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The Ultimate Guide to Market Research

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Market research is at the foundation of all commercial success. No matter the industry—from life sciences to manufacturing and consumer goods—it’s imperative for organizations to build and maintain a deep understanding of their customers. 

At its core, market research enables organizations to open a window into the minds of their target customers and better understand how they think. Armed with this information, it is possible for leaders to envision and execute strategies that resonate deeply with customer’s needs, creating lasting relationships and long-term business success. 

A firm grasp of market research—and the many tools, methodologies, and processes that make up this discipline—enables organizations to build significant competitive advantages in their industry. Through a superior understanding of what customers want, organizations can benefit from first-mover advantage, perfectly time their response to market trends, and position themselves as a category leader in the eyes of their target customers. 

The applications of market research are broad-ranging. As a practice, market research has been around for a hundred years. But since Daniel Starch's significan t contributions in the 1920s, the scientific principles and techniques have evolved at a rapid pace. Across a swath of industries, organizations employ market research for everything from generating new product ideas to testing packaging designs before launch. 

Of particular note in recent years has been the increasing popularity of prediction market research, an innovative new approach to market research that addresses many of the issues that limit the utility of traditional tools. 

In this guide, we’ll explore the field of market research in detail. You’ll learn about:

  • Different approaches to market research
  • The market research process
  • Quantitative and qualitative techniques
  • The role of prediction market research
  • How to get started on your next market research project

By the time you’re finished reading this guide, you’ll understand both the theoretical underpinnings of market research, and how you can apply these techniques in your own organization. Equipped with this knowledge, you’ll be well-positioned to drive market research projects that have a meaningful strategic impact for your organization. 

 

Let’s begin.

Table of Contents

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Approaches to Doing Market Research

When setting out to begin a market research project, there are several different approaches that you might consider. These include performing in-house market research, purchasing syndicated research, or partnering with a full service research provider. In fact, depending on the scope of the research project, organizations may opt for a blended approach that combines a variety of these methods.

There are major distinctions between each of these approaches, and they are important to understand before embarking on the research process. The choice of approach will influence everything that follows, and this has major implications on the types of insights organizations can expect to realize from their market research projects. 

Let’s evaluate each of the three main approaches to market research:

In-House Market Research

An in-house research process embraces a do it yourself mentality. This helps organizations execute projects at a relatively low cost. However, unless the organization has its own market research experts, the challenges caused by an in-house approach outweigh the potential benefits.

Market research might seem easy: how hard can it be to send a survey to a group of people and see what they say? While simplistic efforts can yield directional results, uncovering deeper insights requires more sophisticated research and analysis techniques.

Unless your organization has a research department staffed by competent market researchers, an in-house market research initiative is a risky bet and is likely to be unsuccessful in uncovering meaningful insights.

Syndicated Market Research

Syndicated market research is research that is independently conducted by a third party market research organization, which then packages the research and makes it available for sale. The research is conducted by experts using sophisticated techniques and tends to be completed using best practice methodologies. Examples of syndicated market research providers include Euromonitor and Mintel

Syndicated research is often undertaken on a large scale. It is therefore better at uncovering macro trends that affect entire industries than it is at uncovering precise insights relating to specific products or services. This type of research is useful in determining how customers perceive different brands and can be used to map competitors on several variables, for example, a price vs. quality matrix.

Overall, syndicated research is a valuable tool for organizations seeking to understand the broader markets in which they compete. The drawback is that this research is widely available: if you’re buying it, your competitors probably are too. This means that it’s impossible to use syndicated market research tools to uncover unique insights that can drive a significant competitive advantage.

Work with a Full-Service Market Research Provider

Of all the approaches to market research, for most organizations (especially those new to market research or those performing it infrequently) it’s nearly always best to work with a full service market research firm. Organizations can engage full service market research organizations to conduct projects on their behalf, with a very specific focus. 

While working with a full-service market research firm can yield impactful results, it can be an expensive process depending upon the approach and partner selected. These firms offer a highly specialized process tailored to the individual needs of their clients. When entered with carefully thought out objectives, the investment is worth it, particularly for major initiatives where the investment in market research will provide knowledge impacting decisions that will pay for itself many times over.

The Market Research Process

Market research is a multi-stage process, with most projects typically taking weeks or even months to complete. The process follows several logical steps, and skipping any of these stages threatens the value of the project. 

