2023 Guide to Market Research: Key Strategies and Best Practices
When Steve Sasson—a Kodak engineer—invented the first digital camera in 1975, a breakthrough in photography was born. However, Kodak wasn’t interested—it was a film company, and Sasson’s digital camera threatened to disrupt its core business. Despite an extensive market research effort confirming the imminent shift from film to digital, Kodak continued to double down on its film business until it filed for bankruptcy in 2012.
The moral of the story is that strategic decisions need to be based on accurate market research in order to avoid costly mistakes, especially when they entail reinvention. Kodak is just one example—another common scenario in which a company might need to reinvent itself is when it’s looking to expand into new markets. Be it a new or adapted product or service, a new target audience, or new business models—changing tack to cater to a new market can be a make-or-break moment for businesses.
That’s why, if you’re looking to take your product global, conducting market research should be a key part of your strategy. Venturing into unfamiliar markets armed with solid market intelligence can help you make the most of opportunities and avoid pitfalls. In this article, we will discuss best practices for market research as a key component of a global expansion, and how you can make the most of it.
What is market research?
Market research is the process of collecting and analyzing data about a target market to understand consumer preferences and purchasing decisions. Companies can use this information to better inform their business strategies, such as what products or services to develop, how to adapt them to different market conditions, or what factors can affect demand.
When a company operates globally or is trying to enter new markets, market research becomes even more important. This is because culture and geography can have a big impact on consumer behavior. To be successful, you need to understand the nuances of each market and tailor your products and marketing strategies accordingly.
Market research vs marketing research
It’s common to see the terms “market research” and “marketing research” used interchangeably, but they actually refer to two different things.
Market research is a broad category that includes all types of data collection and analysis related to a target market. The aim is to understand the market, including the needs of consumers and the dynamics of competition.
Marketing research, on the other hand, is more specific and refers to the process of collecting and analyzing data to assess and identify the changing elements of the marketing mix (product, price, place, and promotion).
For example, if you want to launch a new product in the Spanish market, you would first conduct market research to assess whether there is a demand for it, what the market size, what market trends are, and what the competition looks like.
Once you have this information, you can then move on to marketing research for concept testing and to determine how to market the product, what channels to use for distribution, and what kind of marketing campaigns will be most effective.
Both activities do share some similarities, though: They may use the same data sources and methods, and the line between them can sometimes be blurry. Ultimately, the goal of both is to generate insights that can be used to make better business decisions.
Why is market research important?
There are many reasons why market research is important, but perhaps the most important is that it helps you reduce risk. When you have a clear understanding of your target market and what they want, you are much less likely to make costly mistakes.
In the context of globalization, market research can help you assess the potential of new markets and make informed decisions about where to allocate resources. It can also help you develop strategies for entering new markets, such as identifying the most effective channels for marketing and distribution.
When you’re expanding your business into new markets informed by market research, you’re much more likely to:
- Develop successful products and services: By understanding your customers’ needs, you can develop products and services that they will actually want to buy.
- Increase sales: By understanding your target market’s buying habits, pain points, and motivators, you can develop marketing campaigns that are more likely to resonate and result in sales.
- Improve customer satisfaction: If you know what your customers want, you can deliver it to them, resulting in happier customers who are more likely to continue doing business with you.
- Reduce costs by avoiding duplicate effort: Market intelligence allows you to allocate resources strategically and get it right the first time. For example, you can avoid spending money on conventional translation for marketing campaigns that require more creative adaptation to be effective in a new market.
- Get localization right: A good localization strategy is a key to success in any new market. But without market intelligence, it can be difficult to know how to adapt your products and marketing materials for a new culture. For example, you might not realize that certain colors have different connotations in different cultures, or that video content gives you a higher return on investment in one market but not another.
Arming yourself with nothing but assumptions can lead to less-than-optimal results—and this is especially true when expanding into new markets. When legal systems, consumer preferences, and business practices differ from country to country, the risks are even greater, and so should your commitment to market research.
Market analytics vs market research
A common misconception is that market research and analytics mean the same. In reality, they’re two distinct ways of doing consumer investigation, and they serve different purposes.
