The Complete Guide on Market Research vs Market Analysis
The Complete Guide on Market Research vs Market Analysis
Market research versus market analysis. This is a topic of contention for many in the business and research worlds. Both of these concepts yield critical data and intelligence for businesses and both of them are necessary to sustain a business.
Both market research and market analysis empower businesses to analyze areas of their industry, predict future trends, hone their business practices and lead organizations effectively. They both deal with big data problems from time to time. Both of these concepts also allow businesses to assess industry expectations and meet them.
However, although these terms are used interchangeably and offer similar business benefits, they are not the same thing, as each represents different key factors, processes, objectives and methodologies.
We’ve taught you about the differences in market research vs. user research. This guide lays out market research vs. market analysis, allowing you to understand all of their key facets and differences, so that you can understand when and how to apply both.
Understanding Market Research
Market research refers to a process that is far more specialized than market analysis, as it entails examining a specific market and its corresponding customers. It is usually bent on answering distinct questions regarding customer behavior along with all else that pertains to a target market, which is the group of consumers most likely to buy from a business.
Market research involves studying customers at an in-depth level, which therefore includes segmenting them into distinct groups and designating them with individual customer personas. This involves the practice of performing market segmentation, along with conducting secondary and primary market research techniques prior, during and after administering market segmentation.
Aside from referring to and implementing primary and secondary resources, market research encompasses both quantitative market research and qualitative market research methods.
Given that this kind of research is centered around customers, it examines a variety of customer traits and characteristics. They include the following:
- Customer buying behavior
- Customer preferences
- Desires and needs
- Customer aversions
- Opinions and sentiments in regards to
- Values
- Products
- Cultural trends
- Current events
- The industry at large
- Prices
- Lifestyles
- Behaviors
- Customer experience (CX)
- Views on the industry at large
- General feedback
Market research is a practice undertaken by business owners, researchers, analysts, marketing departments and even individuals. Essentially, market research is used to gather feedback and data directly from the customers, mainly to assess the viability of particular business decisions.
The Importance of Market Research
Market research carries a great deal of importance, as it empowers all businesses with critical data that steers them towards making the right business decisions.
Firstly, it’s important for startups and new businesses to conduct market research before launching their business or even innovating on a product. Although it is tempting to push a product to market, a lack of market research has grave consequences.
It is difficult to acquire new customers for established businesses, as it costs five times more to acquire a customer than it does to retain an existing one. Additionally, selling to a new customer has a low success rate of 5-20%, while selling to an existing customer has a success rate of 60-70%.
This environment exists for existing businesses. It is even more arduous for startups and yet-to-be registered businesses to gain a customer base. As such, these businesses must conduct market research. It grants them valuable knowledge about the particulars in their industry and most importantly, their target market.
Only when you understand your customers can you serve them properly. After all, you're not just selling a product or service. Businesses of the present can only survive if they provide a strong experience for their customers. 73% of U.S. customers say that CX is a very important factor in their purchasing decision. 1 in 3 custumers will leave a company after just one bad experience.
Clearly, customer experience is vastly important and in order to create positive experiences that not only draw in but retain customers, you’ll need to understand your customers at a deep level.
Market research makes this possible, as it allows you to learn everything about your target market, segment them into smaller, more distinct groups that you can dedicate to different campaigns and satisfy them continuously.
Understanding Market Analysis
Market analysis is the process of examining a particular market, industry, niche or segment. It is carried out by way of quantitative and qualitative assessments of a market.
This analysis relies on raw data that predominantly focuses on a market's size and potential. As such, it involves studying a market by observing various factors that involve these two concepts.
A market analysis involves observing the following aspects: market volume, value, its different customer segments and their customer buying behavior, economic conditions, regulations, the competition, barriers to entry and political, social and cultural trends, as they relate to the market.
A market analysis uses current and historical data to forecast future market events and outcomes. This data includes information on the above topics of observation. Businesses use market analyses so that they can understand how their products and experiences may exist under a certain environment.
This kind of analysis allows companies to plan ahead for the future in a strategic way, using data for decision-making. This is because it allows companies to get a plain understanding of the most important factors of their market.
