Starting a new business is an exciting venture but comes with its fair share of challenges. From the day you launch your new company, you’ll need to be able to answer questions about your industry, customers and competitors. What’s unique about your product or service? What do your customers value? How can you beat your competitors? To answer these questions, you need a keen understanding of the market.
That’s where market research really shines.
Market research is a systematic approach to gathering and interpreting data and information about the following:
- Potential customers
- Competitors
- The overall market landscape.
In the UK, where business sectors are widely varied and competition is fierce, market research isn’t just a good idea — it’s essential. According to Investopedia, the biggest reason new businesses fail is not investigating the market.
You’re in the right place if you’re wondering what exactly it is and how to conduct market research. Whether you’re just about to register a new company in the UK or you’ve been operating for a while, this guide will help. It’s got everything from the basics, like what market research is and why it’s essential, to a step-by-step outline to follow and information about outsourcing research.
Let’s get started.
What Is Market Research?
Have you ever wondered why some products fly off the shelves while others sit and gather dust? Or why do some brands resonate with people so well? The answer is usually market research.
Before we dive into the specifics of market research, it’s important to know the basics.
At its core, market research is about gathering information. It’s about asking questions, listening to responses, and piecing together a clearer picture of your target audience and how to reach them.
But why is this so crucial? Understanding the “why” behind customer choices can be the key to unlocking business success. It’s not just about numbers – it’s about the stories and reasons behind those numbers.
The Importance of Market Research
As mentioned, market research is often key to a business’s success. Forbes lists “complacency” first on its list of reasons businesses fail. Many new business owners often go with their gut when it comes to decisions for their new venture. While gut decisions can pay off, it’s a risky strategy.
Market research acts as your safety net. It’s the process that lets you make decisions based on facts and figures, not just a feeling. Let’s break down why market research is such a game-changer for businesses of all sizes:
Reduces Risks
Starting a business always involves some level of risk — that’s a given. But with solid market research, you can significantly lower those risks. It shows the potential bumps and turns ahead, allowing you to steer clear or prepare for them.
Uncovers Opportunities
Market research helps you spot golden opportunities in your industry — whether that’s an underserved market segment, a rising trend that fits your business, or a gap in the market that your product or service can fill perfectly.
Understands Customer Needs
Your customers are the heart of your business. Market research lets you get to know them on a deeper level. What do they want? What do they need? What problems are they trying to solve? With this knowledge, you can precisely tailor your products or services to meet these needs.
Informs Strategy
Your business plan and strategy isn’t something you set and forget. It’s a living, evolving plan. Market research feeds this plan with fresh, relevant data, helping you adapt and refine your strategy as the market changes.
Market research isn’t just about collecting data — it’s about turning that data into actionable insights that can guide your business to success in the vibrant UK market.
Why Market Research Is More Important than Ever
Market research has always been important. Henry Ford didn’t launch the Model T without knowledge of consumer demands and Ford’s competitors.
But today’s consumers are more informed and empowered than ever.
Almost everyone has access to a tonne of information in their pockets. Customers are no longer passive buyers — they’re actively involved in the buying process at every level.
Here are a few reasons why market research is more important than ever:
- Research-driven decisions — Consumers now rely on online reviews, social feedback, and peer recommendations to make purchasing decisions.
- Brand loyalty and advocacy — Loyal customers become brand advocates, sharing and defending their choices.
- A desire for personalisation — Brands that tailor experiences to individual needs see increased loyalty and satisfaction.
Businesses can build stronger relationships and drive growth by understanding their influence and tailoring your services or products to their preferences.
Now that you know why market research is important, let’s dive into the specifics.
Types of Market Research
Market research is not a one-size-fits-all kind of deal. There are different approaches and methods, each with its own strengths and weaknesses. While there are hundreds of different ways you can gather data and information, there are two main methods of market research:
Primary Market Research
Unsurprisingly, primary research is all about gathering data directly from the source. Before the internet, this involved hitting the streets and asking questions or calling people to get them involved in a survey. While those methods are still used, conducting primary research online is much easier. You can break down this kind of research into two main areas:
- Qualitative research — This digs deep into people’s thoughts and feelings. It’s more about the “why” and “how” than the “how many”. Methods include in-depth interviews, focus groups, and observation.
- Quantitative research — This is the numbers game. It’s about collecting measurable, numerical data through methods like surveys, questionnaires, and experiments.
