What is market research and how to conduct it?

There are several crucial points when positioning a product in the market, such as studying the target customers, analysing the competition and determining the right price at which to offer it. The market research is the most commonly used tool to gather this data, which will help you to find business opportunities.

What is a market research study?

The launch of a product or service on the market requires a process ofpreliminary research, which analyses the commercial and economic viability of the professional project; these variables are defined through a market study, a task consisting of surveying data that will help us to anticipate the response of target customers and the competition to our business idea.

The information extracted from market research can be really valuable for the entrepreneur:

1. Who to offer the product to? Through market research, the target (target audience) of our business idea is segmented.
2. Who else offers the product? We canvass the market in search of competitors: companies or individuals who are already marketing something similar.
3. At what price to position the product? The selling price of the products or services must be in line with the competition and cover our structural costs.

What is a market study for?

Knowledge of the target customer

Through these studies, we extract relevant information about the target of our business: we will know the profile of the people or companies likely to take up our offer, including their behavioural patterns and social, economic and even psychological data, which will help us to anticipate their demands and reactions.

Determining the size of the market

As part of the research, it will be necessary to know how many “players” the market consists of, meaning the number of entities offering products or services similar to ours (size of competition) and the number of target customers to whom we can address our offer. The ideal scenario is to find a market with little saturation (few competitors) and with the maximum number of target customers.

Description of the competition

Returning to the competitor figures, the market study will help us to know more about how they manage their business: what type of entities they are, what volume of business they move, what prices they set, what their scope of presence is and what differentiating points they argue in their sales pitch.

Prediction of market behaviour

We can also study the trends of the market in which we are going to position ourselves: we study the evolution of the market, the current scenario and future projections. Therefore, additional factors that may condition demand, such as changes in the distribution model, new characteristics of the product or service, or regulatory changes that affect its commercialisation, are ascertained.

Steps to carry out a market study

1. Gathering information on the sector

Thanks to the Internet, it is possible to obtain information on the sector of activity where we will position our business idea: outstanding news, statistics and related official bodies, among others.

2. Observation of the market

The next stage consists of paying attention to the details of market behaviour: detecting the peaks and valleys of demand, the factors that affect purchasing decisions, and the consumption habits of target customers.

3. Customer knowledge target

In target customer prospecting, questionnaires acquire special relevance: they consist of directly asking what products or services they consume, how much they pay for them, what motivates them to buy or how they use the products, and segmenting the answers according to sex, age, profession, studies, nationality…

4. Competitive research

Next, we will try to find out as much as we can about our competitors: visit their websites and social profiles, observe them from a customer’s point of view, find out their radius of action… to end up establishing a comparison of strengths and weaknesses with respect to us.

5. Definition of the buyer persona

The buyer persona is the person who makes the actual purchase decision: this involves defining the profile of our ideal customer and using it to find a market niche in which the people most similar to him/her are found (in terms of behaviour, purchasing power, expectations, etc.).

Market research companies can charge a minimum of around 2,000 euros for the service. However, even if there is some data that you can collect yourself, it is not a bad idea to resort to this professional help: the information extracted from these studies can determine the success or failure of even the best business idea. Once you have carried out the market research and decided to start, you will need management software to help you get your business off the ground and to control those routine tasks that are not worth wasting time on.