Market research is the back bone of new product development, marketing expert Abhishek Sareen discusses the 5 types and how to do market research.
Market research is an important exercise for making great innovative products. Whether you are opening a new restaurant or your company is launching a new product, or even if you’re trying to explore new markets or consumer segments, research is necessary for everything.
So what’s market research? It is the process of finding consumer insights and actionable market intelligence to make new product development decisions. Market research can broadly be classified into the following applied categories:
- Consumer Research: This involves getting insights from the end consumers, by understanding their needs and wants.
- Industry Research: Also known as trade analysis, industry research involves keeping track of industry and state policies, which could affect your industry. It also involves estimating the market size, i.e. how much is being spent in your category in your country or worldwide, and the size of your target group (TG).
- Competitor Research: This involves analyzing existing market players, benchmarking their products to understand their strengths and weaknesses, what market areas they are strong in and where they are vulnerable.
- Trend Research: In order to create a breakthrough product, marketers need to keep track of their industry trends, by keeping abreast with the latest technologies that are being introduced by global competitors, and component (or tier 1) suppliers. They also need to have the insight, or rather foresight, to forecast upcoming trends.
- Cross-Industry Research: This involves keeping track of the trends in the adjacent industries that could influence your industry and markets. For example, if you are in the two-wheeler automotive industry, you would like to keep track of development in industries & markets like the four-wheeler, fashion industry, gaming, etc.
Market Research Methodologies
To conduct market research, marketers use methodologies that can broadly be classified as
- Primary research methodologies involve getting intelligence directly from your intended consumer or customer, for example, in-person interviews, observations, etc. This is also called first-hand research.
- Secondary research methodologies is where you get the information through some secondary or intermediary source. These could be reports published by various agencies, publicly available information on the internet, etc. Also called second-hand research.
How to Select Your Research Methodology
Whenever possible doing first-hand primary research is very important, as it gives you believable insights. When you are conducting market research you would be at times overloaded with information, and your job would be to cut through the clutter and prioritize your finding, which could lead to creating an actionable brief for your new product development or NPD team.
However, if for some reason, you are not able to do first-hand research, you could then look up data online or hire an agency to do the research for you.
For example, it’s very difficult to do primary research in the defense sector, as most customers and market players are unlikely to divulge any information. This happened on a project I was working on, so we had to depend on secondary research data.
Goals of Market Research
Market research is intended for new product development (NPD); the aim is to create briefs to improvise existing products and create new ones. You may also aim at entering a new market or consumer segment. It’s most often a product marketing or brand manager’s responsibility to conduct market research, which can then provide direction to the NPD team for the future products that they would be developing.
Market research analysis should be done with the aim of providing intelligence which can lead to actionable decisions. Market research companies often leave their findings so open that it’s almost impossible to take any call. I once referred to reports from a major trend forecasting firm WGSN, but their forecasts were so open-ended that I failed to make any concrete decision. However, such reports are often just used as backup NPD decisions.
In a big organization, it’s very hard to make straightforward decisions. Most design or marketing heads would like to leave decision-making to a process or their juniors or mid-level management, so as to escape the blame game from the top. It’s also one of the reasons why trend forecasting firms leave the trend report findings indecisive. However, if you are an entrepreneur or business owner, keep the market research goals very sharp so you can rely on the findings.
Planning In-person Consumer Research
I started my professional career as a research associate for a management consulting firm, where I learnt the biggest lesson: if one intends to take a managerial or strategic decision, one needs to do primary market research first-hand. Having spent over 15 years in brand and product management, I have executed numerous kinds of market research.
You can refer to a lot of reports, but the best way to truly understand your customer is to conduct one-on-one personal interviews, as there are so many untold aspects about customers, that you can only experience them when you directly engage with them.
To truly understand your customer, you must try to figure out the following things:
- Their interests
- What or who influences them
- How they spend their day
- What content they consume, both online and offline
- How and when they consume it
- What stage of life they are in, with respect to their biological and psychological stages, as this affects their decision-making.
