Understanding who your target market and audience are can be one of the most challenging aspects of running a business. When building out your business’s marketing strategy, conducting market research can be one of the most helpful ways to understand your audience and set your marketing efforts up for success.
Market research will help you gather actionable insights and concrete data that will ensure you are making informed decisions to maximize your marketing strategy. There are two types of market research: primary and secondary. Here’s everything you need to know before you start conducting primary and secondary market research.
Before doing anything, plan and budget
With a name like primary research, it sounds like this should be your first step when gathering information about your target market, but it should actually come after you’ve done your secondary research. Primary research requires more resources and will likely require budget allocation. By conducting secondary reserch first, you’ll have a clearer understanding of the areas you need to spend resources on to gather insights that you couldn’t obtain from secondary research.
Before you get started, as yourself these questions:
- What are the business goals you are trying to achieve?
- What decisions will the market research help you make?
- What audience are you trying to reach? Do you already have a general idea of who your audience is?
- hat level of insight do you need? Do you need very specific information and actions, or are you looking for a broad understanding of your market?
- How quickly do you need the information?
- What do you already know that will be helpful as you start researching?
- What is your budget?
Estimating the cost of market research is like budgeting for a vacation or a wedding — costs can vary greatly. Depending on the number of participants needed for your research, the type of research you’ll need for your goals, and data collection needs, your budget can be a range, so plan accordingly.
Don’t be discouraged by the idea of having to budget out your market research. With the right planning, you’ll be able to find a market research package that fits your budget and delivers results that will benefit your business.
For the best results, it’s recommended that you work with a market research firm to help direct your efforts, manage your budget, and analyze results. If you decide to work with a market research service or not, you should understand what your options are and how to prepare for them.
When you’re ready to start conducting primary research you have options. There are three main methods you can choose from, or select a combination of the three, depending on your budget. The methods are direct mail, phone interviews, and personal interviews. All three have pros and cons, but make sure to select one that will benefit your business the most.
Direct mail research happens by mailing out surveys or questionnaires to a select group of individuals. This requires you to secure a mailing list, produce the physical mailers, and then wait for responses from participants.
Direct mail can be a good channel for advertising your business once you’ve defined your audience, but for most businesses conducting market research, it’s a difficult channel with typically the lowest response rates, around 5%. However, if you feel that your target market will respond the best to direct mail, and you plan to mainly communicate with your audience that way for your marketing efforts, you should give it a try.
When conducting market research through direct mail surveys and questionnaires, stick to the following guidance to maximize responses:
- Keep it short: Questions should be short and direct to avoid any confusion and to provide the most helpful responses. The questionnaire itself should also be short — stick to two pages at the most.
- Personally addressed mailers: When mailing out a survey, address it to an individual instead of the whole household or “to whom it may concern”. By personalizing, you will increase the likelihood of a response.
- Include postage: Include an already addressed and post-stamped envelope. By removing these barriers you’re more likely to get responses.
- Send a reminder: Mail out a second reminder about two weeks after the first mailer goes out. People are busy and can easily forget, so a little nudge can go a long way.
Another option for conducting research is through phone interviews and surveys. By reaching out directly to customers over the phone and asking a small number of questions, you can quickly gather insights for understanding your customers. Of course, this can be challenging today with so many people having an aversion to answering their phones, especially to unknown numbers. Younger generations — especially Millennials — dislike answering their phones, so take that into account when deciding if phone surveys are the right method for your business and who your target market is.
Follow these guidelines to get you started with phone surveys:
- Be direct and upfront with your intentions for calling.
- Avoid pauses or awkward silences which can lead to a drop in interet from responders.
- If needed, ask permission to reach back out for follow-ups or additional information.
- If you don’t get an answer, don’t leave a message, call back later.
Another benefit to phone surveys is that they allow you to reach a larger geographic audience than other channels, so if a wide geographical range of customers is a priority to you, consider phone surveys as your primary method for conducting research.
Personal interviews are the best method if you have a flexible budget and a long list of questions. There are two main types of personal interviews for conducting market research:
- Focus groups and group interviews: Typically the most common method for larger companies, focus groups are a good option for brainstorming product offerings, understanding buying preferences, and getting a deeper understanding of consumers’ purchasing behavior in certain markets.
- One-on-one interviews: If you have a long list of questions or a checklist to go through, one-on-one interviews can be the best option to gather the most meaningful insights. You’ll need to conduct a significant amount for statistical relevance, but they offer an opportunity to really connect with a potential market and understand your customers on a deeper level.
Secondary research is much more accessible and cost-effective than primary research. It’s a better option if you have a limited budget or already have a good idea of what your target market is. Before starting primary research, try doing your own secondary research to understand what areas you need to focus on to maximize the impact of your research budget.
Secondary research is also easier to come by. It has often already been compiled, analyzed, and published by someone else. Secondary research can include, but is not limited to:
- Reports and studies from government agencies (including census data and labor statistics), research agencies (like Pew, Gartner, or Forrester), trade associations (like Retail Dive, QSR Magazine, and more), education institutions, or other businesses in your industry.
- Published content from publications, trade journals, industry publications, competitor content, and more.
Some low-cost or free resources you can use for your initial or secondary research include:
U.S. Census Bureau: The U.S. Census Bureau provides data about the economy and the U.S. people. Every ten years it conducts the Population and Housing Census where every resident in the United States is counted. The agency also gathers data on household wealth, retails sales, nutrition programs, and more.
USA.gov: USA.gov has statistical data sourced from several different federal agencies. You can see trend data related to education, crime, small businesses, and more. These are sourced by the Bureau of Transportation Statistics, Bureau of Economic Analysis, and Bureau of Labor Statistics, to name a few. You can also sort information by state or territory for even more localized information.
U.S. Small Business Administration: The U.S. Small Business Administration has many resources for small business data and trends ranging from income and employment statistics to demographic data.
U.S. Department of Commerce: The U.S. Department of Commerce publishes information about products, services, and industries. The agency uses data to spur innovation inside and outside the Federal Government.
Trade Associations: There are several trade associations that publish resources specific to fields and industries. The Directory of Associations can help narrow down an association for your industry, or you can perform an internet search to identify publications most relevant to your business.
Pew Research Center: Pew Research Center is a nonpartisan fact tank that informs the public about issues and trends. The center makes its data available to the public after a period of time. From downloadable datasets to survey reports, the center offers an array of free resources if you’re conducting secondary research.
Nielsen Global Media: Nielsen Global Media specializes in understanding data around what people listen to and watch, from podcasts to streaming TV or social media. This is what resource companies and advertisers use to connect to their audiences. While they are a paid service, they do have many free tools and reports that small business owners can use free of charge.
Understanding your target market won’t happen overnight, but it is a meaningful investment for your business. By collecting actionable insights direct from consumers or research studies, you can focus your marketing efforts better, helping you be more intentional with your budget and time, increasing your return on investment, and ultimately reaching more customers.