A market analysis is an all-encompassing practice of examining a market, therefore, it uses a wide range of sources. This involves using market research to provide key information on customers and other aspects of the market. By relying on a vast number of sources, a market analysis can assess and predict all of a business’s growth options, as well as its possible stumbling blocks and limitations.
In short, a market analysis gives businesses a broader understanding of their market by relying on multiple means and sources of data that pertain to various aspects of the industry.
The Importance of Market Analysis
Market analysis is important for a variety of reasons. Almost every successful product or service of the present involves having conducted a thorough market analysis. This analysis is often the first and the most significant stage in the development of a marketing and business plan.
The process of a market analysis is important, as it allows business owners to evaluate whether their product or service will satisfy their customers’ needs. This way, they don't waste time on producing products, product updates and features that will perform poorly and generate few sales.
A market analysis helps gain insights into the shifts occurring in the economy. This can include changes in regulations that directly or indirectly affect your business. It also helps you stay aware of market trends, which puts supply and demand in perspective.
This helps you set reasonable prices that are commensurate with demand. It allows you to understand the desirable products and services along with those that drive little demand. These key aspects enable your business to become fully acquainted with the economy, along with the particular one of their industry.
In addition, this kind of analysis is important in that it provides insights into your target market, the segment of the market most likely to be your customers. It does so, as it involves studying your demographics along with their behaviors, traits and expenditures. In this sense, market analysis is critical as it implements market research.
Furthermore, a market analysis will help you plan the most promising strategy to market your product or service product. This is because when analyzing the key facts of your market, many marketing messages will come your way.
Even by casually browsing your competitors’ sites and social channels, you’ll discover various marketing techniques, from ads, to landing pages, webinars, promotions and much more. This will give you critical information on the kinds of marketing methods to test and try.
Given that a market analysis touches on so many components of a market, it equips businesses with essential knowledge for making auspicious business decisions. This kind of knowledge allows you to complete a business plan, as it has its own section, showing prospective and plausible investors that you understand your market.
The results that your market analysis draws enables your company to identify both the opportunities and risks of your particular market. All in all, this kind of analysis sheds light on all the foundational aspects of a business, along with its main ongoing concerns. This kind of knowledge will inform and bolster all kinds of business endeavors.
The Key Differences Between Market Research and Market Analysis
There is considerable overlap between market research and market analysis, given that some market research projects may include a market analysis and especially since market analysis encompasses market research.
Additionally, you can complete both a market analysis and market research for a business plan. You can use both of these insights-rich methods to support a wide array of different documents and reports. Both of these can point you to the appropriate action based on the data you collect.
However, these two terms are not the same and should, therefore, not be confused with one another.
The main differentiating factor between them is that market research is inclined on gathering customer-specific intelligence. Market analysis, on the other hand, seeks a far more expansive perspective of a market, thereby relying on more resources, to execute all the possible business forecasts and examine all growth options.
Whereas market analysis is broad, market research is much more specific and fine-tuned. Market research is therefore restricted by the population of studies, emotions and time, as well as different kinds of human interaction.
In contrast with market research, market analysis works by depositing large quantities of data into a large storage framework. Market research works by collecting specific data points necessary for answering certain research concerns.
Market analysis often yields results that last in the long-term, while the results of market research tend to be valid for several months to years, depending on the population and theme of the study, given that public opinion can change quickly.
In conclusion, market analysis strives to render a clear picture of the majority of a market, while market research is focused on understanding its customer base and those possible prospects.
Reinforcing All Your Research and Analysis Needs
Market analysis and market research are two exceedingly important processes of gaining information to bolster your business. Despite their similar nature and often conflation, they are two distinct practices and should not be mistaken for one another.
However, in order to conduct market research and even garner intelligence for market analysis, your business ought to use a strong online survey platform. It can be used to study your customers on a deep level, along with what people perceive in your market. You can also send surveys to specific people with Link Distribution, allowing you to better understand your market by surveying key players.
To do so, you ought to look into a strong online survey platform, the kind that operates via random device engagement (RDE) sampling, which reaches respondents in their natural digital environments, scaling back on survey bias.