Of course, these are just the basics. You may have to ask more information depending on your product, for example their favorite brands, their preferred social media platforms, their budget for something, etc.
I was doing market research on boys aged 9 to 14 years, and despite doing numerous interviews, I wasn’t able to convincingly understand their behavior. It was only when I started researching their biological growth stage regarding puberty, things began to make sense.
One of the few things I took back was that they stopped watching TV with their parents or siblings, they have a high need for privacy and thus began to consume content on TV at odd hours or on individual devices like phones or tablets. This was something I had no idea about, and it changed my entire advertising campaign.
How to Go About Conducting In-person Consumer Research
Meeting and interviewing consumers in person requires a lot of planning. Also conducting personal or group interviews with an audience like young kids requires a lot of skill. One needs to have an extremely good understanding of the kids’ psychology when interacting with them, as they are often very shy or seldom would give a direct answer. You may need an expert interviewer to conduct such in-person interviews with young boys or girls.
Similarly conducting research with very experienced professionals is difficult because they aren’t able to take out time from their busy schedules and prefer giving one-word/short answers.
The first step is to hire a research agency or freelance research agent who can scout potential customers or research samples for you, based on our criteria. These criteria could be your brand customer, your competitor’s brand customer, consumers from different age groups, gender, city type, etc.
The next would be to hire an interviewer or researcher who would conduct these interviews. In a lot of cases, interviewers and researchers collaborate with each other. Once you are sorted you need to define the objectives of the research and plan the interview schedule with your research sample.
Once you start conducting your research, either do it yourself or along with an experienced researcher. I would advise going with the latter option, as it would give you a better perspective about your consumer, as you would be able to make sense of & interpret your consumer’s reaction. You should always record these interviews, with permission of the consumer, so that you can look back for reference.
Your goal from consumer research is to find their specific habits, preferences and pain points from which you can infer their needs.
This is an important exercise to understand how the customers currently perceive your competitor brands and products in various categories so that you can identify the market gaps.
Analyzing Your Competitors: Good or Bad?
It’s important to know what your competitors are doing, but over-analysing your competitors or doing an in-depth detailed benchmarking exercise could eventually turn you into a follower, rather than a market leader.
Many times in the market when the products can’t be differentiated much, the big players end up copying each other’s models and leave very less room for innovation for the NPD and marketing team to come up with something new, as these players are driven more by sales, rather than innovation.
In such a market, it’s the smaller player that is willing to take more risks and thus become the market leader in terms of product trends. Companies need to provide adequate freedom to marketing & NPD and test new products to be relevant to their new customers.
So companies need to maintain this balance of power where the marketing & NPD team can experiment with new products and not over-analyze the competition. For example, in the Indian automotive industry, Mahindra created a near clone of Toyota’s market leading MUV Innova. Despite Mahindra’s best efforts, they did not have any major impact, as they didn’t stick to their brand’s positioning of rugged products.
However, mimicking a benchmark product does sometimes yield dividends if you are completely absent in a sub-category. For example, Maruti-Suzuki did not have any good mid-size-sedan in their portfolio nor had any major success in this segment for a long time. As they are more of a cost leader, so they stuck to their proposition and benchmarked the market leader Honda City, by providing a cost-effective option and launched the Maruti Ciaz. It’s a classic case of fake it till you make it, which paid off for them.
How to Go About Doing Competitor & Trade Analysis
When you are about to research your competitors, you may at times get overloaded with a lot of information. Your first step should be to start profiling your competitors based on parameters like sales, distribution, advertising campaigns, product portfolio, product segments, strengths, weaknesses, pricing, distributor margins, etc. You should never ignore the smaller players/competitors in your market.