The research typically begins with an exploratory phase that aims to uncover new ideas and trends that helps researchers formulate hypotheses. These hypotheses are then tested using primary research techniques that make use of both quantitative and qualitative research methodologies. Finally, researchers consult secondary data sources that add additional context to the research findings and help inform the most optimal course of action. 

Each stage of the research process demands a different approach, and adopts different research methods, analysis techniques, and skill sets to gather information. While there is no one size fits all approach to market research, the traditional process typically follows these stages:

Exploratory Research

Virtually all market research projects begin with some kind of exploratory research process. In this preliminary stage, researchers are focused on uncovering new ideas and rich insights that they can use to inform the rest of their research. 

Researchers use qualitative research methods like focus groups and unstructured interviews. Participants are asked open-ended questions and are encouraged to share their views on issues pertinent to the research. Exploratory research tends to be more of a free-flowing discussion than a tightly-structured research process. 

The goal of exploratory research is to generate a series of hypotheses that researchers can then test using more rigorous statistical methods. Exploratory research defines the parameters of the research and provides directional insight. This helps firms identify important issues related to the  research.


Many times, organizations formulate their own set of hypotheses. Research hypotheses can be formed from everyday interactions, whether that’s a meeting with a key customer or boardroom meeting of the organization's leaders. Research hypotheses can also be stimulated by external developments, such as the activity of a key competitor, or the passage of a new piece of legislation. 

In formulating their own hypotheses, it can be helpful for an organization to utilize a M/CI platform that synthesizes information on a topic in one place. Platforms like Knowledge360 aggregate news and data from a variety of sources, then apply? machine learning to organize that data, so that users can always be aware of the latest developments of relevance in their market and use it to inform their market research strategies. 

Primary Market Research

After the most relevant issues have been identified using exploratory techniques, researchers then conduct further primary research. Primary research gathers information directly from research participants, and uses a blend of quantitative and qualitative techniques to test hypotheses and uncover additional insights. 

Familiar methods for conducting primary research, including:

  • Surveys
  • Observations
  • Polls 
  • Focus Groups
  • Interviews

The choice of techniques is guided by the focus and scope of the research. There are several characteristics of good primary research, which are outlined below. These are driven by empirical evidence that drives a higher level of accuracy in market research studies.

Use an Appropriate Sample

It is important to select a sample that is large enough to yield results that can be extrapolated to a larger population. This isn’t purely about the number of participants. While selecting a large sample of participants increases the representativeness of the data, it’s also important to select a sample that shares characteristics with the group you are aiming to understand.

For example, a medical device company conducting market research into the purchasers of their products might conduct market research with a sample that includes doctors, hospital administrators, and procurement managers of major healthcare systems. In doing so, they can conduct research with a sample of participants that is representative of their wider pool of customers. 

By performing market research with an appropriate sample that closely resembles their target customer groups, organizations can uncover better insights. 

Then, the strategies that flow from research initiatives are relevant to a company’s core constituents. 

Ensure Research is Conducted Impartially

It can be all too easy for the organization conducting the market research to unintentionally mislead participants into responding a certain way. Research participants are often eager to please, and it’s important that all research questions are framed in such a way that their answers aren’t unduly influenced.

Larger organizations often partner with a full service market research firm to conduct research on their behalf. This ensures that the research is conducted impartially. The largest and most advanced firms, particularly in the CPG industry, even have their own market research functions that operate unbranded research facilities and function as a standalone group.

Regardless of the approach organizations take here, the research participants should, ideally, not be aware of the organization that is sponsoring the research. By ensuring this is the case, organizations guarantee they’re collecting high-quality data that isn’t impacted by partiality in responses.

Take Steps to Manage Response Bias

Response bias is an interesting phenomenon in marketing research, and can often skew the results of research projects. When participants are asked questions about their own behavior, they tend to answer overly optimistically, and often project their aspirational self onto their answers rather than answering in a way that reflects their real behavior. 

Addressing this is a challenge when using conventional market research techniques, but one method which has been proven to reduce response bias is the use of prediction market research techniques. This method asks participants to predict how others might behave, thus removing the aspirational lens that clouds traditional methods. This has been proven to increase the accuracy of market research.

Secondary Research

In addition to primary research, organizations should also incorporate secondary research into their market research initiatives. Secondary research serves to add a rich layer of context to the raw findings of primary research, and can help firms better understand their discoveries in the context of the wider macro environment and marketplace.