You should also opt for an online survey platform that implements artificial intelligence and machine learning to disqualify survey fraud and poor-quality data and offer a mobile-first design.
Such a platform will ensure you gain the most quality insights on your market and customers in a timely way.
The Importance of Market Research for Any Business
The Importance of Market Research for Any Business
The importance of market research should not be glossed over by businesses, yet not all businesses apply it to their marketing efforts or even to their strategic planning process.
This missed opportunity has grave consequences for companies of all sizes; even large successful companies have lost billions in revenue from failing to conduct market research. Thus, all companies must conduct market research, whether they’re fledgling startups or long-established businesses.
This article expounds on the importance of market research so that businesses and researchers understand its value. It also shows how to conduct this kind of research to reach and maintain various business goals.
Defining Market Research
Market research is a specialized kind of research process; it refers to the organized methods by which an organization collects information about its target market and overall industry to inform its go-to-market gain continual intelligence on its industry at large.
Although used interchangeably with market analysis, they are not the same practice. Market analysis refers to the broader practice of studying a sector, industry or niche. This kind of analysis uses current and historical observations to make forecasts.
Market analysis primarily delves into existing business practices and products to plan for future business endeavors. Using raw data, market analysis gatherers a large supply of impersonal facts and figures. Thus this kind of research is far more general.
Make research, on the other hand, is more specialized in its design and approach, as it primarily focuses on examining a particular target market and its even more specific segments. Thus, it is far more customer-centric than market analysis.
Although the primary focus of market research is on a business’s customer base, it too involves elements of market analysis. Some market analysis projects in market research involve turning to secondary research as a means of understanding the broader environment of a market before narrowing the focus to its customer segments.
Market research can be conducted by amassing secondary resources or by conducting primary research. The latter may include using an in-house research team, which conducts market research techniques entirely on its own such as in field research, in exploratory research, experimental research or other methods.
It may also include an in-house research team that implements syndicated research or custom research. These refer to the external research methods of the receiving company, in which a market research provider conducts primary research for the business. In short, these two forms of research are a kind of outsourcing method for market research, as they represent services that extract customer data.
In syndicated research, a research project is funded by various companies and conducted by a research firm, which owns all the resulting data. Alternatively, custom research is a form of research in which a single business works with a market research provider on a project and funds it entirely on its own. Thus, the resulting data is also proprietary to the business.
The Importance of Market Research
The importance of market research is manifold. It provides various uses and can be used with multiple macro-applications and subsets of marketing, along with business needs as a whole.
The overarching umbrella of importance in market research is the ability to understand customers to the fullest extent, which includes: their needs, desires, opinions, frustrations, aversions, inclinations and other intelligence.
Understanding all of these factors in relation to a target market helps a business attract and retain customers. Both aspects are of utmost importance to a business, but customer retention is especially important, in that existing customers are far more likely to buy from a business.
In fact, the likelihood of selling to existing customers is 60% to 70%. Additionally, retained customers are 50% more likely to buy a business’s new product. Despite these figures which clearly illustrate the weight of customer retention, only 18% of businesses focus on customer acquisition, while 44% of businesses focus on customer retention.
Market research is also crucial for maintaining competitiveness. A business cannot thrive in a competitive landscape when it fails to do the necessary research to adapt to trends, new product/service upgrades and most importantly, customer needs. In fact, 9% of businesses lose their customers to their competitors when they don’t conduct market research to improve their customer loyalty and retention.
Market research helps businesses assess their customer satisfaction, whether they examine the satisfaction of existing customers or all those in their target market. As such, businesses can keep continuous tabs on customer preferences to understand how to better serve them, whether it is via products, services, customer support or digital experience (DX) across all digital channels.
Businesses can also learn customer sentiment in relation to the industry at large. This will help companies grasp their standing within their industries and in relation to their competition.
Moreover, conducting market research does not merely help businesses understand their customers' opinions and preferences. It also helps determine the exact makeup of a business’s target market via target market surveys and market segmentation. The latter identifies the subsets that make up a general target market, allowing brands to create granular messaging and campaigns to both acquire customers and retain them.