Primary research is a great way to know your potential customers and understand consumer trends. By sourcing the information directly, you can gauge its reliability and get a direct read on what your customers want.
Secondary Market Research
Sometimes there’s no need to reinvent the wheel regarding market research. Secondary market research uses data that someone else has already collected. Today, there’s a huge amount of information and data available online that can offer valuable insights. Plus, it can save you a lot of time and money.
Here are just a few of the places you can find secondary data:
- Government publications — These are goldmines of data, from population demographics to industry trends. In the UK, the Office for National Statistics is a fantastic resource for market research.
- Industry reports — Think of these as the pulse-check on your sector. They can tell you about market size, growth trends, and key players. Often, businesses will publish industry reports as part of a marketing campaign to gain media attention. You can find information there. If you can, look for the original data. Statista can be a great starting point.
- Academic studies — Universities and research institutions often publish detailed studies that can offer unique insights. There are various places to find academic studies and resources online, including Google Scholar and JSTOR.
While you can rely on one type of research if, for example, you’re pressed for time or have budget restrictions, it’s usually best to mix primary and secondary research. While primary research gives fresh, specific insights, secondary research can help you understand the broader context.
In a nutshell, market research is a blend of art and science. It’s about asking the right questions, in the right way, to the right people — and then making sense of all the answers you get back.
Customer Research
Whether you’re a new business or you’ve been established for a while, understanding your customers is absolutely crucial. Your customers are the lifeblood of your business. They’re the ones who will buy your products or services, recommend your brand to friends and family and, ultimately, determine your success.
So getting to know them is vital. Market research is a fantastic way to get to know your customers, understand their needs and learn how to reach them.
Here are some of the best ways to get to know your customers:
Surveys and Interviews
In the last section, we mentioned how important primary research is, especially for learning your target market. Surveys and interviews give you a direct line to your customers’ thoughts and needs. They allow you to ask specific questions and get answers straight from the source.
- Surveys are fantastic for quantitative data and are easy to conduct nowadays. Use online tools like SurveyMonkey to create and distribute them.
- Interviews are ideal for qualitative insights. They’re more time-consuming but can be a great way to get deeper insights into your customer base.
Customer Feedback
While direct interaction with your customers is crucial, existing companies already have great customer feedback resources. Reviews, comments and direct feedback can be excellent sources of market information. They give raw, unfiltered insights into what your customers think and feel. Here are some good places to start:
- Online reviews — Check platforms like Google Reviews and Trustpilot.
- Social media comments — Monitor your brand mentions and direct messages.
- Customer support interactions — Log and analyse customers’ questions and issues to your support team.
If you’re a new business, this type of research can be trickier, but it’s still possible. Rather than looking at your own reviews and feedback, you can look at competitors to see what they do well and not so well (but more on that in the next section.)
Customer Personas
One of the most difficult parts of launching a new business is targeting the right people. You can create a good picture of your target audience through surveys, interviews and customer feedback. But you can go one step further by creating customer personas.
A customer persona is a picture of your ideal customer — their age, interests, pain points, and why your product or service is a perfect fit for them. It’s a detailed, semi-fictional representation of your ideal customer based on market research and real data, including:
- Demographics — Age, gender, income level, education, occupation.
- Psychographics — Interests, lifestyle, values, and buying motivations.
- Behavioural traits — Shopping habits, brand loyalty, and product usage.
Why Customer Research is Essential
Customer research can be time-consuming, but it’s well worth the effort. It helps you to:
- Tailor your products/services — Shape your offerings to meet your customer’s needs and solve their problems.
- Refine your marketing — Speak your customers’ language and reach them through the right channels.
- Build strong relationships — Show your customers you understand and value them, building loyalty and trust.
Understanding your customers through market research is like having a conversation with them. It’s about listening, learning, and using that knowledge to serve them better and build a business they love (and keep coming back to).
Competitor Research
Market research goes beyond knowing who your customers are and what they want — your competition is just as important. Knowing and understanding what your competitors are up to can give you invaluable insights and help you gain the upper hand.
Let’s take a look at competitor research and analysis and why it’s crucial.
Identifying Key Competitors
Before you can dig into any research, you need to know who your competitors are. Unsurprisingly, your competitors are businesses that offer similar services and products in your target market. Your competition is split into two categories:
- Direct competitors — These businesses offer the same products or services as you.
- Indirect competitors — These businesses offer different products or services but target the same audience.
