and make better choices for success.

Why should businesses conduct market research?

Market research is essential for businesses because it reduces uncertainty, finds new opportunities, minimizes risks, boosts competitiveness, and improves customer satisfaction.

What are the main benefits of market research for businesses?

• Giving clarity in decision-making by providing useful information.
• Identifying hidden chances for growth and expansion.
• Reducing potential risks and preventing costly mistakes.
• Gaining a competitive edge in the market.
• Understanding customers better and satisfying their needs.

What are the key components of market research?

• Defining the Problem: Setting clear goals and questions for research.
• Designing the Research: Planning how to gather data effectively.
• Data Collection: Collecting information from primary and secondary sources.
• Data Analysis: Analyzing and finding patterns in the collected data.
• Interpretation and Reporting: Making sense of the results and presenting them clearly.

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The 8 types of market research: definitions, uses and examples.

13 min read What are the different types of market research that can help you stay ahead of the curve with your marketing strategy? Understand how to use each type, and what the advantages and disadvantages are.

Market research  (also called marketing research) is the action or activity of gathering information about market needs and preferences. This helps companies understand their target market — how the audience feels and behaves. There are 8 variations of market research in our lineup that we’ll explore in more detail.

Download our free eBook: How to rethink and reinvent market research

A number of the tools for carrying out market research can be classed under two main categories: primary and secondary market research. Let’s start our list by exploring these two types first.

1. Primary research

Primary research is research that you collect yourself but going directly to the target market through a range of methods. Because it is data you create, you own the data set.

Two types of results — exploratory information (determines the nature of a problem that hasn’t yet been clearly defined) and conclusive information (carried out to solve a problem that exploratory research identified) — from participants are collected as raw data and then analysed to gather insights from trends and comparisons.

This method is good for getting the views of a lot of people at one time, especially when time is short, but it comes with its own management issues. The interviewer must prepare a way to gather answers and record these, while engaging in conversation with many people.

Participants may be affected by the group setting, either from acquiescence bias (the desire to say yes to please the interviewer), dominance bias (stronger participants can alter the results from less dominant participants) or researcher bias (where the research leads or impacts the participant responses indirectly).

This provides a structured setting where the interviewer can listen to what’s being said and investigate further into an answer. The interviewer can also pick up on non-verbal cues from body language can help the interview understand where to deep-dive and broaden their understanding.

However, some of the same biases (acquiescence and researcher) still exit in this format. The method is time consuming to do the interviews and collect the data afterwards.

A survey is an excellent method for carrying out primary research as participants do need to be physically present with the interviewer to carry it out. The survey can be completed anywhere there is an internet connection, meaning there is flexibility for the participants to use different devices and for interviewers to contact participants in different geographical time-zones.Preparation is key, however, as the researchers must segment the market and create a list of participants to send the survey to. Hiring a panel or using existing marketing lists can help with this.

2. Secondary research

Secondary research is the use of data that has previously been collected, analysed and published (and therefore you do not own this data). An example of this for market research is:

Most information is freely available, so there are less costs associated with this kind of secondary research over primary research methods.

Secondary research can often be the preparation for primary research activities, providing a knowledge base. The information gathered may not provide the specific information to explain the results, which is where primary market research would be used to enhance understanding.

There is also a logistics planning need for a recording solution that can handle large datasets, since manual management of the volumes of information can be tricky.

Both primary and secondary research have its advantages and disadvantages, as we’ve seen, but they are best used when paired together. Combined, the data can give you the confidence to act knowing that any hypothesis you have is backed up.

Learn more about primary and secondary research methods

The next market research types can be defined as qualitative and quantitative research types:

3. Qualitative research

Qualitative market research is the collection of primary or secondary data that is non-numerical in nature, and therefore hard to measure.

Researchers collect this market research type because it can add more depth to the data.

This kind of market research is used to summarise and infer, rather than pin-points an exact truth held by a target market. For example, qualitative market research can be done to find out a new target market’s reaction to a new product to translate the reaction into a clear explanation for the company.

4. Quantitative research

Quantitative research is the collection of primary or secondary data that is numerical in nature, and so can be collected more easily.

Researchers collect this market research type because it can provide historical benchmarking, based on facts and figures evidence.

There are a number of ways to collect this data — polls, surveys, desk research, web statistics, financial records — which can be exploratory in nature without a lot of depth at this stage.

Quantitative market research can create the foundation of knowledge needed by researchers to investigate hypotheses further through qualitative market research.

Learn more about qualitative and quantitative research

The next four variations of market research are specific to topics areas, that bring about specific information.:

5. Branding research

Branding  market research assists a company to create, manage and maintain the company brand. This can relate to the tone, branding, images, values or identity of the company.

Research can be carried out through interviews, focus groups or surveys. For example, brand awareness surveys will ask your participants whether the brand is known to them and whether it is something they would be interested in buying.

Additional areas for brand research is also around brand loyalty,  brand perception ,  brand positioning ,  brand value  and brand identity .

The aim of research will be to understand how to know if:

• Your brand is performing in relation to other competitors
• There are areas to improve your brand activities
• There are positives to showcase to enhance your brand’s image

6. Customer research

Customer market research looks at the key influences on your target customers and how your company can make changes to encourage sales.

The aim of this research is to know your customer inside out, and continuously learn about how they interact with the company. Some themes covered by this include:

• Customer satisfaction  – Exploring what keeps customers happy, as higher customer satisfaction is more likely to lead to increased customer retention.
• Customer loyalty  – This looks at what experiences have happened to lead to greater customer loyalty across the customer lifecycle.
• Customer segmentation research  – Discovering who the customers are, what their behaviour and preferences are and their shared characteristics.

Relevant desk research may look at historical purchase records,  customer journey mapping , customer segmentation, demographics and persona templates.

Primary research, such as  NPS  and  customer satisfaction surveys , or customer satisfaction interviews at the end of customer support calls, can also give more details.

7. Competitor research

Competitor market research is about knowing who your competition is and understanding their strengths and weaknesses, in comparison to your organisation. It can also be about your competitive offering in the market, or how to approach a new market.

The aim of this research is to find ways to make your organisation stand out and future planning through horizon scanning and listening to customer preferences.

For example, for competitive analysis, researchers would create a SWOT for your business and your competitors, to see how your business compares.

Primary research could interview customers about their buying preferences, while secondary sources would look at competitor’s market dominance, sales, structure and so on. With this thorough analysis, you can understand where you can change to be more competitive, and look for ideas that make you stand out.

8. Product research

Product market research is a key way to make sure your products and services are fit for launching in the market, and are performing as well as they can.

The aim of this research is to see how your product is perceived by customers, if they are providing value and working correctly. Ideas can also be formed about upgrades and future product development.

There are a number of avenues within product research:

• Product branding  – Does the product brand and design attract customers in the intended way?
• Product feature testing  – this can happen at various stages of development with target markets (in early development, between versions, before product launch, etc.) to check if there are positive reaction to new or improved features
• Product design  thinking  – what solutions would solve your customers’ current or future problems?
• Product marketing  – Do the marketing messages help your product’s memorability and saleability, or can they be improved?