Furthermore, market research helps companies on the strategy side of a business, in that by studying their market and niche, they can devise critical documents and strategies to both launch a business, as well as propel it forward. For example, startups can use market research for business, while companies that have been in business for several years ought to use market research for their strategic planning process. The latter helps businesses map out their goals, better understand their ranking and establish practical objectives.
Finally, the customer-specific intelligence that businesses gain with market research helps support a variety of macro applications, from general marketing, to branding campaigns, to advertising projects, along with various studies such as longitudinal studies, cross-sectional studies, retrospective studies, prospective studies and others.
How to Conduct Market Research
There are many ways to conduct market research as there are various market research techniques. The two major classifications of market research are secondary and primary research.
Secondary research involves gathering and analyzing already available sources of customer data and other relevant information about a market. Secondary research can exist in a number of public resources, such as:
- Government resources: on government websites and databases
- Examples: The Census Bureau, The U.S. Small Business Administration, The Bureau of Economic Analysis and more
- Enterprise sources: trade associations, the Directory of Associations
- Research Associations: Composed of research analysts, they provide businesses with reports on specific subsectors of an industry.
- Examples: Forrester, Statista, Gartner, IBISWorldMintel: Market intelligence
- Industry blogs and content-oriented Websites: Online publications on the latest updates, trends and breaking news
- Examples: Ars Technica, The Business of Fashion, Grocery Drive, Realtor Magazine
- SEO and SEM Reporting: Tools for SEO (organic rankings efforts) and SEM (paid search)
- Examples: Ahrefs, SEMrush, etc.
Primary research refers to the various methods of amassing self-conducted research. Researchers can obtain primary research in a direct way, that is, by interviewing their target market themselves or by outsourcing.
Primary research methods include:
- Phone interviews
- In-store and in-person interviews
- Field research
- Mail-in surveys
- Focus groups
- Syndicated research
- The market research firm will be the proprietor of the extracted data
- An online survey platform
- The business is the sole owner of their extracted data
The following provides the steps that a business should take when conducting market research:
- Begin by conducting secondary research, which gives you insights into the broader market and niche. Use any of the above secondary sources, along with others.
- Look for information about the customers who belong in your target market.
- Find the patterns in your target market through the secondary sources. Keep an eye out for their demographics, psychographics, habits and behaviors.
- These will help you make hypotheses about your target market and how to best approach it for a number of campaigns.
- Next, conduct primary research via your method of choice. To do so, identify your most pressing curiosities from the secondary research you conducted.
- Tie your inquiries into a specific campaign or macro application.
- For example, do you need to conduct a longitudinal study to understand buying habits, or a study to test the effectiveness of ads?
- Conduct your primary studies with a set amount of participants.
- Surveys help you reach thousands of consumers in your target market.
- After you’ve gathered a significant amount of relevant information, perform an analysis.
- This ought to be done by more than one person within a business as different minds interpret data differently and can thus lead to different conclusions and ideas on moving forward.
- Then, ask yourself if your study is complete or you need additional data.
- If you opt for the latter, create another campaign and conduct further primary research.
- Analyze your primary data, along with your secondary data.
- Does the primary data align with the information you gathered from secondary sources? If so, it can point to repetitive behaviors or ongoing occurrences among customers.
- If not, consider the significance of the changes. Have the customers changed or has the industry changed which has led to the difference in findings.
- Additionally, primary research may not always align with secondary research, given that the business is at liberty to form its own questions and delve into its own curiosities and priorities.
- Draw conclusions and create a plan of action to reach your target market, whether it involves advertising, content strategy or any other campaign or change.
The Importance of a Strong Market Research Platform
In summary, market research is a crucial set of activities that businesses of all sizes and stages must conduct in order to better understand their industries and most importantly, their target market.
It identifies how customers view a business and allows businesses to identify and resolve gaps in customer expectations. As such, implementing a strong market research tool is an absolute must. While there are many market research tools, none are quite as potent in reaching thousands of people in a target market as online surveys.
Thus, a business should choose a robust online survey platform, one which makes it easy to design and deploy surveys, along with distributing surveys across a vast pool of digital properties. This will ensure that businesses have easy access to valuable customer data — the kind that approaches customers naturally in their digital environments, instead of being pre-recruited via email or survey panels.