Secondary market research is the process of consulting existing bodies of data to create a more comprehensive understanding of an organization's customers, competitors, and wider marketplace. There is an array of research sources organizations can choose to incorporate here, from macroeconomic data from bodies like the World Bank to industry specific data like the clinical trial performance of a competitor’s new medical device. 

It’s important to only incorporate secondary data which the researcher knows to be reliable.

In the modern era, there is an unfathomable amount of data out there, and it is critical that organizations have the frameworks and tools to decipher the signal from the noise. Seek out data from high quality sources, like the U.S. Government (FDA, SEC, etc), or world-renowned organizations like the Organization for Economic Cooperation & Development (OECD).

In dealing with this vast corpus of data, it’s beneficial to have tools that enable organizations to gather and process this data in a systematic way. M/CI platforms like Knowledge360 play an important role here, with built-in integrations to key data sources like the FDA, FACTSET, and Crunchbase. The most advanced tools will make use of advanced technologies like Artificial Intelligence (AI) and Natural Language Processing (NLP) to help researchers distinguish what is relevant, better organize data, and enable new discoveries. 

Qualitative & Quantitative - Adopting The Right Approach

As touched upon earlier, high quality research incorporates both quantitative and qualitative research tools. Qualitative research methods are often used in the exploratory phase of market research, and are intended to drive an understanding of ideas, concepts, and experiences. Quantitative techniques are used to address more specific issues and test hypotheses. They typically express results in quantifiable numeric values.  

The two approaches complement each other well, and virtually every market research initiative should include both quantitative and qualitative techniques. By understanding different types of quantitative and qualitative techniques, their applications, and the advantages and disadvantages of both approaches, you’ll better understand how to conduct a comprehensive market research process that results in actionable insights.

Qualitative Market Research Methods

Qualitative research focuses on driving open discussions of complex issues and ideas to enable researchers to better understand customer’s thoughts and feelings regarding certain issues.  Generally, qualitative research is used at the beginning of the research process, and can help researchers generate a range of hypotheses they can test out with more exact, quantitative methods. 

Market researchers usually conduct qualitative research on a relatively small scale. Because of the nature of the research, it can be challenging to systematically evaluate the output of qualitative research. While the sample sizes are small—typically between 10 and 20 participants—it’s important to ensure that the sample is highly representative. 

Larger organizations may have ongoing customer communities  or run focus groups on a regular basis. This allows them to keep their finger on the pulse of customer feelings towards the brand, products and services. These are helpful to understand both what customers think, and to explore the reasons why they feel this way.

It is common to turn to experienced, full service market research firms to run this type of research. Because the number of participants is small, this process must be managed correctly. Experts or consultants can ensure the research is conducted with the right respondents and eliminate or reduce bias wherever possible. This is particularly true for focus group research, where it can be easy for a facilitator—or even particularly vocal group members—to unduly influence the conversation in a way that is not reflective of the thoughts and feelings of the majority. 

There are a few key qualitative market research techniques that are commonly used. These include:

Focus Groups

These are an effective way to conduct qualitative market research with several participants at once. Research participants are gathered in a group setting, with around 6 - 10 participants being a common size. A facilitator leads the group and guides the conversation through a defined agenda that explores several ideas and concepts. Participants are encouraged to share their thoughts and the rationale behind their beliefs. Disagreements are common and, in some instances, are encouraged. Often, the facilitator will present an alternate view and observe participants' responses.

These sessions are traditionally held in person, but have moved to an online format recently. Focus groups are recorded, and might even be observed in real-time by executives from the organization sponsoring the research. While participants are typically compensated for their time, they must be carefully selected to ensure they fit the research criteria and can provide high quality insights. 

In-Depth Interviews

Market researchers frequently conduct in-depth interviews with individual research participants to explore concepts in great detail. These interviews tend to be at least 30 minutes long. Researchers follow a relatively loose agenda but have the flexibility to dive deeper into any particular topic that the participant discusses. 

In-depth interviews offer perhaps the most comprehensive view of the way that customers make decisions. However, they are expensive to conduct, are time consuming, and don’t scale particularly well. They are best used at the start of the research process to generate hypotheses that can be explored further using more scalable research methods. 

Observations

The use of observational techniques is becoming increasingly common, particularly in categories like retail and consumer goods. Organizations in this industry employ observational techniques like shopalongs. In a shopalong, a researcher accompanies a research participant on a trip to the grocery store to observe the way they navigate the store, ask why they decide to buy certain products, or to observe the way they evaluate different categories. 