Primary research methods have a clear advantage in this kind of market research: Surveys can ask for rankings on the popularity or usefulness of features or conduct conjoint analysis, while in-person observation interviews (where the participant can handle a product) can be particularly useful in seeing what customers do with the product in real time.

How to use market research types in your company

In a good marketing strategy, it’s preferable to have a mixture of data across:

• Qualitative and quantitative research
• Primary and secondary research
• Your specific topic area or area of focus

With these three components, you can make sure your market strategy gives you a complete picture of your market’s  operational data and experience data , —  what  your market does and  why .

Economical experience data (O data)

This type of experience data is quantitative in nature (including operations, featuring sales data, finance data and  HR data ). As it can be quantified into numerical values, it can be measured over and over, providing datasets.

There is the opportunity to use a data-driven approach to understanding the results and making predictions based on historical trends.

This sort of data can be measured more easily than emotions and feelings. But it can only tell you about past activities and what happened. It can’t tell you what will happen in the future and why things will happen — this is where X data comes in.

Emotional experience data (X data)

This type of experience data seeks to find reasons to explain emotional decisions and how brands ‘sit’ in people’s minds. In this way, this data is qualitative in nature.

Companies that have X data have a ‘mental advantage’ over other companies,  as they are able to understand the perceptions of the customer, their needs and values.

When you have tangible insights on the audience’s needs, you can then take steps to meet those needs and solve problems. This mitigates the risk of an experience gap – which is what your audience expects you deliver versus what you actually deliver.

eBook: How to rethink and reinvent market research

Related resources

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Market Research: A How-To Guide and Template

Discover the different types of market research, how to conduct your own market research, and use a free template to help you along the way.

MARKET RESEARCH KIT

5 Research and Planning Templates + a Free Guide on How to Use Them in Your Market Research

Updated: 02/21/24

Published: 02/21/24

Today's consumers have a lot of power. As a business, you must have a deep understanding of who your buyers are and what influences their purchase decisions.

Enter: Market Research.

Whether you're new to market research or not, I created this guide to help you conduct a thorough study of your market, target audience, competition, and more. Let’s dive in.

Table of Contents

What is market research?

Primary vs. secondary research, types of market research, how to do market research, market research report template, market research examples.

Market research is the process of gathering information about your target market and customers to verify the success of a new product, help your team iterate on an existing product, or understand brand perception to ensure your team is effectively communicating your company's value effectively.

Market research can answer various questions about the state of an industry. But if you ask me, it's hardly a crystal ball that marketers can rely on for insights on their customers.

Market researchers investigate several areas of the market, and it can take weeks or even months to paint an accurate picture of the business landscape.

However, researching just one of those areas can make you more intuitive to who your buyers are and how to deliver value that no other business is offering them right now.

How? Consider these two things:

• Your competitors also have experienced individuals in the industry and a customer base. It‘s very possible that your immediate resources are, in many ways, equal to those of your competition’s immediate resources. Seeking a larger sample size for answers can provide a better edge.
• Your customers don't represent the attitudes of an entire market. They represent the attitudes of the part of the market that is already drawn to your brand.

The market research services market is growing rapidly, which signifies a strong interest in market research as we enter 2024. The market is expected to grow from roughly $75 billion in 2021 to $90.79 billion in 2025 .

Free Market Research Kit

• SWOT Analysis Template
• Survey Template
• Focus Group Template

You're all set!

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Why do market research?

Market research allows you to meet your buyer where they are.

As our world becomes louder and demands more of our attention, this proves invaluable.

By understanding your buyer's problems, pain points, and desired solutions, you can aptly craft your product or service to naturally appeal to them.

Market research also provides insight into the following:

• Where your target audience and current customers conduct their product or service research
• Which of your competitors your target audience looks to for information, options, or purchases
• What's trending in your industry and in the eyes of your buyer
• Who makes up your market and what their challenges are
• What influences purchases and conversions among your target audience
• Consumer attitudes about a particular topic, pain, product, or brand
• Whether there‘s demand for the business initiatives you’re investing in
• Unaddressed or underserved customer needs that can be flipped into selling opportunity
• Attitudes about pricing for a particular product or service

Ultimately, market research allows you to get information from a larger sample size of your target audience, eliminating bias and assumptions so that you can get to the heart of consumer attitudes.

As a result, you can make better business decisions.

To give you an idea of how extensive market research can get , consider that it can either be qualitative or quantitative in nature — depending on the studies you conduct and what you're trying to learn about your industry.

Qualitative research is concerned with public opinion, and explores how the market feels about the products currently available in that market.

Quantitative research is concerned with data, and looks for relevant trends in the information that's gathered from public records.

That said, there are two main types of market research that your business can conduct to collect actionable information on your products: primary research and secondary research.

Primary Research

Primary research is the pursuit of first-hand information about your market and the customers within your market.

It's useful when segmenting your market and establishing your buyer personas.

Primary market research tends to fall into one of two buckets:

• Exploratory Primary Research: This kind of primary market research normally takes place as a first step — before any specific research has been performed — and may involve open-ended interviews or surveys with small numbers of people.
• Specific Primary Research: This type of research often follows exploratory research. In specific research, you take a smaller or more precise segment of your audience and ask questions aimed at solving a suspected problem.

Secondary Research

Secondary research is all the data and public records you have at your disposal to draw conclusions from (e.g. trend reports, market statistics, industry content, and sales data you already have on your business).

Secondary research is particularly useful for analyzing your competitors . The main buckets your secondary market research will fall into include:

• Public Sources: These sources are your first and most-accessible layer of material when conducting secondary market research. They're often free to find and review — like government statistics (e.g., from the U.S. Census Bureau ).
• Commercial Sources: These sources often come in the form of pay-to-access market reports, consisting of industry insight compiled by a research agency like Pew , Gartner , or Forrester .
• Internal Sources: This is the market data your organization already has like average revenue per sale, customer retention rates, and other historical data that can help you draw conclusions on buyer needs.
• Focus Groups
• Product/ Service Use Research
• Observation-Based Research
• Buyer Persona Research
• Market Segmentation Research
• Pricing Research
• Competitive Analysis Research
• Customer Satisfaction and Loyalty Research
• Brand Awareness Research
• Campaign Research

1. Interviews

Interviews allow for face-to-face discussions so you can allow for a natural flow of conversation. Your interviewees can answer questions about themselves to help you design your buyer personas and shape your entire marketing strategy.

2. Focus Groups

Focus groups provide you with a handful of carefully-selected people that can test out your product and provide feedback. This type of market research can give you ideas for product differentiation.

3. Product/Service Use Research

Product or service use research offers insight into how and why your audience uses your product or service. This type of market research also gives you an idea of the product or service's usability for your target audience.

4. Observation-Based Research

Observation-based research allows you to sit back and watch the ways in which your target audience members go about using your product or service, what works well in terms of UX , and which aspects of it could be improved.

5. Buyer Persona Research

Buyer persona research gives you a realistic look at who makes up your target audience, what their challenges are, why they want your product or service, and what they need from your business or brand.

