In this article, we will provide you with a comprehensive guide to market research and how to implement it for your retail business. We will explain what market research is and why it is important, and we will also provide you with methods to conduct both primary and secondary market research. You will learn about secondary market research tools and sources and how to use them, as well as primary market research methods such as customer surveys, customer interviews, customer reviews, secret inquiries, focus groups, sales records, and employee insights.
What is Market Research?
Market research is the study of the targeted market, including businesses and individuals involved, to understand their needs and preferences. It gives you an understanding of the culture, society, economic situation, geography, and personal circumstances of your target customers. It will help you understand whether there is demand for your product, how much demand there is, and who generates that demand. It will also help you understand the competition in the market.
In short, market research in retail tells you who your target customers are and why they want to buy from you.
Why is Market Research Important?
Shopify’s 2022 Commerce Future Report reveals that the availability of online stores and technological advancements have lowered the barrier to entry into the market. As more retailers enter the market, competition will increase. Market research can definitely help you not only raise brand awareness but also stand out and attract loyal customers.
Here are some things that market research can help you achieve:
How to Conduct Market Research for Your Retail Business (+ Tools)
Although some business owners prefer to hire a market research company or consultant to conduct this research, it is possible to carry it out yourself. In fact, many retailers prefer to conduct market research themselves as they enjoy spending time with customers and learning more about how consumers view their businesses.
If you are conducting the market research yourself, it is important to know that there are two elements to market research: primary research and secondary research. We encourage you to start by reviewing available secondary research materials such as industry reports, trends, and current studies. By starting with the existing data that has been gathered by someone else, you will learn more about how to conduct longer and costlier primary research.
Secondary Research Methods in Market Research
Here are some tools and sources for secondary research in market research:
Nielsen:
Nielsen provides reports and research studies on consumer behavior in over 100 countries.
Pew Research Center:
The Pew Research Center also conducts scientific studies, many of which provide insights into consumer behavior and trends.
W&P Hoovers:
You can purchase reports from W&P, a company that has researched over 85 million businesses, 100 million people, and 1,000 industries. You can find insights ranging from consumer behavior to competitive analysis and industry trends.
MarketResearch.com:
MarketResearch.com has many reports and analyses of independent research you can purchase. Retailers can start by checking their list of consumer goods reports.
U.S. Census Bureau:
The U.S. Census Bureau provides a comprehensive view of the U.S. economy. Use it in your market research to understand the state of your industry in the United States and globally.
U.S. Small Business Administration:
The Small Business Administration offers resources to help U.S. traders understand their target market and current economic conditions. The free SizeUp tool from the Small Business Administration is a great way to see how you stack up against your competitors.
Department of Labor:
The Department of Labor has many resources to help you learn about the labor market in the United States. It provides employment rates and statistics on topics such as occupational employment, wages, labor demand, and changes in the labor market.
Office
National Statistics:
Traders residing in the UK can use the numerous resources available here to learn more about their industry, the economy, employment information, and consumer demographics.
FedStats:
This is another great U.S.-based source for statistics and trends covering a variety of topics and findings from reliable sources.
Consumer Price Index:
The Consumer Price Index (CPI) Program produces monthly data on the changes in prices paid by urban consumers for a representative basket of goods and services. This is a great way to understand how to price your products.
Consumer Spending:
The U.S. Bureau of Economic Analysis provides resources on personal consumption expenditures (PCE) that you can use to understand how to price your products, similar to the CPI.
American FactFinder:
The U.S. Census Bureau has a full library of facts that can be especially useful in demographic research for your target customers.
U.S. Consumer Product Safety Commission:
This U.S. agency provides injury statistics based on product category and risk category. This helps estimate the number of injuries caused by products that will be treated in the emergency room annually. You can use this information in various ways, from positioning your sales pitch as a supplier of safe products to understanding how to communicate about your product’s safety to customers.
Primary Research Methods in Market Research
Next, engage in direct research and study the market firsthand. Use the following methods for primary research:
Customer Surveys:
Customer surveys are a way to collect data about your target market. Depending on the questions you ask in your survey, you can understand your target market and its competitiveness, as well as gather feedback on your product.
In-Depth Customer Interviews:
In-depth customer interviews are one-on-one interviews with customers. You can conduct video calls or meet customers in person or over the phone. Since customer interviews are direct conversations, they provide unparalleled insights into your customers, their shopping motivations, and their feedback on your brand and products.
Customer Reviews:
Customer reviews can provide a wealth of valuable information about consumer preferences and opinions. You can also analyze competitor reviews to see what customers like and dislike about them, what they commonly complain about, and how they respond to those negative reviews.
Mystery Shopping:
Mystery shopping is another useful method for market research, where undercover investigators are sent as customers to stores – whether your stores or your competitors’ – to evaluate store operations and customer experience.
Focus Groups:
Focus groups gather a group of 6-10 people to collect feedback on a product, service, idea, or marketing campaign. Participants in focus groups are selected based on their demographic traits. Questions are prepared in advance, and the interviewer’s role is to collect responses from all participants.
Sales Records:
This method involves studying existing customer and sales information, and works best for established retail stores. These sales records, which cover customer purchase dates, amounts, payment methods, returns, and other information, provide a rich source of data. The data is also proprietary and unique to your business – no one else has it.
Employees:
Finally, ask your sales staff for their on-the-ground feedback, whether it’s frequently asked questions from customers or observations about customer behavior. Employee research can uncover insights that not only help you understand your customers better but also inform you about the effectiveness of your visual merchandising, store design, and sales promotions.
By effectively implementing market research, you can enhance your retail business and achieve greater success. Get to know your customers better, understand their needs and preferences, outperform competitors, and provide an exceptional customer experience.
In the end, market research should be an integral part of your retail business strategy. Continue to conduct market research regularly, as the market changes frequently, and you need to keep up with these changes to stay ahead.
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