One of the greatest fears about not knowing something is not knowing what you don’t know. When you know what you don’t know, you can explore it and address it. When you don’t know what you don’t know, it’s hard to know where to start.
When it comes to your business, you need to know many things. Out of all the critical information you need know, knowing your market is the most critical. You not only need to know your market, you need to understand it. The best way to research your market is through market research (go figure)!
Without a market to address, you have no one to sell your product to. This may seem like common sense, but entrepreneurs often ignore the need for market research. Many entrepreneurs have the mindset “Build and they will come”. If this is your marketing plan, you don’t have a marketing plan.
This is relevant to all entrepreneurs regardless of the stage of their business. Market research is just as important to a young startup trying to determine product market fit as it is for an international enterprise trying to gauge the feasibility of launching a new product line. Market research can be used by businesses for a variety of reasons including targeting new verticals, competitive analysis, ad testing, product testing, UI feedback, and many others.
At the highest level, there are two different types of research, primary and secondary. Primary research is new research, carried out to answer specific issues or questions. Secondary research makes use of information that is publicly available or for sale privately, and was previously gathered for other purposes.
Although it seems counter-intuitive due to its name, many times you will begin with secondary research. This way, you’re able to quickly get an overview of the market opportunity. In my previous entrepreneurial experiences, I always used secondary research for identifying how big my target market was and for researching my industry and competitors.
Often a young pre-funded startup can only afford to do secondary research, as primary research does require some capital and time. Secondary research is low cost and information can be gathered quite quickly. Just remember that someone else’s primary research can be your secondary research. Some great resources for secondary research include:
- Census Data
- Search Engine (Google frequency of words being searched)
- Business Publication Articles (Forbes, Entrepreneur, etc.)
- Case Studies
- Industry reports
- White papers
Once you’ve completed your secondary research you’ve either gained enough information to know if the project/product is unfeasible or you’re ready to dive into primary research. This primary research will help answer all the questions that your secondary research couldn’t.
At a high level primary research can be broken into different types of methodologies, quantitative and qualitative research.
Quantitative research includes any research methods that produce hard numbers which can be turned into statistics. An example would be to have your customers rate a product’s new features on a scale of 1 to 10. The objective of quantitative research is to quantify data, measure the incidence (rate of occurrence) of various reviews, and generalize results from a sample to the population of interest. Quantitative research is great for entrepreneurs looking to analyze data to forecast sales, find out how the population ranks their brand among competitors, and for a ton of other valuable reasons.
The sample (the group of people you talk to) for quantitative research usually consists of a large number of cases representing the population of interest. So let’s say you want to sell a product to IT decision makers, they would be your population and your sample would be the 100 IT decision makers you actually talk to. The larger the sample size and closer it is to the actual population of interest, the more accurate the findings are. The sample for quantitative studies can come from a number of places but the two most common are customer lists (meaning you're talking to your own customers) and panel companies (meaning you're talking to the general/targeted population).
Quantitative research data collection methods, which consist of mainly “surveying”, are very structured. Here are some of the main quantitative research data collection methods.
- Telephone Interviews - Telephone interviews are used for mostly close-end questioning, ideally when the ranges of issues are known. A good interview can help extract deeper insights than a self-administered survey such as an online or paper survey. Unlike online surveys, you’re not able to use the aid of any visual stimuli (photos, video, etc.) and the interview process is completely verbal.
- Personal Interviews - Personal interviews are best when a face-to-face/personal environment is desired. Personal interviews are usually held in a central location such as a shopping mall or at an event. Interviews in shopping malls are great if you have a consumer product. The main caveats with in-person interviews are that they are high cost and the recruitment of samples can be difficult.
- Online Surveys - Online web-based surveys are the most common form of data collection for quantitative research. Online surveys tend to be cheaper and faster to implement than all other survey types. Entrepreneurs can create surveys using various survey software including free solutions such Google Forms all the way to robust market research solutions such as Decipher’s Beacon platform.
The analysis of quantitative data is a statistical process. The data is usually analyzed and presented in the form of tabulations (crosstabs). Tabulations are subsets (demographics, psychographics, etc.) of your sample. Tabs are created so that you can see how certain subsets of your respondents answered questions differently than others. Quantitative research findings are conclusive and can be used to make generalizations about the population of interest. Most final presentations from a quantitative study will include tables and charts, as well as a final recommendation based on the findings.
Qualitative research is an in-depth exploration of the rationale behind what people think, feel or do. An example would be finding out people’s attitudes about a new service you’re thinking about offering. The objective behind quantitative research is to gain an understanding of the underlying reasons and motivations of your potential customers. The insights gained from qualitative research differ from the statistical evidence collected from quantitative research. Qualitative research is great for finding out whether people will buy your new product, and more importantly, why they will buy it, but it shouldn’t be used to see how many people will buy it or for any sales forecasting.
The sample for qualitative research usually consists of a small number of non-representative cases.. The sample size for qualitative research tends to be smaller than quantitative research because the sample doesn’t need to be large enough to be representative of the population of interest. Most qualitative sample is recruited from previous quantitative studies or comes from intercepts in central physical locations.
Qualitative research data collection methods, which are very “conversational”, have very little to no structure. Here are the two main qualitative research data collection methods.
- Focus Groups - A focus group is group of people who are asked about their perceptions, and opinions towards a product, service, concept, ad, etc. Focus groups are a great way to get in-depth feedback on new ideas. Focus groups are usually small (less than 20 people) and the hope is that the group interaction will lead to unplanned reactions.
- In-Depth Interviews - In-depth interviews are traditionally long, one-on-one interviews using open-ended questioning. Open-ended questioning allows for respondents to talk openly how they feel about your brand/product, service, etc. Unlike personal interviewing, which is a structured quantitative research technique, in-depth interviewing is a unstructured and non-directive approach that is meant to explore the rationale behind the respondents’ thoughts.
Unlike the analysis of data from a quantitative study, the analysis of data from a qualitative study is non-statistical. The findings are meant to be exploratory and investigative, not conclusive. Unlike qualitative research findings, quantitative research findings can’t be used to make generalizations about the population of interest. Many times a final presentation for a qualitative study will include verbatim quotes from the respondents and will be used as a sounding board for further decision making.
Mixed Methods Approach
Quantitative and qualitative don’t have to be rival methodologies, they can be tools that work together as well. Both types of research provide different perspectives and usually complement each other. An example of a mixed method approach would be to use an online survey and then based on their answers, participants would be selected for in-depth interviews. Another example from the opposite side of the spectrum would be having a focus group regarding a new product idea, and following up a couple of weeks later with an online survey that includes concepts for the new product.
There are even web-based solutions that allow you to do both quantitative and qualitative research online. You can create an online survey on Decipher’s Beacon platform, and integrate the qualitative chat software iModerate with your survey, which allows human moderators to do online real-time in-depth interviews with a subset of respondents from your online survey. This gives you the best of both worlds, statistical data from your web survey and exploratory insights from your interviews.
If you can only afford or have the time do one of the research approaches, make sure you choose the approach that best fits your research objectives, and be aware of its caveats described earlier. Now get out there, talk to customers, gain insights, and learn your market!
Eric Santos is a young entrepreneur and writer. Eric is the co-founder and CEO of Scheduly, a mobile app that talks to and schedules your employees so that you don’t have to. Eric is the previous founder of WishBooklet, Dwibbles and Soshowise. Eric has written for a number of publications including AskMen, Elite Daily, Under30Ceo and YFS Magazine.