6. Market Segmentation Research

Market segmentation research allows you to categorize your target audience into different groups (or segments) based on specific and defining characteristics. This way, you can determine effective ways to meet their needs.

7. Pricing Research

Pricing research helps you define your pricing strategy . It gives you an idea of what similar products or services in your market sell for and what your target audience is willing to pay.

8. Competitive Analysis

Competitive analyses give you a deep understanding of the competition in your market and industry. You can learn about what's doing well in your industry and how you can separate yourself from the competition .

9. Customer Satisfaction and Loyalty Research

Customer satisfaction and loyalty research gives you a look into how you can get current customers to return for more business and what will motivate them to do so (e.g., loyalty programs , rewards, remarkable customer service).

10. Brand Awareness Research

Brand awareness research tells you what your target audience knows about and recognizes from your brand. It tells you about the associations people make when they think about your business.

11. Campaign Research

Campaign research entails looking into your past campaigns and analyzing their success among your target audience and current customers. The goal is to use these learnings to inform future campaigns.

• Define your buyer persona.
• Identify a persona group to engage.
• Prepare research questions for your market research participants.
• List your primary competitors.
• Summarize your findings.

1. Define your buyer persona.

You have to understand who your customers are and how customers in your industry make buying decisions.

This is where your buyer personas come in handy. Buyer personas — sometimes referred to as marketing personas — are fictional, generalized representations of your ideal customers.

Use a free tool to create a buyer persona that your entire company can use to market, sell, and serve better.

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Market Research: Meaning, Types, Methods and Examples

Today's entrepreneurship landscape is very fast-paced. Consumer demands and market conditions change frequently, often predetermining the product's chances for success or failure. And although following your intuition can sometimes help, when it comes to business where a lot is at stake, making factless calls is almost equal to using a Magic 8 ball.

What should business owners do to withstand the competition and stay afloat among all the unpredictability? Repeatedly conducting market research could be the answer. Like a skilled detective, teams must take a magnifying glass, gather evidence, and look into the data and recent findings to find clues and invaluable insights to unravel fundamental mysteries.

The bottom line here is that thorough investigation can lead to a deeper consumer understanding and more informed decisions. So, if you're ready to put on your detective trench coat, keep browsing the page, as we'll give the definition of market research, provide answers to questions like what is market research necessary for, go over the various types of market research, common methods, and provide examples.

What Is Market Research?

Giving the market research definition, it refers to the process of investigating customer behavior, client preferences, market trends, industry intricacies, and various competitive landscapes . This is a systematic and methodical process, which can help bring valuable insights to light. By navigating through the labyrinth of data and analyzing the findings, teams may gather and piece together the clues to base their decisions on.

What else does the meaning of market research imply? This approach is used to omit guesswork and raises the lid on multiple things like:

• customer preferences;
• product appeal;
• existing market trends;
• current competitors, their strengths or weak spots.

To obtain such information, teams apply various techniques, including surveys, interviews, competitor analysis , among others. In the end, it empowers organizations by revealing answers to many questions, regardless of whether the team is only going through proof of concept , moving toward project planning and the discovery phase , or upgrading or modifying the product.

Why Is Market Research Important? 

As you see, it's sort of a detective-like quest to solve a confusing case that requires clue allocation, studying the "suspect" behavior, and deciphering the obtained information. It isn't an easy process, and it requires a lot of time and effort. So what is market research needed for, and which business gains does it bring? Here are several notable points. Email validation plays a crucial role in ensuring the accuracy, deliverability, and effectiveness of market research efforts by maintaining a clean and reliable database of email addresses. Employing proper email validation methods and bulk email verifier tools can contribute to the success of market research campaigns.

1. Getting to Know the Target Audience

Market research makes it possible to gain a comprehensive understanding of the market size and target audience. After all, you need to clearly identify who can find your offering useful and know all the ins and outs of whom you're building your product for . This includes their behavior, desires, expectations, needs, pain points, aspirations, and buying habits.

2. Improving the Product or Offering

When you're aware of which customer needs are unmet, it becomes much easier to address them. Hence, market research becomes leverage for tailoring products to better meet specific client demands , needs, and desires.

This certainly strengthens the creation process at all stages of the product development life cycle . Plus, it helps reinforce the sales and marketing strategies and the product itself (from packaging and positioning to pricing, monetization paths, etc.).

3. Informed and Strategic Decision-Making

As follows from the above, making calculated, data-driven decisions that are backed by facts (instead of your gut feeling) can accelerate other vital business processes that don't necessarily have to deal with the product directly. Because market research implies in-depth analysis, not surface-like observations, data unveils various patterns and possibly hidden opportunities , which can define the entire business trajectory. To streamline the process of organizing market data, you can consider exploring Google Sheet alternatives to foster efficient collaboration among team members involved in the analysis processes.

4. Shaping the Business Plan

Surely, market research can be considered one of the pillars of business strategy creation. Such data provides a sturdy foundation for planning business development steps and crafting an optimal product development roadmap . It also allows for making more accurate project estimations and reduces the chances of making non-precise assumptions that will be completely off the mark.

5. Reducing Risks

Like a guiding compass, market research may enable team members to avoid uncalled-for risks . For starters, it often helps uncover possible pitfalls, allocate potentially hazardous areas, or identify sketchy moves.

Moreover, it can minimize risks related to an ineffective product or MVP launch . For example, it could signal an untimely release or, even more importantly, the threat of launching something people don't need or that doesn't resonate with their expectations. Certainly, this saves invested resources like time, effort, and money from being put to waste.

6. Helping Teams Learn

Undoubtedly, market research is a versatile source of knowledge . It flags what you're doing right or wrong and illuminates the paths that can be taken. Gathering feedback and measuring customer satisfaction can assist in evaluating how effective a promotional campaign is, what to improve in the product, or how to spend the budget more optimally.

7. Becoming More Flexible and Adaptable

Agility is an essential component of a successful business, and market research can also expose the necessity for a strategic adjustment or business pivot . Such data grants teams the chance to anticipate shifts and adapt to the changes in due time. This can not only ensure that you're staying ahead of market trends but also that the product and offering remain relevant.

8. Gaining a Competitive Advantage

Of course, businesses strive to obtain a competitive edge, and that won't be possible if you don't understand the competitive landscape . Who are your competitors? What are they doing? How are they getting on? Do they have any visible strong sides or weaknesses?

Market research definitely lends a helping hand in identifying market gaps . It hints at untapped opportunities to try seizing and how to amend the strategy to differentiate your product in the market and put your best foot forward to help it win over clients and stand out.

Types of Market Research

Just as detectives, business owners have to use fragments of the data puzzle to see the full picture and perspective. What are the three types of market research? In a broad sense, we can actually distinguish four. Below, we describe a few main categories or approaches to how research can be conducted based on its data source, focus, or purpose.

Primary Research

There are different types of market research, but primary research deals with gathering original data from firsthand sources to obtain new, tailored, and business-specific insights. For instance, teams can collect information from:

• their target audience directly via observations, interviews, surveys, personal one-on-one contact;
• controlled experiments (held for hypothesis testing or data gathering purposes or to get an answer to a specific question or objective).