These types of research techniques are very insightful in unmasking what goes through the minds of consumers at the moment they are making a purchase decision. 

For example, how does a consumer choose which shampoo they buy? Do they navigate by brand, price, or some other factor? Does the position of the shampoo on the shelf matter? What about the color of the packaging? This is just one example of the types of issues that can be explored using observational techniques. Large organizations spend a fortune on research like this to determine the most optimal shelf location, price, and packaging design for their products.

Another type of observational research is ethnographic research, where the researcher watches a consumer interact with a product. This shows how end users truly use the product, not how marketers envision them using the product in a perfect world. Ethnographic research techniques can often lead to small but meaningful tweaks to products that significantly improve user experiences. 

Strengths of Qualitative Market Research

Qualitative research has three key advantages:

Depth of Research: Qualitative techniques are best used to explore complex ideas in detail and help researchers to understand what participants feel and why they feel it. 

Relatively Low Cost: Because the research is conducted on a small scale with just a few participants, the cost to administer this research is often much lower than larger scale research initiatives.

Adaptable: Qualitative research techniques are relatively unstructured, so it’s possible for researchers to switch gears and focus on a new topic without starting the entire research process again from scratch. 

Limitations of Qualitative Market Research

It’s important to note that qualitative research does also have some limitations. These include:

Time Consuming: Conducting qualitative research isn’t as simple as grabbing ten people off the street and asking for their opinions. It takes time to craft the research agenda, recruit participants, and organize times and venues for interviews, focus groups, or observations.

Subjectivity: Inherently, qualitative research techniques are subjective, and two people watching the same focus groups might come away with very different interpretations of what was discussed. Because the research is relatively unstructured, it’s hard to quantify research insights in any numerical or statistical terms. 

Possibility of Bias: Without highly experienced researchers, it can be easy for bias to creep into qualitative research techniques. One particularly loud participant in a focus group may overpower the conversation. Psychological phenomena, like groupthink, can also limit the effectiveness of research conducted in a group setting. 

Quantitative Market Research Methods

Quantitative research techniques employ more rigorous, data-driven techniques to explore research hypotheses with a larger group of respondents. In many instances, these responses are then analyzed using advanced statistical techniques, with the output used to generate insights that inform an organization’s strategies. Researchers often rely on technology to make this process more efficient.

Researchers conduct quantitative research with hundreds or even thousands of participants. Large sample sizes are preferred to drive accuracy and statistically significant findings. While it’s possible for organizations to administer quantitative research on their own behalf, it’s far more common to contract with an external, full service market research firm. This ensures that the research methodologies are sound and that the research can be reliably used to inform strategic decision making. 

Quantitative techniques are primarily used to quantify research topics in numbers, graphs, or charts. They are used to test an existing hypothesis or set of hypotheses, rather than generate new ideas. In designing quantitative research, researchers should first start with these hypotheses, and then formulate research questions that will either prove or disprove these hypotheses.

Surveys are the most common type of quantitative research, and can be administered in a wide variety of ways.

Market Research Surveys

A survey is a series of questions administered to research participants through email, phone, online, or an in-person medium. Every participant receives the exact same set of questions. This uniform design makes it relatively simple for researchers to perform analysis on the survey results.

Survey questions are typically close-ended questions, which forces participants to select an option from a range of choices. Questions can be presented in different ways: examples include yes/no questions, ranked choice questions, or multiple choice questions. 

When creating a survey, it’s possible to set up the research process to conduct a particular type of analysis, such as conjoint analysis or TURF analysis. Administering these types of research studies is complex, and often requires specialist technology and guidance from experienced market researchers. 

Strengths of Quantitative Research

There are three key strengths to quantitative research techniques:

Data-Driven: Quantitative research is characterized by its ability to consistently produce reliable, data-driven results. For researchers, it can be relatively straightforward to analyze quantitative data. This is due to the structured nature of the raw datasets it produces. By conducting quantitative research, organizations can understand key issues, preferences , and consumer opinions in numeric form, giving them increased confidence to make informed decisions. 

Scalable: Quantitative research can be relatively low cost to conduct, and better lends itself to being administered with large groups of respondents. Administering the same survey to 1,000 people is significantly easier to scale than organizing focus groups or individual interviews for the same number of participants. Because of the large sample sizes used in quantitative market research, the research often produces reliable results that show statistically significant trends. 

