Market research is a key phase in the creation or development of a growth of your business. It allows you to identify the market you are going to launch in and to convince your potential funders. This article will provide you with a method and an overview of how to do it.
For market research to be effective, it is necessary to follow an orderly and structured approach and respond to four main issues: the market, supply, demand and the environment of your business.
But what is market research?
A well-crafted market research is a systematic and objective process of collecting, analysing and evaluating relevant data. to help a company or organisation make informed decisions about your marketing strategy, product launches, price adjustments, industry status, etc.
Market research involves the use of various data collection techniques, such as surveys, interviews, focus groups, sales data analysis, digital tools, among others, to obtain information about consumers, competitors and the market in general.
The aim of the market research is help a company to better understand the needs and wants of its potential customers, identify market opportunities and minimise risks associated with the introduction of a new product or service.
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4 steps to get your market research right
The success of any business is based on your ability to understand the needs of your business, such as customers, in order to meet them effectively. Market research is a valuable tool to achieve this goal, as it provides valuable information about consumers, competitors and current market trends.
However, in order to conduct effective market research, it is necessary to follow certain key steps. In this regard, this paper will present four essential steps for conducting market research correctly, which will enable companies to make more informed and strategic decisions in the future.
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First step: define your market
It is essential that the market definition is clear and precise in order to focus the research correctly and obtain useful and relevant information. If the market is not properly defined, the research results may be inaccurate and not representative of the target audience.
Therefore, Defining the market correctly is the first step in conducting effective market research. In this process, it is necessary to identify potential buyers of the product or service, as well as competitors and other factors that may influence the market.
To do so, you will have to answer several questions:
- In which market(s) will the company evolve?
- Who will be the clients or users?
- What is the geographical dimension of the markets to be targeted?
- What are the market trends in value and volume?
- Directly or indirectly competing products or services
You will also have to find out which companies or products will be the direct competitors, but also indirect competitors and define the main players in order to get a deep understanding of the market.
Step two: analysing demand
Demand analysis is one of the crucial steps in any market study. Knowing the trends in demand and its evolution over time can provide valuable information for any company that wants to compete in a market.
By understanding demand, companies can adjust their strategies and improve their product or service offerings to meet customer needs and ultimately increase their sales. This is why you should ask yourself the following questions:
- What is the size of the market and what are the quantities sold?
- What is the number of customers in the market and how is this number changing?
- Which companies can I buy from or to reach demand?
- Customer and user behaviour.
Make an accurate portrait of your customers and/or your users, then try to determine their behaviour:
- On what occasion (the customer) buys or uses (the user) the product and/or service you offer? How? Why?
- Are you satisfied?
- What are their motivations? What are their obstacles?
- What is your perception of the product and/or service?
- What are the characteristics of the product and/or service that could favour the act of purchase or use?
- Segmentation of demand
Your objective is to select among all your identified customers (and/or users) which ones to target first in order to market your product or service.
Depending on the nature of your market, the criteria can be very varied. For individuals, you can use distinctive criteria such as: gender, socio-demographic criteria, consumption patterns and styles, etc. For companies: workforce, activity, turnover, location, etc.
Step 3: Supply side analysis
When conducting market research, it is important not only to analyse demand and demand trends, but also supply. Supply-side analysis provides an understanding of the competition in the market and the different options that consumers have to satisfy their needs and wants.
In this sense, knowing what is on offer on the market can help identify opportunities to differentiate from the competition and develop an effective strategy with greater precision..
So, once you have presented them, analyse your direct and indirect competitors in detail. Ask yourself the following questions:
- Who and where are the main competitors in the market and what is their market share?
- What do they offer, at what price?
- How do they sell? What strategies do competitors use to sell their products or services? What are their financial results? Who do they sell to?
- How do they communicate? What are their competitive advantages?
- What is your market share?
- Are customers/users satisfied?
Step 4: Analysing the business environment
In order to carry out a successful market study, it is essential to carry out an analysis of the environment in which the business will develop. This analysis allows you to identify and understand the external factors that may affect the viability and success of the business.
This analysis can be carried out using various tools, the PESTEL analysis being one of the most commonly used. Thanks to this model, it allows you to identify and evaluate the following factors:
PESTEL Analysis: Understanding the 6 dimensions of the environment for success
- Policy: Political and legal factors, such as laws, government regulations, political stability and government change, etc. You will need to answer: What is political stability, are there any particular tensions, what is the current regime, what is the fiscal policy, trade policy, etc.? ?
- Economic: economic factors, such as the business cycle, interest rates, inflation, fiscal and monetary policy, among others. You will have to answer the following questions: What is the current economic situation? What is the unemployment rate? What is the disposable income? What is its evolution?
- Social: Social factors, such as demographics, culture, lifestyles, values and attitudes, education, etc. You will need to answer: What is culture? What are values and norms? What is the level of education? How are demographics changing? What are consumer habits?
- Technological: technology-related factors such as innovation, automation, research and development, patents, etc. To do this you will need to answer: What are the next technological developments? Are they frequent? Which sectors are they concerned about?
- Ecological: You will have to answer the following questions: What is the sensitivity to the challenges of sustainable development? What measures are being taken in favour of the environment? How is waste being treated?
- Legal: legal factors, such as labour, intellectual property, competition and other laws. You will need to answer the following questions: What legislation governs your business, how can it evolve, what is the role of public authorities, what is the role of lobbies and professional organisations? Etc.
You will also need to collect secondary data to analyse the business environment by collecting data produced by third parties that is publicly available.
You can access market research reports, government databases, academic studies and more. This data can provide an overview of the market and help supplement primary data.
Some online platforms for data and statistics
In short, for each step in conducting your market research, you can follow the approach proposed below. This will allow you to obtain a flexible method, adaptable to the specificity of your needs:
| 1 - Search for information | Research existing information Conduct a questionnaire Conduct interviews |
| 2 - Summarise and analyse the information gathered | Verify the veracity of the information Review the questionnaire Analysing interview responses |
| 3 - Writing the report | Identify market opportunities and risks Define the keys to success and the limitations of the market. |
4 - Estimate the turnover forecast | Make several assumptions Establishing forecast accounts |
Examples of market research in M&A
A market study inM&A transactions-y-acquisitions-m-a/"> M&A transactions and acquisitions (M&A) is a detailed analysis of a company's industry, market and competitors that is carried out before a merger or acquisition takes place. Here are some examples of M&A market research:
- Industry analysis: A thorough analysis of the industry in which the target company operates is carried out, including an assessment of market trends, key players, barriers to entry, opportunities and threats, etc.
- Competitive analysis: An assessment is made of the target company's main competitors, including their position in the market, their strengths and weaknesses, their ability to innovate and compete etc.
- Value chain analysis: Critical activities and processes in the target company's value chain are identified, and their effectiveness and efficiency in terms of cost and quality are assessed.
- Analysis of synergies: An assessment is made of the synergies that can be achieved through the merger or acquisition, such as consolidation of operations, reduction of costs, expansion of the customer base, etc.
- Financial analysis: A detailed financial analysis of the target company is carried out, including its current financial status, its cash generating capacity, its growth history, its assets and liabilities etc.
These are just a few examples of the types of analysis that are carried out in a market study forM&A transactions-y-acquisitions-ma-en-en-espana/"> M&A in Spain. Depending on the specific situation of the target company, country,... other types of analysis may be necessary.