The Importance of Doing Market Research for Your Business Plan and the Different Types of Research to Take into Consideration

Any successful business starts with a business plan, and a thorough business plan should definitely start with Market Research to provide you with a detailed analysis of your market and to help you identify new opportunities.

Market research is the process of gathering and analysing information about target markets, potential customers, and competitors in order to keep up with the latest trends and provide an insight into customers’ thinking and buying patterns.

Different types of market research:

1. Primary vs. Secondary

There are two main types of market research: primary and secondary.

Primary research is the process of collecting new and raw data directly from the source, while secondary research involves analysis and interpretations of the data already collected through primary research.

Focus groups with specialists, face to face interviews with customers and online surveys are the most used methods in primary research. On the other hand, the necessary data to conduct secondary research can be found on the internet, on the reports of government and non-government agencies or by contacting market research firms.

Since primary research is done from scratch and conducted on the basis of new first-hand data it can be a long, expensive process. Secondary research is often faster because all the relevant data is already available but, often you will need a subscription or to purchase one-time access to see this informaiton. Depending the source, this can be expensive as well.

2. Quantitative vs. Qualitative

Within the primary and secondary research, two types of data collection methodologies can be used: qualitative and quantitative research.

Qualitative research uses unstructured or semi-structured techniques, like focus groups and interviews, to collect non-numerical data such as opinions, motivations, attitudes and behaviors. It is used to initiate market research and aims to develop hypotheses for potential quantitative research.

Quantitative research uses structured data collection methods, like surveys and observations, to generate statistics and numerical data such as spending patterns and market trends. It can be used to test theories and assumptions, draw general conclusions from the research and make future predictions.

For your market research you can choose either type of research or a mixed methods approach depending on, among other things, your budget and the type of data you need to answer your research question.

Why market research is important to the business plan

Accurate market research helps businesses better understand the state of the market, the consumer behavior, and the economic trends. All these are critical information to have when creating a Business Plan. They provide managers with the knowledge to make smarter business decisions because, if done correctly, market research is a powerful tool to help your marketing and financial strategies and minimise the risks involved when making key business decisions.

Market research is also important to the business plan because it helps you assess your business ideas and better understand your customer by answering questions such as who is buying your product, what motivates them, and whether they are loyal to your brand.

Keep in mind that market trends and the customers needs and preferences are constantly changing. Therefore, conducting market research should be considered as an ongoing activity to help you better understand the market dynamics and improve your offering.

How to approach market research

Before you start market research you should, first of all, set out clear goals and objectives and identify your target audience. Then, you have to choose the most suitable market research and data collection methodologies. Once all the necessary data is collected you have to analyse it and draw conclusions that will guide your business decisions.

Although you may be able to conduct your own market research, it may be better to hire a professional Market Research Firm to get the maximum benefits from the whole market research process. They have more expertise in the field and they will guide you through important decisions such as the suitable type of market research to use and the perfect questions to ask in your surveys or interviews. Finally, they will provide refined market analysis and business recommendations to help you make the best decisions for your business.