Secondary Research

What’s for secondary research, such types of market research rely on your own historical data and previous findings or on data that was collected by someone else . It implies analyzing and even synthesizing data that already exists, shortening the time and the required resources to gather the information and offering a broader perspective. Here are some things that may serve as sources for analysis:

• your own previous research results;
• industry reports;
• research publications;
• data analysis and statistics by government agencies;
• public records;
• online databases;
• statistical repositories;
• market studies.

However, it is crucial to keep in mind that the data may have originally been collected for a different purpose. It can be handy if you want to explore trends or validate what you've discovered from your own primary research.

Quantitative Research

The market research types can also be distinguished by being either quantitative or qualitative. The former places an emphasis on quantity, that is, it's exploratory market research that involves the collection and analysis of numerical data and objective measurements . Data can be collected from:

• surveys or polls with predetermined responses;
• questionnaires with closed-ended questions;
• experiments, regression or correlation analysis;
• and other sources.

As a result, teams get statistical insights that make it possible to compare, generalize, or make conclusions using a rather large sample size. 

Qualitative Research

Mentioning qualitative types of market research, they place emphasis on digging deep to find answers to specific questions based on non-numerical data , such as the points of view of select individuals. In this case, subjective experiences are under analysis with the aim of allocating patterns, getting extensive insights, and generating hypotheses.

For instance, to get descriptive insights and obtain business-specific answers to many "whys", teams can: 

• hold in-depth interviews with open-ended questions;
• run detailed opinion polls in focus groups to understand the users' motivation, behavior, or attitude toward something.

Now that we've shed light on the question of "what are the types of market research", as an additional tidbit, it is worth noting that both primary and secondary research could be quantitative and qualitative . It depends on which analysis methods are chosen and the data sources.

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Market Research Methods

Businesses can use various techniques for collecting data and gathering insights about their competitors, target market, and industry. But how exactly do teams approach the matter? Let's take a closer look at the most common methods of market research that can help teams "crack the case".

Surveys and Polls

Surveying or asking people to give answers to a poll are quite cost-effective research options. They are best applicable for getting information from a large number of respondents. The extensiveness and depth of the questions depend on the aims.

Polls or surveys can be run in person, but the more popular online channels of distribution are email send-outs, social media, or specialized platforms. Luckily, there are lots of MVP tools that can visibly simplify the process of creating polls, questionnaires, etc.

Interviews and Focus Groups

Leveraging data from customer interviews with individuals is a first-hand source of truth that teams often turn to (as long as it's not an interrogation, right?). Just as with surveys, the size and level of detail of the interviews will vary. They can be held via video chats, phone calls, face-to-face meetings, or even in written Q&A chat format.

Focus groups, however, entail gathering a petite group of people who match the company's target customer profile or market segments. They can watch a demo, provide feedback on something, or test the product. This is also a qualitative method but assumes questioning more than one person at a time in the course of a discussion.

Observations and Usability Tests

The observation method implies taking out your detective binoculars and studying the target audience or even competitors and how they act in their natural environment. This silent tactic is generally unintrusive but can provide a pretty realistic picture of how users interact with the product and their behavior. Such methods of market research as usability testing, scrollmapping, heatmaps, clickmaps, or shop camera footage may be the "footprints" or "fingerprints" of observational research, offering in-depth insights.

Product Testing

Certainly, market research may be a challenge if you have an incomplete product or lack one on the whole. Nevertheless, there exist very simple MVP types like smoke tests, fake doors, or email campaigns. They apply simple solutions like landing pages to test user interest or collect data, contact details, and feedback. If you do have a new service or product to show, you can assess its quality and how happy people are with it by running usability tests.

Competitive Analysis

Competing with other players on the market is tough if you don't know who they are and their strengths and weaknesses. That's why competitive analysis plays an important role in the market research process and benchmarking your offering. Teams overview various business aspects of direct and close competitors, including their used business or startup digital marketing strategy, product advantages, pricing, and brand positioning. Then, they may apply these findings to differentiate their own product.

Social Media Listening

Social media platforms and forums can become a great source of data, too, if you want to reveal the latest trends or customer sentiment and desires. After choosing the most appropriate channels, teams can monitor, track, and analyze information such as comments, threads, mentions, and often discussed topics. Moreover, social media may serve as a tool for obtaining feedback, discovering opportunities, or learning about issues. You can also use social media analytics tools to delve deeper into audience insights and engagement metrics, which will help in refining your content strategy.

Brand Research

Such research revolves around brand positioning, i.e., user interaction with it, awareness, perception, etc. Teams do their best to measure customer satisfaction and brand loyalty (for instance, by studying client reviews, ratings, feedback forms, and complaints submitted to customer service, as well as metrics like the customer retention rate, repeat purchases, customer lifetime value, and others obtained from Google Analytics, Mixpanel or Amplitude ). They can then amend the product and the marketing and sales strategies correspondingly.

Data Mining

This approach highlights the analysis of big datasets to uncover vital business learnings such as prominent behavioral patterns. Multiple things can act as sources, e.g., social media, site analytics, or product performance metrics . Nonetheless, in this case, the larger the volume of assessed data, the better.

Neuromarketing

Interestingly, neuroscience has made its way into the field of research, too. It focuses on the subconscious and helps teams understand crucial things, such as how people make choices. The techniques applied include brain imaging and eye tracking to assess reactions to marketing stimuli.

Experimental Research

Additionally, teams can run various controlled experiments to test their ideas and assumptions. For instance, A/B testing, split or multivariate tests may be of great help if you want to ensure which option to select. Say, you'd like to know which landing page color scheme or CTA phrase to choose, then you randomly direct traffic to each version and, after a while, make conclusions based on user clicks and engagement.

How to Do Market Research

Now that we've overviewed the possible types of market research and the often applied methods, it's time to figure out the sequence of steps teams generally take throughout the process.

Step 1: Determine the Objective

Begin by clearly defining the purpose of why you're planning to invest time and effort into research. What reason led you to the need to conduct this market research? Who is in focus (e.g., market trends, competitors, a customer segment, or a specific buyer persona group)? What are you planning to achieve?

The "why" can be determined by lots of things like initial research to learn whether it's worth taking a shot at starting a startup or building a product, a market shift, a sudden drop in sales, or your team's overall KPIs and OKRs . The "what" should specify who is the focus of the study. Jotting it all down can be a good start. 

Step 2: Select the Best-Fit Research Strategy and Plan It

What kind of research type is best applicable to help you find answers? Which specific market research methods can be of use? What do you have enough resources for? At this point, you have to line out the plan and strategy :

• put your research hypotheses on paper;
• mark the expected results and the success/failure indicators;
• pick the ways to collect data;
• choose the best-fit types of market research and channels;
• select the groups of participants, test subjects, or respondents;
• indicate the duration of the procedure;
• possibly note the incitive or reward for participation;
• make a research plan noting the activities;
• assign responsible people;
• decide on the budget if necessary. 

