Market research and market reports

A business that understands its customers and their buying habits can sell more effectively, compete with other suppliers, target new customers and identify new opportunities.

There is a wide range of published and non-published data available, which can help you build up a picture of general trends and your customers’ buying habits.

This guide explains what you need to know about market and customer research, how to build your knowledge and how using field research can fill in the gaps.

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Customer research: what you need to know

Carrying out customer research on loyalty, satisfaction and service can make a big difference to your business. If you know how your existing and potential customers make their buying decisions, you can adapt your sales methods to fit their needs.

Knowing such things as your customers’ gender, age, occupation, income, lifestyle and attitudes can help with your marketing and sales plans. But knowing what they think of your products and service and how they rate you against your competitors will enable you improve your business’ offering.

To target your customers successfully, you should know as much about their buying habits as possible. To find out what questions you should be asking, see the page on ten things you need to know about your customers in our guide: know your customers’ needs.

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Information on market trends and competitor intelligence

Understanding market trends is important if your business is to make the most of its opportunities and remain competitive. You also need to understand your competitors and be aware of what they are doing in order to predict their next moves and exploit any weaknesses.

Try to get answers on:

• Demand for your product or service – is it growing or shrinking?
• What are the current general economic and market trends?
• How customer requirements and buying behaviour could change in the future.
• What new products are in your competitors’ pipeline – could they make yours look outdated?
• How competitors are changing – what are their plans?
• What do competitors offer and what prices do they charge?
• How do your competitors advertise and promote themselves?
• Is there any forthcoming legislation which could affect your market?

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Using market reports and other data

Once you have identified the information you need, you can start to gather it.

You can find useful data from a wide range of sources, including:

• your local business reference library 
• your trade association, local authority or Chamber of Commerce
• the Office for National Statistics – for information on the economy, population and social trends
• the business pages of national newspapers
• commercial publishers of market reports – including KeyNote, Euromonitor, Mintel, Datamonitor, The Economist Intelligence Unit and Market & Business Development
• your business’ own data – for analysis of your sales records or levels of enquiries
• your customers – monitoring their buying habits and how they behave is one of the best methods of market research

For other useful sources of data, see the page on learning about your competitors in our guide: understand your competitors.

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Interpreting market information

Though there’s a lot of readily available market information, you need to be careful how you interpret it.

External data might not be in a format that’s easy to use. It may have been collected for other purposes or be from a range that doesn’t tally with your target market.

Beware of out-of-date market information. This can be misleading, as the market may have changed significantly since the information was published. It can be particularly hard to tell how recent any information published on the internet is. Some information on the web can be unreliable or biased.

Remember that statistics can sometimes mask the true picture. For example, an ‘average’ income for the population in your area might conceal a high proportion of low earners – meaning fewer people can afford your product than it appears.

The same principle applies to your own sales records – one or two major customers could distort the picture.

Most importantly, don’t make up your mind in advance. Finding market information that simply confirms what you already believe is easy – but only a realistic picture of your customers and markets will be useful to your business.

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The basics of quantitative and qualitative field research

Published market information and your own data can tell you a lot about your customers and your market – but it’s unlikely to tell you everything.

Field research can be quantitative or qualitative:

• quantitative research provides statistical information – for example, how many potential customers there are and what their average incomes are
• qualitative research examines people’s feelings and attitudes towards your product or service, and what motivates them

You’ll probably need to carry out some of your own quantitative and qualitative field research – talking, observing or carrying out product tests with customers and potential customers. This can help you to:

• test customers’ reactions to a new product, and adapt it if necessary
• investigate attitudes of customers and potential customers
• find information specific to your business or a local market, rather than the market as a whole

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Planning field research

Good planning is essential if you want to get the right results from field research.

First you need to decide how to collect the information you want. Popular methods include:

• A survey, using a fixed set of questions. The most effective way of carrying out a survey is typically with face-to-face interviews, but phone interviews, online questionnaires and postal surveys are also possibilities.
• A discussion – often held in small focus groups. Discussions are good for qualitative research as they allow you to explore people’s attitudes in more detail.
• Observation, to investigate what people do rather than what they say. For example, look at how shoppers react when they pass a particular point-of-sale display.
• An experiment – you might, for instance, run a blind taste test of your soft drink against your competitors’ products. Alternatively, you could lend your new product to a customer and ask for feedback.

Once you have decided how you’ll gather the information, you’ll need to work out how to make it happen. Budget how much time and money will be needed, as the time involved will normally be significant.

You’ll need to design your research. For example, drawing up a questionnaire or deciding how you’ll run a focus group.

Then there are the logistics. If you want to carry out street interviews, make sure your researchers have the required local authority licence and identity card. If you want to run a focus group or conduct face-to-face interviews or product tests, where will you hold them? Where will you find the participants? And who’ll run the session?

Consider carefully whether you have got the skills in-house to do this. If not, it’s probably a good idea to get a market research agency to do your research for you.