It’s very unlikely you will be able to find all the information for your competitors, and there may be a lot of information gaps, but that shouldn’t deter you from creating a matrix where you can compare the parameters of your competitors along with your brand. This process of competition mapping is a continuous process, and once you start building this you will start finding nuggets of market intelligence.
The next step is to add international players to this matrix. Once you have profiled an adequate number of market players, you will be able to figure out some key parameters based on which you can segment or characterize players in your industry. For example, in the bicycle industry, I tried plotting the product widths of brands on the X-axis and their price range on the Y-axis, and this gave me an amazing perspective about our brand positioning along with other global and domestic brands.
Participating in Competitive Sports to Gain Insights
Many companies, especially in the automotive industry, have factory racing teams. By involving themselves in competitive sports, they gain insights into new technologies and applications when their products are pushed to their limits. Even in electronics, component makers sponsor video-gaming teams and get insights out of their products.
Alternatively, if your marketing budget is limited, brands can go about sponsoring sports amateurs & professionals who could use your products and provide feedback when they are using your products during their training or in sports events.
Analyzing Global Trends for Product Brief & Inspiration
While doing market research, marketers and NPD teams should expand beyond their home markets. They should also keep track of what international players are doing, and take inspiration from their best-selling products and new concepts.
For example, when we were creating bikes for the domestic market, we introduced some bicycle models (defined by the category hardtail) inspired by international markets. At first, the sales team wasn’t confident these products would sell in the urban and rural markets as they had a very simplistic design feel to them. However, in less than a year’s time, the trend changed and every kid wanted a hardtail bike. Thus it’s very important to take some risks, and bet on products that have caught up in other markets.
Cross Industry Research
Looking for trends and inspiration across industries can help you gain insights on how to innovate or stay up-to-date.
We all are aware of how the SUV trend has caught up across the globe, however before this trend became prominent, it was in the cycling industry where mountain bikes had come into vogue in the early 2000s.
Since most people do leisure cycling in urban areas, using mountain bikes is not very practical. However, people love the rugged looks of mountain bikes and prefer them over slim-looking city or road bikes. As we discussed in my article on positioning, it’s the form that takes precedence over the functional value of a product. In such scenarios, the customer wants to express their lifestyle while owning these products.
Similarly, the retro trend had caught up in the motorcycle industry, and a lot of motorcycle brands started creating modern retro classics. Royal Enfield caught on upon this trend, and other companies like Classic Legends introduced classic brands like Jawa & Yezdi. This retro styling trend can also be seen and being gradually adopted by EV car makers. Read more about it in my article on Trends in Electric Vehicles Show 70s Styling.
One must also note that a trend that works in one industry may not literally translate to another industry. For example, in mid-2015, Apple launched the rose-gold color iPhone, and designers thought the same color would work well on girl bicycles too. However, this color direction never took off because bikes are a much larger product than an iPhone, and the premiumness of the color didn’t translate in that size. In hindsight, everything looks fine, and there’s no reason to think why it wouldn’t have succeeded, but there are several practical reasons which we understood later.
Market research is very important to gain intelligence that can help you create, innovate, improve or expand. It’s something that a brand & product manager should undertake on a continuous or at least a periodic basis.
No matter what amount of market intelligence one might gather, in the end, marketers need to go with their gut feel. If possible, marketers should test new trends by introducing limited products to test market response, as in the end there is no better intelligence than testing it with the market itself.
In my personal opinion, product managers or marketers should be the users of their products. Only then can they understand the finer nuances and truly empathize with their customers.
Abhishek Sareen is a sales & marketing professional with over 16 years of experience. He started his career as a management consultant at Kurt Salmon Associates and has worked in marketing & brand management, international business in sectors like precision steel tubes for automotive industry, consumer goods and retail.
He’s is a passionate cyclist and participated in several endurance competitive events. His interests are in behavioral psychology, economics and chess. He is a graduate in Computer Science and an MBA in Marketing. He completed his executive education from IIM-A in 2016 focusing on business strategy.