Market research is a structured way of collecting and analyzing information about a market, a target group or your competitors, so that you can make better business decisions. Below we go through the main types of market research, where the data can come from, how B2B and B2C studies differ, and where studies tend to go wrong.
What is market research?
Market research is a systematic process for collecting, analyzing and interpreting data about a market, a target group or competitors. The purpose is usually to get a basis for strategic decisions, for example whether to enter a new market, how to price a product or how to position a brand.
Why do market research?
Market research helps you understand what your customers need and prefer, find new business opportunities and keep up with a market that changes. It can show how large a potential market is, or reveal important trends early, which makes it easier to adapt products and strategy. Collecting and analyzing the right information regularly also lowers the risk in important decisions and gives you an edge over competitors.
Some situations where market research is particularly useful:
- Before developing or launching a new product
- When evaluating customer satisfaction
- When expanding into new markets
- When pricing products and services
- When market conditions change
- When changing your brand strategy
- To keep track of competitors
- Ahead of a change in the company’s strategic direction
- In connection with mergers or acquisitions
Quantitative and qualitative market research
Market research is usually divided into two main types depending on how the information is collected: quantitative and qualitative.
Quantitative market research
Quantitative research focuses on measurable data, usually numbers and statistics. A study typically reaches a larger number of people and gives a broad picture of a topic, such as customer satisfaction, market shares or buying habits. Common collection methods are online surveys and telephone interviews with structured questionnaires and predefined answer options, which makes the data easy to measure and present. Quantitative research can also be based on information that already exists. More on that under Secondary data below.
Qualitative market research
Qualitative research aims to understand opinions, behavior and feelings in more depth. The data is collected through open and less formal methods where respondents can develop their answers. The goal is to understand why people and companies act as they do, not only what they do. Qualitative studies usually involve fewer people than quantitative ones, and the most common methods are in-depth interviews and focus groups. They too can be based on existing information, which is described under Secondary data below.
Where does the data come from?
Depending on where the data comes from, market research uses two types of data. Primary data and secondary data.
Primary data
Primary data is new data that you collect directly from the target group or market. It gives you information that is tailored to your specific questions. Primary data is used when you need answers to new questions, or current and specific information that does not exist elsewhere. The most common methods are interviews, surveys, focus groups and observation studies. A customer survey, for example, is based on primary data.
When people in the industry talk about quantitative and qualitative market research, they usually mean studies based on primary data, even though both types can also be based on secondary data.
An example of a quantitative study based on primary data is a survey of 1,000 Swedish consumers to get an indication of their willingness to pay for a certain type of product.
An example of a qualitative study based on primary data is a series of in-depth interviews with decision makers and users at important business customers, to get feedback on a new type of product.
Secondary data
Secondary data is data that already exists, such as reports, studies or statistics collected by other organizations. It can be faster and cheaper to use, but the information may not match your specific questions. Common sources are official statistics (in Sweden, for example Statistics Sweden (SCB)), industry reports, data from earlier market studies, and academic research.
Secondary data can be used in both quantitative and qualitative studies. In the industry, though, this kind of work is more often called desk research or secondary analysis, and it usually includes both quantitative and qualitative elements.
An example of a quantitative study based on secondary data is analyzing population trends using statistics from a third party such as Statistics Sweden.
An example of a qualitative study based on secondary data is reviewing a number of existing case studies to understand an industry better.
Combining methods
In many cases the most effective approach is to combine quantitative and qualitative methods, and primary and secondary sources. Quantitative and qualitative methods together give both breadth and depth, and a more reliable result. Primary and secondary data together give a good balance between very specific information (primary data) and broader, more cost-effective information (secondary data).
You can, for example, use industry reports and official statistics to identify possible markets, and then interview potential customers or decision makers to get a more detailed and up-to-date picture of the interest in your specific product or service.
How does B2B market research differ from B2C?
Market research can look quite different depending on whether it targets businesses (B2B) or consumers (B2C). Both aim to understand the target group, but the methods often differ.
B2B market research
In B2B markets, decisions are often more complex and involve several people, such as purchasing managers, technical experts, finance managers and senior management. To understand in depth how customers or potential customers think about customer satisfaction, product ideas, decision criteria or loyalty, qualitative methods such as personal interviews are usually the best choice.
B2C market research
In consumer markets, impulses and brand perception play a large role in how people make buying decisions. Quantitative methods are therefore common, since they give measurable results and indications of trends from a larger number of respondents or from existing consumer data. Typical methods are online surveys and telephone interviews.
Differences in methods and analysis
For primary data, B2B studies more often use in-depth qualitative methods with fewer but more specific respondents, while B2C studies rely more on large data sets and statistical analysis. There are exceptions in both directions, such as quantitative B2B studies (for example brand studies and CSI surveys) and qualitative B2C studies (for example focus groups).
Secondary data is common in both. In a B2B study it often means industry trends from trade publications and competitor profiles and key figures. In a B2C study it often means data on consumer trends and population statistics.
Where market research goes wrong
Market research can give valuable answers, but there are some common mistakes that make the results less reliable.
Misreading the data: Data can show correlations that are mistaken for cause and effect, that is, that a change in one variable leads to a change in another, when that is not necessarily the case. This leads to wrong conclusions and poorly founded decisions.
Relying too much on secondary data: Secondary sources are fast and inexpensive, but relying too heavily on them can lead to vague or wrong conclusions. The data is rarely tailored to your company or your questions, and it can turn out to be outdated or irrelevant in your context.
Too small a sample: If you collect too few answers, or if the sample does not represent your actual target group, the results can be misleading. To draw reliable conclusions, the sample needs to be large enough to be statistically significant.
Ignoring qualitative findings: Quantitative data is valuable for measuring trends and spotting patterns, but if you rely only on numbers you can miss the emotional and psychological drivers behind customer behavior.
Poorly worded questions: How a question is phrased can strongly affect the answers. Leading or unclear questions push respondents toward a certain answer and give a misleading result. Neutral and clear questions are essential for reliable answers.
Do it yourself or get help?
If you have the time and the knowledge, doing a market analysis yourself can be rewarding. You get close to the market and usually learn a lot. Most companies still choose to bring in a professional partner, because the work takes time, has many pitfalls and comes with a learning curve. A market research company brings specialist knowledge, which makes it easier to get the questions right, keep the data collection objective and make the analysis reliable.
Need help with market research?
We have run market research in many industries and of many different types. Contact us for more information, or read more about our market research.