Step 3: Start the Work

Next, you have to prepare the actual instruments of research . For instance, you can:

• spend time making a logical and consistent list of questions for the focus group interview;
• think though the survey and poll content (you can use Typeform or Google Forms to speed things up);
• or put together several versions of the landing page that you'll run split tests for (e.g., using VWO ).

Then, set up the tools or organize the processes that'll help you track the results and collect data.

Step 4: Analyze Collected Data

When the execution stage is complete, move on to analyzing the gathered data and interpreting the findings . Carefully study the results to try to find patterns, identify trends, and set aside repetitive insights. The evaluation process can entail:

• analyzing statistical information;
• going through interviews or survey replies one by one;
• using data visualization ;
• and other methods.

On another note, organizing a separate space to store the knowledge you've obtained thanks to market research, hypothesis tests, and other used methods is considered a best practice. Having all your data analysis reports at hand with a quick overview of what you were searching for, when, why, and the results can help keep the whole team on track, share the findings, and have a single source to return to later.

Step 5: Make Conclusions and Act on the Findings

Which key findings did you get? Draw conclusions on the outcomes and note the results to help you make data-backed business decisions. Then, continue by taking after-research steps related to fine-tuning the strategies, going through feature prioritization once again, refining the offering, and other actions.

Once these changes are implemented, make sure to keep monitoring the results. If relevant, return to the research data after some time or repeat the process.

Examples of Market Research

Here are a few hypothetical market research examples that can better illustrate cases of how teams can utilize this approach.

Startup W is thinking about working on a product in a highly competitive market . To understand how to position the product and what to emphasize, they spent time on a detailed competitor analysis. First, they singled out their potential direct industry competitors and then took a deep dive into their pricing, features, marketing, and available client feedback. The results illuminated a market gap and the possibility of formulating a unique value proposition that could make their product stand out.

Let's assume that the founders of Startup X have a great product idea. They want to ensure there is market demand for it and that people will be willing to pay for such a product. They wish to find this out at the early stages of startup development before investing significant resources into its creation. To test demand, they put together a fake door landing page, showcasing a video with a mini demo of the to-be product. Tracking the number of CTA clicks and filled-out forms gave them a primary understanding of customer interest. 

‍ Startup Y isn't certain about the problem their product should solve and which user needs to address. Hence, to learn about the target audience's challenges and pain points, the team created user stories and target audience profiles. Then, they conducted detailed interviews with a focus group to determine the customer preferences, what is expected from the product, and which feature set to focus on first. Afterward, the team also ran a survey via email and social media channels.

Startup Z is currently working on the MVP design for their early product version. They made a clickable prototype and decided to present it to potential customers to see whether it's usable and gets what people want done. They analyzed the recorded user sessions and feedback, which allowed them to spot inefficiencies in the user flow and make the product better before release.

Need help developing your product?

Upsilon is a product studio, and we'll be glad to share our years of expertise in building products!

Concluding Thoughts on the Types of Market Research

In this article, we've answered the question of "what is market research", overviewed which types of market research exist, and found out why it is integral for business development. By utilizing various techniques, teams can make important discoveries and gain invaluable insights into various areas.

Like detectives, they analyze data instead of relying on the sixth sense to learn about the market state, the competitive landscape, and important factors related to the customers to make informed calls and enhance business strategies. Plus, this comprehensive approach allows us to avoid many costly mistakes down the line and make better, data-backed decisions.

Being a product studio, Upsilon knows how integral market research is for product success. So, if you need a hand with product development, don't be shy to turn to us for MVP development services for startups or to reach out and book a consultation!

What Is Wireframing and Its Role in Product Development

UX Discovery: Deliverables, Process, and Importance

Writing a Killer Product Problem Statement: Why It's Crucial for Your Discovery Phase

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What is Market Research? Definition, Purpose and Benefits

On this page:

• What is market research? Definition. Why it is so necessary and what is its purpose?
• Importance, key advantages, and benefits for the business.
• What are the two main types of market research?
• Infographic in PDF for free download

No matter if you are going to create a completely new product or you want to develop the existing one, you need a good market research process.

Market Research Definition and Importance

In simple words, it is the process of collecting, analyzing and interpreting information about a particular target market.

It might be a research about a product or service, customer habits, and needs, a particular industry or competitors.

You know how important is the accurate information delivered on the right time. It is crucial for overall business success. Without the right information about the market, your business can’t do the most important – to solve the customer problems.

To run a profitable company, it is vital that you perfectly know who your customers are, what are their needs, and how to cover them. As you see the product of market researcher is data.

However, a good market research should not stop with data. Data are the collection of opinions, facts, statistic and other types of information that tell us something important.

More than ever before marketing research is transforming to intelligence that aim to helps us make smart moves.

So, what is the purpose of market research?

Simply, its purpose is to give you the right information for important market variables regarding your business.

The purpose is to collect relevant data on customers, competitors or products. The collected data allows your company to do effective decision making in the right way.

Therefore it decreases the risks involved in making a variety of decisions in an organization.

The environment that you operate is so dynamic.

Changes in economic conditions, demography, technology, customer needs, beliefs and etc. affect the way you do business.

Let’s sum the market research benefits and advantages:

1. You are closer to your current and potential customers

You understand better your customers – their characteristics, preferences, expectation, needs, beliefs and etc.

2. Helps you identify new opportunities in the marketplace

Market research can give you a hint and can open your mind for new ideas to increase sales and grow your business.

3. Helps you to identify potential problems

You are able to see consumers’ reactions to a service in a development stage. This can give you a view how to go further.

4. Minimize risk

Starting a new product, for example, hides a risk. There are chances you to make profits or losses. It mainly depends on how your customer accepts the new product. However, a market research minimizes the risk. Through market research, you can find almost all the information you need to decide what action to take.

5. Market research support you to establish your market positioning

Information from market research allows you to know what is your current position and help you to monitor your progress. You can use market research to figure out particular ratings, including how customers rate your product quality.

6. Help you to find out how to be better than your competitors

The research of a target market gives you the opportunity to know competitors well and to examine their strengths and weaknesses. This gives you ideas on how to offer better products and services.

7. Measures your reputation and help strengthen your credibility

Market research not only finds out where you are now but also allows you to improve your own reputation and give people more confidence in your decisions.

8. Allows you to make better plans

By examining the crucial factors in a target market, you can better predict how the market and your business will become in the future. With this data, you can adjust your business to fit the future needs and expectations in the market.

9. You are able to stay on track with the last industry trends

Your business will know and constantly will learn about the changes in your customer needs and requirements, your competitor’s efforts, what are the upcoming technologies and etc.

10. You are able to come up with professional decisions

As we mentioned above the informed decision making is the main purpose of market research efforts and activities. The research can give you all marketing benchmarks that you need to constantly improve your company’s marketing strategies.

11. Improves communication with your customers

Market research can really boost effective communications between your company and your customers. You can communicate with understanding and have the right ideas on how to handle the customer’s questions.