Market analytics is the process of collecting and analyzing data to unveil patterns and trends. This data can come from a variety of sources, including surveys, social media, transactional data, and web analytics. For example, you might use market analytics to track how often certain foreign-language keywords are being searched for on Google or to understand which demographics are most likely to purchase your product outside your home market.
Market research, on the other hand, captures data to answer specific questions. For example, a company might want to know what factors influence its customers’ purchase decisions in a particular market, or what the barriers to entry are for a new product.
Market analytics can help generate hypotheses that you can then test through market research. You can think of analytics as the inward-looking “what” (What happens? What are the trends?) and market research as the outward-looking “why” (Why does it happen? Why do people want this?).
When you leverage market analytics and market research together, you can get a well-rounded view of your target market and what they want. This, in turn, helps you make better business decisions and avoid costly mistakes.
What types of market research are there?
There are several types of market research depending on the questions you want to answer, the type of data you need, the resources that you have available, and the timeline that you are working with.
Primary market research vs secondary market research
Primary research is the first-hand research that you conduct yourself. This could involve surveys, interviews, focus groups, or any other type of research method where you directly interact with consumers.
Secondary research is the intelligence that someone else has already gathered and published. This includes data from government reports, trade associations, industry journals, commercial data providers, and other published sources.
|Primary research||Secondary research|
|The first-hand research that you conduct yourself.||The intelligence that someone else has already gathered and published.|
|This could involve surveys, interviews, focus groups, or any other type of research method where you directly interact with consumers.||This includes data from government reports, trade associations, industry journals, commercial data providers, and other published sources.|
Quantitative market research vs qualitative market research
Quantitative research focuses on numbers and statistics. For example, if you want what percentage of people in a certain age group prefer your product over a competitor’s, you would use quantitative research. Polls, surveys, desk research, web statistics, and consumer panels are all quantitative research methods.
Qualitative research, on the other hand, focuses on understanding people’s opinions, motivations, and behaviors. Multilingual sentiment analysis, ethnography, and in-depth interviews are all qualitative research methods.
Exploratory market research vs conclusive market research
You use exploratory research to generate hypotheses and identify key variables. This type of research is frequent at the beginning of a project to get a better understanding of the problem. For example, if you want to know why customers are leaving your website in a foreign market, you might use exploratory research to generate hypotheses that you can then test through further market research.
Conclusive research is used to test hypotheses and measure relationships. This type of research usually comes after exploratory research. For example, if your exploratory research suggests that customers are leaving your website because the current user experience isn’t considering their cultural preferences—think things like imagery or payment methods—you could use conclusive research to measure the impact of a new user interface that takes these cultural preferences into account.
Branding research helps you create, manage, and measure the success of your brand. This type of research can help you understand how customers perceive your brand, what associations they have with it, and how well your brand is positioned in the market.
When expanding globally, branding research can help you strike the right balance between global brand consistency and local brand relevance. It can also help you understand how to adapt your brand messaging and identity to different cultures.
Product development research
Product development research helps you establish if there is a market for your product or service and what features or benefits customers are looking for. This type of research can help you understand the viability of your product, optimize its characteristics, and ensure it performs well before taking it to market.
Most global companies adapt their product offering to local markets. Product development research can help you understand what features or benefits are most important to customers in different countries so you can out-compete local companies.
Customer research is a type of market research that can serve different purposes, from segmenting your customer base to measuring customer satisfaction. In the context of international operations, customer research can help you understand how to appeal to different customer segments in different countries.
For example, when you know that 64% of Asian-Pacific customers are willing to share personal data for a tailored online experience, you can use this information to improve your website design and user experience in the region.
The main types of customer research are:
- Customer satisfaction research: Also known as customer experience research, this type of research helps you understand how customers feel about your product or service. This includes understanding what they like and don’t like, their unmet needs, and how likely they are to recommend your product or service to others.
- Customer segmentation research: Segmentation research helps you understand how to divide your customer base into smaller groups with shared characteristics. This type of research can help you better target your marketing efforts and create more personalized experiences for your customers.
- Consumer insights: Consumer insights are actionable, research-based observations about your customers. They go beyond demographic information to include things like customer values, preferences, and behaviors. For example, if you want to understand why customers in a certain market are choosing your competitor’s product over yours, consumer insights research could help you uncover the reasons.
