What is Market Research?
To really clarify the key differences between the various types of research that go into the development of a new product or service, we’re dedicating a post to each one. Previously we’ve discussed Design Research and User Research, and in this post we’ll be honing in on Market Research.
What is Market Research?
The primary goal of market research is to understand from the offset whether or not there is a viable market for a product or service — whether people will actually likely buy it — and if so what the market landscape currently looks like — what they are currently buying.
Market researchers will seek to answer questions such as:
- What is the market size?
- What products or services are currently available to our target market?
- What are their price points and what are people willing to pay for them?
- What do customers think of the current offerings? Do they like them or do they think there is room for improvement?
This is a non-exhaustive list but gives an idea of the sorts of information that market research aims to uncover.
These questions enable researchers and designers to understand whether or not the product or service they are building is likely to be wanted by customers, and whether or not people will likely be willing to pay for it. This process is the identification of product-market fit. You can read more about product-market fit in our blog post all about it here.
Identifying these points at the beginning of a product or service development journey means that should any of these questions highlight that there perhaps isn’t a market for the product or service, or that people will not likely buy it, then they needn’t waste any further time or resources developing it. This prevents time and money being invested in a design that is unlikely to pay off.
Types of Market Research
In order to gather this information, market researchers can conduct either primary or secondary research.
Primary research is that which the researchers conduct first hand. Within market research, primary research methods could include:
- Hosting focus groups to discuss market acceptance levels
- Conducting interviews to enable product testing
- Carrying out social listening to understand what people are saying about a product or brand
- Ethnography
- The use of biometric data to understand biological reactions to products and their messaging
On the other hand, secondary research involves the use of data already publicly available. This could include industry reports, market statistics, social media data or even, if you’re an established company, reports on your previous sales performance. It is data that has already been collected.
Another element of market research is conducting a competition analysis. This involves looking at other products or services similar to the one you’re designing, and understanding their strengths and weaknesses. This helps guide where you position yourself within the market. Learn more about how to conduct a competition analysis in our blog post on it here
It is important to keep in mind during this type of research, that there is a difference between market research and market analysis. While on the surface they seem to have a similar goal, their practice differs. Where market research involves conducting research within your target market to understand your customers and their wants/needs, market analysis is more focussed on the assessment of a market within its wider industry, and understanding whether it is the best place for your product or service. We speak in much greater detail about the difference between the two in our post here.
Who does Market Research involve?
When conducting market research, researchers will be looking to speak with those that they have identified as their target customer. You can refer back to our post on Users vs Customers for a refresher on who constitutes a ‘customer’.
This could be an existing customer if they are conducting research on behalf of an established business, or it could be customers of a competing product who are present within the target market. Regardless of the position of the business, the aim of market research is to speak with people who it is believed might be interested in buying the new product or service, to understand their current consumer behaviour and whether there is the desire — or room for — a new product or service.
The reason that market research is focussed more on customers than users, is that the aim is to understand at a higher level consumer behaviour and buying trends. As we established in this post, the customers hold the buying power when it comes to new products or services, and in light of the fact that in some cases the customer and the user are two different people, it is important to differentiate them and ensure that they will provide the level of information that the research requires.
How does Market Research differ to Design/User research?
The key differentiating factor between market and design/user research is the level of enquiry that the research makes, and the type of data that the research aims to gather; “market research is valuable because it shows us broad information; user research is valuable because it gives us deep insights.“ (Source).
The difference is sometimes summarised as ‘analysing attitudes’ vs ‘analysing behaviour’; where market research seeks to understand what people are saying and whether or not they will buy something — their attitude towards something, user research aims to gather a deeper understanding as to why they are behaving that way, by not only listening but also observing people’s behaviour. Often individuals may not have actually considered why they feel a certain way or do a certain thing, and user research can dig deeper to uncover these insights that would not have always been identified.
Market and user research are also conducted on very different scales. Typically market research is looking at what people are saying and at customer behaviour on a very broad scale. As a result of this, although they will often use similar research methods to user and design researchers, they are used for different purposes.
Contrastingly, user/design researchers require a much more detailed and in-depth understanding of the people they include in their research, and because of this they will often opt to conduct interviews or host focus groups. These are carried out on a much smaller scale and include far fewer participants, because they need more time and have much more intricate conversations to uncover the level of insights that they need.
Research Methods: A breakdown
We put together the above table to break down the key characteristics of each of the research methods that we’ve discussed, so that it hopefully clarifies the key differentiators.
The takeaways
Ultimately the biggest takeaway that we hope you’ll gain from this series of posts is that all three types research that we’ve covered — Market, User and Design Research — come at the start of any product development process to better understand who is using it. The differences are that they each come from a different perspective and with a different approach; they are either looking at it from a customer/buyer view [Market Research], a user view [User Research] or a business strategic view [Design Research].