It’s crucial that when you’re identifying your competitors, you’re realistic about it. Say you’re starting a fast-food restaurant; your competition isn’t going to be McDonald’s or Burger King. It will be other local fast-food restaurants (direct competitors) and pubs and restaurants (indirect competitors).
Analysing Your Competition
Knowing your competitors can be a fantastic way to find gaps in the market and opportunities. One of the best ways to evaluate and analyse your competitors is to do a SWOT analysis:
- Strengths — What are they doing well? Think about their brand reputation, product quality, or customer service.
- Weaknesses — Where are they falling short? Maybe their pricing is too high, or their marketing is outdated.
- Opportunities — Where can you outperform them? Perhaps they’re neglecting a segment of the market that you can serve.
- Threats — What are they doing that could challenge your business? Are they expanding or launching a new product line?
Not everything you identify in your analysis will be actionable, but you’ll find a lot of helpful information. Make sure you keep detailed notes to refer back to later.
Monitoring Competitor Activity
Competitor research isn’t a one-and-done activity — you’ll be doing it constantly throughout your business journey. Staying updated with your competitors’ moves is key. It’s important to note that this isn’t so you can copy them — it’s so you can understand their strategy and find your own edge.
Here are a few of the best ways to monitor what they’re up to:
- Website and SEO analysis — Use tools to see how their website performs and which keywords they target.
- Social media tracking — Follow their social media accounts to see how they engage with their audience.
- Sign up for newsletters — Get on their email list to see how they communicate with customers.
- Read customer reviews — What do their customers think about their services and products? Are they doing anything that can be improved?
Competitor analysis isn’t about copying your competition and offering the same products or services, it’s about the following:
- Learning from others — Understand what works (and doesn’t) in your industry.
- Finding your unique selling proposition (USP) — Identify what sets you apart and how to emphasise this in your marketing.
- Staying agile — Be ready to adapt your strategy based on the competitive landscape.
Analysing your competitors through market research helps you understand the moves others are making so you can craft a winning strategy of your own.
How to Conduct Market Research: A Step-by-Step Guide
Conducting market research might seem daunting, but with a systematic approach, it’s quite straightforward and can even be fun. Here’s a step-by-step guide to help you navigate the process:
Step 1: Define Your Research Objectives — What’s the Goal?
Clearly articulate what you want to learn from your research. Are you trying to understand your target audience, evaluate a new product idea, or assess your competition? Write down specific questions that you want the research to answer.
Think of this step as setting the destination for your research journey. Without a clear endpoint, you might find yourself lost in a sea of data without meaningful insights.
Step 2: Identify Your Target Audience — Who Are They?
Outline the demographics (age, gender, income), behaviours (shopping habits, brand loyalty), and needs of the people you want to serve. Create customer personas to visualise your ideal customers.
Remember, this is just your starting point, and you’ll use your market research to update your customer personas later on.
Step 3: Choose Your Research Methods — Qualitative or Quantitative? Primary or Secondary Research?
Decide whether you need in-depth insights (qualitative) or broad trends (quantitative). Choose methods like surveys for quantitative data and interviews or focus groups for qualitative insights.
You’ll also need to decide whether to use primary or secondary research. While both can be insightful individually, a mixture can be game-changing.
Step 4: Collect the Data — Gather Information
Use your chosen methods to collect data from your target audience. Look at government publications, industry reports, and academic studies for secondary data. Be meticulous and organised in your data collection.
If you create a survey or another data collection method, do everything you can to make it unbiased. The wording of a questionnaire can make a huge difference to how people respond, and you want honest answers.
Step 5: Analyse the Data — Make Sense of What You’ve Found
Organise the data, look for patterns, and draw conclusions. Use tools like spreadsheets or specialised software to help. Consider hiring a professional analyst if the data is complex.
You don’t need to be a data analyst to glean insight from your data — especially if it’s qualitative. If you’re struggling and not eager/don’t have the budget to hire a professional, there may be AI tools you can use for analysis.
Step 6: Apply Your Findings — Put It into Action
Use the insights you’ve gained to inform your business decisions. This could mean developing new products, tweaking your marketing strategy, or rethinking pricing.
These changes don’t always need to be huge. Little tweaks here and there can often make a big difference, too.
Step 7: Review and Adjust — Keep It Fresh
Market research isn’t a one-off task. The market research process doesn’t end once you’ve implemented your insights. It’s an ongoing cycle of gathering data, drawing insights, taking action, and revisiting the process.