The two main types of market research

Now, as we saw the key advantages, let’s go further and understand what are the main two types of market research. The two essential types of research you can perform are primary and secondary research.

Primary Research

If you want to meet your specific need, primary research is designed to help you.

What is primary market research?

Primary research is used to directly gather information from potential customers.

The most common methods for collecting data are:

• focus groups
•  interviews
• observations
• field testing and more.

You can do the market research by yourself or by hiring a research company to do it for you. The crucial benefit of primary research is that it gives you more specific results. Results that cover your particular needs.

Primary research is all about answering questions relevant only to your company.

A disadvantage of primary research is that it can be expensive and time-consuming. It refers to when you are hiring a research company to lead the research.

Secondary research

As we saw above primary research involves the gathering of fresh data.

In secondary research, you just use previously completed examinations and apply their results to your case.

In this type of research, you normally spend less time and less money. Furthermore, it can be completely free, if you use the internet, research journals, a library and etc.

While secondary research is less targeted, it is still valuable information that your business can use.

Customers always will be the most crucial part of any business. Today, if the customer is not in the center of your business, your business has no future.

This is where market research comes to help you understand your customers’ needs and to give you the power to make informed decisions with reduced risk.

Market research is a weapon that allows you to uncover the truth hidden under a variety of assumptions.

Knowing the truth about the needs, expectations, and desires of your audience, you have the core basis for building trust and make your business successful

What is Market Research Infographic for free download in PDF

About The Author

Silvia Valcheva

Silvia Valcheva is a digital marketer with over a decade of experience creating content for the tech industry. She has a strong passion for writing about emerging software and technologies such as big data, AI (Artificial Intelligence), IoT (Internet of Things), process automation, etc.

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How the American middle class has changed in the past five decades

The middle class, once the economic stratum of a clear majority of American adults, has steadily contracted in the past five decades. The share of adults who live in middle-class households fell from 61% in 1971 to 50% in 2021, according to a new Pew Research Center analysis of government data.

From 2020: Are you in the American middle class? Find out with our income calculator

The shrinking of the middle class has been accompanied by an increase in the share of adults in the upper-income tier – from 14% in 1971 to 21% in 2021 – as well as an increase in the share who are in the lower-income tier, from 25% to 29%. These changes have occurred gradually, as the share of adults in the middle class decreased in each decade from 1971 to 2011, but then held steady through 2021.

The analysis below presents seven facts about how the economic status of the U.S. middle class and that of America’s major demographic groups have changed since 1971. A related analysis examines the impact of the coronavirus pandemic on the financial well-being of households in the lower-, middle- and upper-income tiers, with comparisons to the Great Recession era. (In the source data for both analyses, demographic figures refer to the 1971-2021 period, while income figures refer to the 1970-2020 period. Thus, the shares of adults in an income tier are based on their household incomes in the previous year.)

This report analyzes data from the Annual Social and Economic Supplements (ASEC) of the Current Population Survey (CPS) to study how the economic status of the American middle class has changed since 1971. It also examines the movement of demographic groups in and out of the American middle class and across lower- and upper-income tiers from 1971 to 2021.

The CPS is the U.S. government’s official source for monthly estimates of unemployment ; the ASEC, conducted in March each year, is the official source for its estimates of income and poverty . The COVID-19 outbreak has affected data collection efforts by the U.S. government in its surveys, limiting in-person data collection and affecting the response rate. It is possible that some measures of economic outcomes and how they vary across demographic groups are affected by these changes in data collection. This report makes use of updated weights released by the Census Bureau to correct for nonresponse in 2019, 2020 and 2021.

In this analysis, “middle-income” adults in 2021 are those with an annual household income that was two-thirds to double the national median income in 2020, after incomes have been adjusted for household size, or about $52,000 to $156,000 annually in 2020 dollars for a household of three. “Lower-income” adults have household incomes less than $52,000 and “upper-income” adults have household incomes greater than $156,000.

The income it takes to be middle income varies by household size, with smaller households requiring less to support the same lifestyle as larger households. The boundaries of the income tiers also vary across years with changes in the national median income. Read the methodology for more details.

The terms “middle income” and “middle class” are used interchangeably in this analysis for the sake of exposition. But being middle class can refer to more than just income, be it the level of education, the type of profession, economic security, home ownership, or one’s social and political values. Class also could simply be a matter of self-identification.

Household incomes have risen considerably since 1970, but those of middle-class households have not climbed nearly as much as those of upper-income households. The median income of middle-class households in 2020 was 50% greater than in 1970 ($90,131 vs. $59,934), as measured in 2020 dollars. These gains were realized slowly, but for the most part steadily, with the exception of the period from 2000 to 2010, the so-called “ lost decade ,” when incomes fell across the board.

The median income for lower-income households grew more slowly than that of middle-class households, increasing from $20,604 in 1970 to $29,963 in 2020, or 45%.

The rise in income from 1970 to 2020 was steepest for upper-income households. Their median income increased 69% during that timespan, from $130,008 to $219,572.

As a result of these changes, the gap in the incomes of upper-income and other households also increased. In 2020, the median income of upper-income households was 7.3 times that of lower-income households, up from 6.3 in 1970. The median income of upper-income households was 2.4 times that of middle-income households in 2020, up from 2.2 in 1970.

The share of aggregate U.S. household income held by the middle class has fallen steadily since 1970. The widening of the income gap and the shrinking of the middle class has led to a steady decrease in the share of U.S. aggregate income held by middle-class households. In 1970, adults in middle-income households accounted for 62% of aggregate income, a share that fell to 42% in 2020.

Meanwhile, the share of aggregate income accounted for by upper-income households has increased steadily, from 29% in 1970 to 50% in 2020. Part of this increase reflects the rising share of adults who are in the upper-income tier.

The share of U.S. aggregate income held by lower-income households edged down from 10% to 8% over these five decades, even though the proportion of adults living in lower-income households increased over this period.

Older Americans and Black adults made the greatest progress up the income ladder from 1971 to 2021. Among adults overall, the share who were in the upper-income tier increased from 14% in 1971 to 21% in 2021, or by 7 percentage points. Meanwhile, the share in the lower-income tier increased from 25% to 29%, or by 4 points. On balance, this represented a net gain of 3 percentage points in income status for all adults.

Those ages 65 and older made the most notable progress up the income ladder from 1971 to 2021. They increased their share in the upper-income tier while reducing their share in the lower-income tier, resulting in a net gain of 25 points. Progress among adults 65 and older was likely driven by an increase in labor force participation , rising educational levels and by the role of Social Security payments in reducing poverty.

Black adults, as well as married men and women, were also among the biggest gainers from 1971 to 2021, with net increases ranging from 12 to 14 percentage points.

On the other hand, not having at least a bachelor’s degree resulted in a notable degree of economic regression over this period. Adults with a high school diploma or less education, as well as those with some college experience but no degree, saw sizable increases in their shares in the lower-income tier in the past five decades. Although no single group of adults by education category moved up the income ladder from 1971 to 2021, adults overall realized gains by boosting their education levels . The share of adults 25 and older who had completed at least four years of college stood at 38% in 2021, compared with only 11% in 1971.