Competitive market research
Competitive market research helps you understand what your competitors are doing. This can include things like their marketing strategies, product offerings, pricing, and distribution channels. Understanding your competitor’s strengths and weaknesses can help you make informed decisions about how to position your own product or service in the market.
How to do market research?
Like every complex process, you can break market research down into smaller, more manageable steps. Here’s a high-level overview of how to do market research:
Identify your target audience
The first step in any market research project is to identify your target audience. This will help you focus your research efforts and ensure that you’re gathering information that’s relevant to your business. For example, if you’re planning an expansion to the Brazilian market, an example of a target audience you might identify would be “Brazilian upper-middle-class women ages 25-40.”
Define your research objectives
Identify an issue, problem, or opportunity that you want to understand better. For example: “I want to understand what payment methods Brazilian upper-middle-class women ages 25-40 prefer when shopping online so we can optimize our checkout process.”
Select your research methods
Once you’ve identified your target audience and objectives, you’ll need to select the research methods that will help you gather the data you need. There are many different market research methods, some of which are quantitative and some of which are qualitative. In the case above, to find out the preferred payment methods of Brazilian shoppers, you might conduct a survey.
Develop your research plan
Once you’ve selected your methods, you move on to developing your research plan. This should include a detailed description of how you’ll execute your project, including timelines, budgets, and any risks or challenges you anticipate. For example, if you’re planning to conduct interviews in Brazil, you’ll need to consider things like language barriers and cultural differences.
Collect and analyze your data
Once you’ve executed your research plan, it’s time to collect and analyze your data. This can be a complex process, depending on the methods you’ve used and the type of data you’ve gathered. In the case of a survey, you might use statistical software to analyze your results.
Present your findings
After you’ve analyzed your data, you’ll need to present your findings in a way that’s easy for others to understand. The stakeholders in your business will use these findings to make decisions about things like product development, marketing, and expansion plans. How you present your findings will depend on the type of data you’ve collected and the objectives of your research. For example, if you’re presenting the results of a survey, you might create a report or presentation that includes charts and graphs.
The above steps are a high-level overview of the market research process. In practice, each project will be unique, and you’ll need to tailor your approach to fit the specific needs of your business.
What are some key market research methods?
We’ve briefly touched on some of the most common market research methods, but let’s take a closer look at each one:
Surveys involve collecting data from a target audience through questions administered either in person, by phone, or online. They can be used to gather data about a wide range of topics, including consumer behavior, preferences, and opinions.
- Surveys are relatively easy and inexpensive to administer.
- They can provide a great deal of immediate information.
- Their extensive reach gives you insights about a large number of people.
- Analyzing survey data is typically straightforward.
- Surveys can be time-consuming to administer and analyze.
- It can be difficult to find people who are willing to participate.
- Survey results can be skewed by the way you word questions or by the order in which you ask them.
How to do it right:
- Avoid asking too many questions so as not to overwhelm respondents
- Make sure your questions are clear and concise
- Try to ask neutral questions that don’t lead respondents to a particular answer
- Include open-ended questions to encourage respondents to give more detailed answers.
Interviews are a type of market research that involve conducting in-depth conversations with individuals from a target audience. They can be used to gather data about a wide range of topics, including attitudes, beliefs, and motivations.
- Interviews can provide a great deal of rich, detailed information about a small number of people.
- You can conduct them online if needed.
- They allow you to build empathy with your audience.
- The resources required to administer interviews (e.g., time, money, personnel) can be significant.
- It can be challenging to find people who are willing to participate (incentives might be necessary to encourage participation).
- They don’t reach an audience as extensive as surveys do.
How to do it right:
- Choose the most appropriate format for your interview—e.g., in-person, phone, video chat, etc.
- Make sure to explain to the respondent what the interview will entail and how you will use their responses.
- Build rapport by repeating back what the respondent says and showing empathy
- Leave time for follow-up questions.
Many companies choose to bring together a group of potential customers to discuss a product or service before it’s launched. This type of market research is called a focus group, and it can be used to gather data about things like reactions, perceptions, and opinions.
- Focus groups can provide rich, detailed information about a small number of people.