Review and refine your research methods regularly to ensure they remain effective and relevant. As the market evolves, so should your research approach.
Common Market Research Challenges
While there’s no denying the importance of market research, it’s not always a walk in the park — especially if you’ve never done it before. Like every process, market research has its hurdles, and you’ll face challenges along the way.
We’ve put together some of the common challenges businesses face and what you can do to work around them:
Data Overload
The amount of data available today is incomprehensible, and it can get a bit overwhelming when you’re carrying out market research. With so much data available, it can be challenging to see the wood from the trees and gain insight into your market.
One of the best things to do in this situation is to focus on quality over quantity. Before diving into the data, clearly understand what information you need and use specific research to gather the data you need.
Biased Results
Whether you’re conscious of it or not, your own opinions and theories can influence the outcome of market research. Whether it’s how a question is phrased (leading questions) or the group chosen to be surveyed, biases can easily creep into our research.
Do everything you can to create unbiased research tools. Ensure that survey questions are neutral and don’t push respondents to a specific answer, i.e. “How brilliant was your experience with our customer service team?” You should also ensure that your chosen sample group represents the larger population you’re studying.
Time and Cost Constraints
Launching or running a business is a lot of work, and finding time to do research can be tricky. Good market research takes time and can be expensive — especially if you’re a small business with limited resources.
If your resources are limited, maximise what you’ve got. Consider a mixed approach to research, with primary research offering fresh insights and secondary research backing it up. Remember, market research is an ongoing process, so you can dig deeper later.
Keeping Up with a Changing Market
Nowadays, market dynamics can shift overnight, and the last thing you want is your recent market research to be redundant after putting time and effort into it.
Adopting a continuous research approach is one of the best ways to combat this. This doesn’t mean you constantly need to send out surveys and trawl through ONS data. Setting up email feedback loops with your customers can be a great way to monitor consumer behaviour. You can also subscribe to industry publications.
In-House vs Outsourced Market Research
As you can see, quite a lot goes into market research, and it can be a lengthy process. Due to this, many businesses face a pivotal decision — handling their own market research or outsourcing it to specialists.
Both are good options, but each has its own advantages:
In-House Market Research (DIY Market Research)
In-house market research is the process of carrying out research yourself. Here are the benefits of this DIY approach:
- Control and flexibility — Carrying out your own market research gives you direct control over the process. You can quickly adapt or modify your methods based on needs, budget and time constraints.
- Cost-effective — Handling your own research means that it can be a lot more cost-effective. While there’s an initial investment in tools, most of your investment will be time.
- Direct integration with business strategies — You and your team will have a deeper understanding of your business goals, and you can make sure your research aligns with those objectives.
Outsourced Market Research
Outsourcing your market research is where you hire an external consultant to carry out your research for you. Here are the benefits of outsourcing:
- Expertise and experience — Market research firms and consultants bring specialised knowledge and a wealth of experience. They’re well-versed in the latest research methods and tools and can see challenges before they arise.
- Time-efficient — As market research professionals, an outsourced consultancy will be faster than an in-house team — especially for in-depth research. They have the resources and experience to get the data and information you need much quicker.
- Objective perspective — An external firm can provide an unbiased, objective view, which is valuable for eliminating internal biases. This fresh perspective could be what you need to beat your competitors.
The decision between in-house and outsourced research often boils down to the business’s specific needs, budget, and long-term goals. It’s essential to weigh the pros and cons of each approach and choose the one that aligns best with the company’s objectives.
Boost Your Business with Market Research
Market research isn’t just a box to tick off your business to-do list; it’s a strategic tool that can guide you on the path to success. From understanding your customers on a deeper level to staying ahead of your competitors and seizing new opportunities, market research is the compass that can guide your business through the complex landscape of today’s market.
In this guide, we’ve broken down the what, why, and how of market research, aiming to demystify the process and show that it’s accessible and essential for businesses of all sizes. Market research is your ally whether you’re launching a startup or looking to grow an established business.
But market research is your starting point, and Mint Formations is here to guide you through the rest of your journey. From company formation to ongoing business support, we provide the tools and expertise you need to confidently launch and grow your business.
Explore our company formation packages today and take the first step to start your successful business in the UK. If you have any questions along the way, feel free to get in touch with us. We’re always happy to help.