Progress up the income ladder for a demographic group does not necessarily signal its economic status in comparison with other groups at a given point in time. For example, in 2021, adults ages 65 and older and Black adults were still more likely than many other groups to be lower income, and less likely to be middle or upper income.

Married adults and those in multi-earner households made more progress up the income ladder from 1971 to 2021 than their immediate counterparts. Generally, partnered adults have better outcomes on a range of economic outcomes than the unpartnered. One reason is that marriage is increasingly linked to educational attainment , which bears fruit in terms of higher incomes.

Married men and women were distributed across the income tiers identically to each other in both 1971 and 2021. Both groups nearly doubled their shares in the upper-income tier in the past five decades, from 14% in 1971 to 27% in 2021. And neither group experienced an increase in the share in the lower-income tier.

Unmarried men and women were much more likely than their married counterparts to be in the lower-income tier in 2021. And unmarried men, in particular, experienced a sizable increase in their share in the lower-income tier from 1971 t0 2021 and a similarly large decrease in their share in the middle-income tier. Nonetheless, unmarried men are less likely than unmarried women to be lower income and more likely to be middle income.

Adults in households with more than one earner fare much better economically than adults in households with only one earner. In 2021, some 20% of adults in multi-earner households were in the lower-income tier, compared with 53% of adults in single-earner households. Also, adults in multi-earner households were more than twice as likely as adults in single-earner households to be in the upper-income tier in 2021. In the long haul, adults in single-earner households are among the groups who slid down the income ladder the most from 1971 to 2021.

Despite progress, Black and Hispanic adults trail behind other groups in their economic status. Although Black adults made some of the biggest strides up the income tiers from 1971 to 2021, they, along with Hispanic adults, are more likely to be in the lower-income tier than are White or Asian adults. About 40% of both Black and Hispanic adults were lower income in 2021, compared with 24% of White adults and 22% of Asian adults.

Black adults are the only major racial and ethnic group that did not experience a decrease in its middle-class share, which stood at 47% in 2021, about the same as in 1971. White adults are the only group in which more than half (52%) lived in middle-class households in 2021, albeit after declining from 63% in 1971. At the top end, only about one-in-ten Black and Hispanic adults were upper income in 2021, compared with one-in-four or more White and Asian adults.

The relative economic status of men and women has changed little from 1971 to 2021. Both experienced similar percentage point increases in the shares in the lower- and upper-income tiers, and both saw double-digit decreases in the shares who are middle class. Women remained more likely than men to live in lower-income households in 2021 (31% vs. 26%).

Adults 65 and older continue to lag economically, despite decades of progress. The share of adults ages 65 and older in the lower-income tier fell from 54% in 1971 to 37% in 2021. Their share in the middle class rose from 39% to 47% and their share in the upper-income tier increased from 7% to 16%. However, adults 65 and older are the only age group in which more than one-in-three adults are in lower-income households, and they are much less likely than adults ages 30 to 44 – as well as those ages 45 to 64 – to be in the upper-income tier.

All other age groups experienced an increase in the shares who are lower income from 1971 to 2021, as well as a decrease in the shares who are middle income. But they also saw increases in the shares who are upper income. Among adults ages 30 to 44, for instance, the share in upper-income households almost doubled, from 12% in 1971 to 21% in 2021.

There is a sizable and growing income gap between adults with a bachelor’s degree and those with lower levels of education. In 2021, about four-in-ten adults with at least a bachelor’s degree (39%) were in the upper-income tier, compared with 16% or less among those without a bachelor’s degree. The share of adults in the upper-income tier with at least a bachelor’s degree edged up from 1971 to 2021, while the share without a bachelor’s degree either edged down or held constant.

About half or a little more of adults with either some college education or a high school diploma only were in the middle class in 2021. But these two groups, along with those with less than a high school education, experienced notable drops in their middle class shares from 1971 to 2021 – and notable increases in the shares in the lower-income tier. In 2021, about four-in-ten adults with only a high school diploma or its equivalent (39%) were in the lower-income tier, about double the share in 1971.

Note: Here is the methodology for this analysis.

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• What is a recession? 

Recessions and the business cycle

• What is a depression? 

Recession vs. depression

• How recessions affect you 
• Recession FAQs

What is a recession?

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• A recession and a depression describe periods during which the economy shrinks, but they differ in severity, duration, and scale.
• A recession is a decline in economic activity spread across the economy that lasts more than a few months.
• A depression is a more extreme economic downturn, and there has only been one in US history: The Great Depression, which lasted from 1929 to 1939.

Economic downturns are a lousy time for everyone. You may be worried about losing your job and being able to pay your bills — or you may be alarmed at just how abruptly that little red line that represents your investment portfolio has dropped. It's even worse if that red line represents your 401(k) savings. As a result, it can be helpful to know the signs of a recession, as well as the different ways this term is defined. 

While you've probably heard the terms "recession" and "depression" before, you may not know what they actually mean and what the difference is between the two. Chiefly, a depression is a more severe, long-lasting recession that extends beyond the confines of a single country's border and into the economies of other nations.

To help you better understand the business cycle and prepare for the twists and turns of an economic crisis, here's what you need to know about recessions, depressions, and how they're different. 

What is a recession?  

Defining a recession , technical definition .

The technical definition of a recession is "a significant decline in economic activity that is spread across the economy and that lasts more than a few months," according to the National Bureau of Economic Research (NBER), a nonprofit organization that officially declares U.S. recessions and expansions. 

An economic recession is often defined as a decline of real (meaning inflation-adjusted) gross domestic product (GDP) for two consecutive quarters — but it's not that simple. Over the course of a business cycle, you might see GDP contract for a period of time, but that doesn't necessarily mean that there's a recession. 

The NBER takes a broader view. The group defines recessions as "a significant decline in economic activity spread across the economy, lasting more than a few months," with indicators including:

• Decline in real GDP
• Decline in real income
• Rise in unemployment
• Slowed industrial production and retail sales
• Lack of consumer spending

The NBER's view of recessions takes a more holistic outlook of the economy, meaning recessions are not necessarily defined by one single factor. But many of these factors are intertwined, meaning a significant drop in something like GDP could rattle consumer spending or unemployment.

In simpler terms 

A recession can be defined as a time during which the economy shrinks, businesses make less money and the unemployment rate goes up. The business cycle is not characterized by neverending increases in GDP. As a result, there are times when this economic yardstick is decreasing, and if it declines for a long enough time, the economy has entered recession. 

These periods of economic decline frequently last about a year, according to figures provided by the International Monetary Fund (IMF). 

During these times, many economic indicators experience notable declines. Investment and production both decline, according to an IMF paper. Consumption also declines, which reduces the overall demand for goods and services created by corporations. 

This, in turn, can reduce profitability and motivate companies to lay off employees in an effort to ensure their bottom line remains healthy. 

It is worth noting that while recessions frequently last about a year, expansions generally last longer , as the economy is usually growing in size, according to the IMF. 