See the page in this guide on tips for successful field research.

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Tips for successful field research

The way that you conduct your field research will have a significant impact on the quality of the results. Below are the key points to remember when conducting your research and interpreting your results.

Ask the right questions

If your questions are badly phrased then they may produce misleading results. Avoid closed questions which encourage the answer “yes” or “no”. A stationery shop that asks customers if they intend to buy pens in the next year will find out just that – but they won’t discover what type of pens, eg specially engraved pens or cheap biros.

Talk to the right people

A survey at a railway station, for example, will get answers from commuters, but if you’re targeting people who stay at home with young children, this won’t be representative of your market.

Talk to enough people

A survey, for example, of two people won’t get you enough information. Some market research professionals suggest asking at least 150 people in order to get a complete picture.

Keep research impartial

It’s easy to encourage people to give the answer you want. For example, by asking leading questions or smiling at the ‘right’ answer. Discussions, where you’re not working from a list of set questions, are particularly easy to distort. And in a focus group, individuals with strong opinions may influence the views of others.

Interpret results with care

You need to make sure you draw the right conclusions from your research. Bear in mind that people may distort answers in the hope of affecting what you do. For example, they might say they would be interested in a product “if the price was lower”. Qualitative research – where you’re investigating feelings and attitudes – can be particularly difficult to interpret.

Be realistic

It can be tempting to pick out results that confirm what you want to hear, and ignore the rest. But ignoring negative results could damage your business. Be prepared to modify your plans if necessary.

If you don’t have the time or skills to carry out research yourself, consider using a market research agency. See the page in this guide: should I use a market research agency?

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Should I use a market research agency?

Though you may be able to do your own field research, it may be better and more cost-effective to outsource the job to professionals and use the services of a market research agency – see our guide on outsourcing.

The benefits to your business are:

• Market research professionals are likely to get better results. They have experience in designing survey questionnaires, running focus groups and asking the right questions.
• Customers may find it easier to be honest with an outsider, particularly if they have a complaint.
• Customers may worry you’re trying to sell them something if you conduct the research yourself.
• You may find it difficult to be impartial, particularly if people criticise your business.

For small-scale field research, your best option may be a freelance researcher. A market research agency won’t usually take on projects with a budget below £3,000.

As well as recommendations from business contacts, you can search for a market research agency on the Market Research Society website [opens in a new window].

Before taking on a market research agency or a freelance researcher, investigate their reputation. Ask for a list of previous clients and contact them for feedback. Check the agency or researcher has relevant experience and consider how comfortable you’d feel working with them. And get a clear idea of fees for the services you want.

Check the agency’s researchers or freelance researchers fit the image of your business. If they’ll be carrying out street interviews, confirm they’ll have the required local authority licence and identity card.

Make sure you provide a thorough and clear brief. This needs to cover areas such as the business objectives behind the project, the information the research should uncover and how you intend to use the results.

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CASE STUDY

Here’s how I made the most of market research

Bladonmore is a financial training and media business, based in London. A customised service and a gritty, real-world approach to training have enabled the company to grow rapidly during its first two years. Director Richard Rivlin explains how effective use of market research has contributed to Bladonmore’s development.

WHAT I DID

Spend time not money

“Like most companies starting out, we needed to research our target market but didn’t have limitless cash to pay someone to do it for us. Doing it yourself is cheap in money terms – but you have to invest your time if you expect to get anything useful out of it.

“Over a period of three months, I went on a virtual fact-finding mission using the internet. If you persevere, you can find an incredible amount of quality information for free, including market reports and expert analysis. Business consultants’ websites, industry bodies and sector-leading companies are a good place to start.”

Apply the research

“Throughout my research, I was careful to avoid analysis paralysis. There’s no point hiding behind piles of market data and thinking you have done something constructive. You have to use the information to develop your business. Having clear objectives helps. I wanted to know the size of the market, to learn from competitors’ successes and mistakes and to understand what potential clients want.

“I focused on data from reputable sources and used it to help formulate a business plan. At a later stage, I also used research facts in Bladonmore’s marketing material – but always bearing in mind that I didn’t want to give away too much to competitors.”

Keep up to date

“Research isn’t just about reading the occasional market report. It should be an ongoing process that keeps you up to date with your market, your rivals and your clients. I find newspapers one of the best research sources. There’s something relevant to our business in the press almost every day. For example an article about increased activity in venture capital (VC) markets is useful, because companies looking for VC finance often need financial presentation training.”

WHAT I’D DO DIFFERENTLY

Head for the top

“I didn’t wake up to the wonders of free expert research soon enough. If I had my time again, I’d head straight for the websites of top consultants. You may not be able to afford their research fees, but they publish enough in the public domain to meet the needs of many smaller businesses.”

Be disciplined

“I now make it part of my daily routine to clip useful research out of newspapers. I even carry around a small pair of scissors for the purpose. It’s yielded several business development ideas and I wish I’d got into the habit sooner.”