- They can provide insights into the purchase decision-making process.
- You can easily measure customer reactions to a product’s design, packaging, price and message.
- They aren’t as in-depth as interviews.
- They can be expensive to conduct.
- They can be biased by the moderator’s questions or the group dynamics—like a dominant personality in the group who steers everyone’s opinions.
- People might not give honest feedback if you’re paying them to participate.
How to do it right:
- Ensure the recruiting process is well-designed so you end up with a diverse and representative group of participants.
- Use skilled and experienced moderators who know how to keep the discussion on track.
- Pay attention to the nonverbal cues of participants—e.g., body language.
- Establish ground rules at the beginning of the session.
- Consider and pre-empty potential intercultural communication issues.
When you observe people, you’re looking at their behavior in a natural setting. This type of market research can be used to gather data about a wide range of topics, including shopping habits, use of public spaces, and interactions with technology. There’s both overt and covert observational research, depending on whether or not participants are aware that they’re being watched.
- Observational research is relatively easy and inexpensive to conduct.
- Natural surroundings can provide insights that would be difficult or impossible to glean from other types of market research.
- The researcher’s own biases can skew the data.
- It can be time-consuming to observe people for extended periods of time.
- People might not behave naturally if they’re aware that someone’s watching them.
How to do it right:
- When conducting covert observational research, be sure to follow all ethical guidelines.
- When conducting overt observational research, make sure to get the consent of participants.
- Always capture context.
- Try to avoid bias by maintaining a detached and objective attitude.
- Be sure to take detailed notes or record videos of the behavior you’re observing.
- Complete debriefing notes as soon as possible after the observation so the data is fresh in your mind.
What are some best practices for market research?
For any market research project, it’s important to keep the following best practices in mind:
Define your scope and objectives clearly
Unless you know what you’re trying to learn, it will be difficult to design an effective market research project. Based on your product offering, target market, and expansion goals, you should be able to define the scope and objectives of your project. These will help guide the rest of your decisions.
Get input from stakeholders early on
People whom the results of the market research will affect—e.g., marketing, sales, leadership—should be involved from the outset to help shape the project. Their input will ensure that the objectives of the market research are aligned with the company’s goals, and it will help ensure buy-in for the project from key stakeholders.
Consider cultural differences
If you’re expanding into new markets, it’s important to be aware of cultural differences that could affect your market research. For example, some cultures might consider it impolite to ask certain types of questions, or the interpretation of body language might be different. Working with local market research partners can help you navigate these differences.
Choose the right method
While it’s tempting to assume that any research method will eventually get you the information you need, that’s often not the case. For example, if you’re trying to learn about the associations that your content is getting in a foreign market to spot and fix any cultural missteps, a multiple-choice survey with predefined answers might not be the most optimal method.
Pilot-test your methods
Before you launch a full-scale market research project, it’s important to pilot-test your methods to make sure they’re effective. This will help you identify any potential problems so that you can fix them before they impact your data.
Analyze your results carefully
All the data in the world won’t be of any use if you don’t take the time to analyze it carefully. When reviewing your results, look for both quantitative and qualitative trends, and try to identify any potential sources of bias. Moreover, if you’ve conducted the research in a language other than your own, it’s a good idea to enlist the help of professional localizers who can help you interpret the results—they’ll be familiar with the nuances of the language and culture that you might not be.
Communicate your findings effectively
Communication can be a challenge when dealing with market research since you’re often dealing with complex data sets. However, presenting your findings in a way that’s clear and actionable for stakeholders is crucial if you want your research to have an impact.
Follow up with respondents
If you’ve collected data from respondents, it’s important to follow up with them after the fact. This shows that you value their input. Moreover, if you’ve acted on any of their feedback, be sure to let them know the results—e.g., a feature they suggested was added to the product, their feedback helped shape a new marketing campaign, etc. This can make a big impression and solidify your relationship with respondents.
Effective market research must be systematic
When done right, market research is a powerful tool that can help companies make informed decisions about their expansion strategies. However, a lack of planning and foresight can lead to wasted effort and resources.
By following a systematic process and keeping best practices in mind, you can ensure that your market research is effective and informative. The result is a stronger market expansion strategy and a better chance of success in new markets.