Easy for Research Participants: It’s much easier for participants to respond to quantitative research studies than it is for them to participate in qualitative research. This leads to higher response rates, increased engagement levels, and more robust results. The internet has been particularly helpful in this, and millions of people now take online surveys every day in return for small incentives.

Limitations of Quantitative Research

While a powerful research methodology, there are a couple of limitations to quantitative market research techniques:

Research Scope: Quantitative research exists to tell us what respondents think about the research hypotheses, but it doesn’t tell researchers why they think that way. While researchers can obtain definitive answers on their hypotheses, oftentimes, they will lack the context required to better understand the ‘whys’ behind the outcome of the research.

Too Structured: Because all of the research follows the same rigorous structure, it may be impossible for researchers to explore interesting insights that individual participants share in the course of the research. The confined structure might make data analysis easy, but it makes it more difficult to be flexible in administering the research to adjust for patterns as they emerge.

Limitations of Traditional Market Research Techniques

Many of the strengths and limitations associated with qualitative and quantitative market research cancel each other out if a combination of both techniques are used. Even so, there are still a range of additional limitations that apply to these traditional approaches to research. 

It’s important for market researchers to be aware of the flaws in any approach, so that they can take steps to avoid the impact of these factors on their own research initiatives. The three biggest drawbacks of traditional research approaches that incorporate both qualitative and quantitative techniques are:

1. Response Bias

When asked to predict their own behavior, respondents often answer in an aspirational way. This can cloud the results of the research, as there is a demonstrable gap between these self-reported behaviors and behaviors that participants exhibit in real world situations.

2. Reliance on Historical Data 

Conducting market research takes time: projects are often several months long. In a fast moving marketplace, by the time an organization gets access to insights from market research, they may be outdated. 

Traditional quantitative methods often model historical data to predict future behavior. In reality, the passage of time allows for many changes, including the way consumers behave. There are numerous factors that researchers cannot control for, whether it's a competitor releasing an innovative new product or a new government regulation that changes market conditions. 

3. Challenging to Explore New Ideas

Truly innovative new ideas that open up completely new product categories are difficult to explain to research participants. Because of this, they can be hard to research in a comprehensive way. Participants struggle to imagine how truly disruptive  products and services might fit in their everyday lives. 

A New Approach: Prediction Market Research

Over the past decade, a new approach to market research has become much more prevalent: prediction market research. 

Prediction market research challenges research participants to predict how a particular audience might react to new products or services, or the impact of a new consumer trend. Participants bet virtual currency to indicate their level of confidence in their bets placed, and are asked to provide a rationale for why they think they are correct that adds a rich layer of context to results. An advanced algorithm analyzes this data and presents a series of predictions on the probable development and adoption of new products, services and trends that can shape entire marketplaces. 

Numerous studies have found prediction markets to be more accurate than traditional market research; just take a look at some of the case studies from the team at Cipher predicting the adoption of new trends in plant-based proteins and quick service restaurants. By asking research participants to predict the behavior of others, prediction markets significantly reduce response bias, which dramatically improves research accuracy. 

Even better, if you’re working with an experienced prediction market research provider like Cipher, projects can be completed three to five times faster than conventional market research projects, reducing turnaround time to days rather than weeks and sometimes even months. 

If you’re interested in learning more about additional applications of prediction market research, check out HUUNU  Futures. a new type of prediction market research, built to address a gap in the market. 

HUUNU Futures enables organizations to more accurately predict future consumer behavior and long-term trends. The technology can accurately forecast the size of disruptive new trends, understand consumer adoption rates, and anticipate customer needs. With this type of foresight , organizations can make decisions with a higher degree of clarity, allocate resources in an efficient manner, and position themselves to capitalize on future opportunities. . 

Related: Book a demo of HUUNU Futures here

Kick Start Your Next Market Research Project with Cipher

Market research plays a foundational role in many organizations. It enables them to understand the wants, needs, and desires of their target market, and skate to where the puck is headed to meet future customer demands as soon as they surface. 

Traditional market research techniques, both qualitative and quantitative, have a lot of capabilities that enable organizations to build much more complete pictures of their customers and better serve their needs. However, in many instances, traditional research methods function more as a rear view mirror, when many organizations wish for a crystal ball. 

Prediction market research techniques offer a better solution and directly address some of the weaknesses evident in traditional market research techniques. These techniques offer a clearer picture of the future with faster results and enhanced insights. 

To learn more about market research, visit our Learning Center, or schedule a call with one of our market research experts to learn more about HUUNU Futures.

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