More specifically, the global organization examined 21 advanced economies between 1960 and 2007, revealing that they were in recession roughly 10% of the time, at least according to this sample. 

Causes of recession

Generally speaking, expansion and growth in an economy cannot last forever. A significant decline in economic activity is usually triggered by a complex, interconnected combination of factors, including:

Economic shocks 

An economic shock is an unpredictable event that causes widespread economic disruption, such as a natural disaster or a terrorist attack. The most recent example of such a shock was the COVID-19 outbreak, which triggered a brief recession. 

Another example of an event that served as a shock to the economy was Hurricane Katrina. One estimate was that this natural disaster caused $200 billion worth of damage, according to figures from the U.S. Bureau of Labor Statistics. 

High interest rates 

High interest rates make it more expensive for consumers to borrow money. This means that they are less likely to spend, especially on major purchases like houses or cars. Companies will probably reduce their spending and growth plans as well because the cost of financing is too high.

Asset bubbles

During an asset bubble, for example a housing bubble , the prices of investments like tech stocks in the dot-com era or real estate before the Great Recession rise rapidly, far beyond their fundamentals. These high prices are supported only by artificially inflated demand, which is caused by overly optimistic expectations of future asset values. This artificially inflated demand eventually dissipates, and the bubble bursts. At this point, people lose money and confidence collapses. Both consumers and businesses cut down on spending and the economy goes into recession. 

Loss of confidence

The sentiment of consumers has a substantial impact on the economy. Consumer spending accounts for close to 70% of U.S. GDP, so when these individuals tighten up their purse strings, it can tip the economy into recession. Even if this change in mindset is not enough to trigger a recession, a drop in consumer demand gives companies less incentive to produce goods and services, which can in turn motivate them to lay off employees in order to maintain profitability.

It is worth noting that the confidence of business executives, as well as other key decision makers in corporations, has a substantial impact on the health of the economy. If these decision makers become less confident, then they could cut budgets, laying off workers and potentially reducing expenditure on capital equipment in an effort to bolster profitability. 

To understand the macroeconomic variables that constitute recessions, Giacomo Santalego , PhD, a senior lecturer of economics at Fordham University, says it's important to acknowledge the relationship between recessions and the business cycle.

A business cycle tracks the up-and-down fluctuations natural to any capitalistic economies. Because the cycle traces the wide-ranging upward and downward comovements of economic indicators, it is often a focal point for monetary and fiscal policy as governments attempt to curtail the effects of these peaks and valleys.

Business cycles are understood as having four distinct phases:

• Expansion: This phase represents a period of economic growth, also considered the "normal" phase of the business cycle. It is often characterized by an increase in employment and a swelling of consumer spending and demand, which leads to an increase in the production and cost of goods and services.
• Peak: The highest point of a business cycle that signifies when an economy has reached its crest of output. Here, there's nowhere to go but down, sending the economy into a contraction phase. This can happen for any number of reasons, either investors get too speculative and create an asset bubble or industrial production starts outpacing demand. This is commonly seen as the turning point into the contraction phase.
• Contraction: A period that is marked by a decline in economic activity often identified by a rise in unemployment as well as a bear market . Additionally, GDP growth falls under 2%. As growth contracts, the economy enters a recession. 
• Trough: A peak is to an expansion what a trough is to a contraction. A trough marks the bottom of a business cycle's economic activity and marks the start of a new wave of expansion and a new business cycle. This is a turning point that's followed by a new wave of expansion. 

It's important to note that business cycles do not occur at predictable intervals. Instead, they are irregular in length, and their severity is reflected by the economic variables of the time. That said, the average post-World War II business cycle lasted 65 months, according to the Congressional Research Service . 

What is a depression? 

An economic depression is typically understood as an extreme downturn in economic activity lasting several years, but the exact definition and specifications of a depression are less clear. 

"The way people think about it is a depression is a more widespread and severe recession," says Laura Ullrich, senior regional economist with the Federal Reserve Bank of Richmond, says, "but there is no clear-cut moment where we can say 'we hit X unemployment rate or Y GDP growth — we're now officially in a depression.'"

The NBER notes that economists differ on the period of time that designates a depression. Some experts believe a depression lasts only when economic activity is declining, while the more common understanding is that a depression extends until economic activity has returned to close to normal levels. 

A depression is a more severe recession. However, it's a little tricky to concretely, quantifiably describe the difference between a recession and a depression, mainly because there's only been one. 

Because economists do not have a set definition for what constitutes a depression, the general public sometimes uses it interchangeably with the term recession. However, the difference makes itself evident when you compare the Great Recession to the Great Depression. 

Generally speaking, a depression spans years, rather than months, and typically sees higher rates of unemployment and a sharper decline in GDP. And while a recession is often limited to a single country, a depression is usually severe enough to have global impacts.

How recessions affect you 

Job losses .

One major consequence of economic downturns is job losses. When the economy starts to contract, revenues decline, which gives companies substantial incentive to lay off employees in order to turn a profit. A perfect example of how a downturn can cause employers to eliminate jobs is the recession that coincided with the COVID-19 pandemic. The global pandemic began in early 2020, and during March, April and May of that year, the nation's employers shed 1.5 million jobs, according to figures from the Bureau of Labor Statistics. Further, economic downturns result in reduced tax revenue, which can prompt governments to lay off workers. Many state governments, in particular, need to balance their budgets each year, which can cause them to slash jobs. 

Reduced income 

Economic downturns can lower the income of residents by eliminating jobs and lowering wages. In addition, companies reduce investment in capital equipment during recessions, which lowers productivity. This can, in turn, adversely impact wages. Lowered incomes can have significant impacts on the economy in the long-term, for example undermining nutrition and making it more difficult for people to pursue college education. Both of these adverse effects can impact productivity in the long-run. 

Difficulty finding work 

One very noticeable impact of an economic downturn is a tighter labor market. When the economy goes into recession, many jobs will get eliminated, both in the public and private sectors. This can increase the number of applicants for every available position, resulting in a highly competitive labor market. This increased competition for jobs can undermine the power that employees have to demand adequate compensation, which can in turn place downward pressure on salaries and wages. 

Declining investments 

One common challenge that investors encounter during economic downturns is the impact that falling asset values can have on their net worth. When the economy goes into recession, the value of assets held by everyday investors, for example stocks and real estate, can decline substantially. This can undermine the value of their retirement accounts and also wealth they hold outside of these accounts, for example in brokerage accounts. When investors feel less wealthy, it can make them less likely to spend, something referred to as the wealth effect . This can in turn contribute to further economic contraction. 

Recession FAQs 

The length of a recession varies, from a matter of months to multiple years. According to IMF research cited in this piece, recessions typically last a year. 

Economists at the National Bureau of Economic Research (NBER) officially declare US recessions. 

Yes, you can prepare for a recession by paying off debt, building up savings and also creating a diversified investment portfolio. 

Governments may respond to recessions by cutting taxes or spearheading other forms of economic stimulus in order to fuel expansion. 

Yes, there are different types of recessions, which can vary in terms of length and intensity. A depression, for example, is a severe recession. 

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