Market research: Purpose, process & methods

Market research plays a crucial role in the operations of most businesses when they want to enter a new market or launch a new product or service. This process offers many benefits, including reducing risks, generating creative ideas, and narrowing focus. This, in turn, helps them achieve high business efficiency. Join 1Office to explore the process and methods of market research in the article below.

1. What is Market Research? Types of Market Research

In business, understanding customers and the market is key to making accurate decisions. Market research is the process of collecting and analyzing data on needs, behaviors, and consumer trends. Depending on their goals, businesses can apply various types of research to build effective product, marketing, and sales strategies.

Definition

Market research (Marketing Research) is the process of collecting information and data related to the business field, including information about customers, competitors, products, and even market segments. Through this process, businesses can establish a specific direction and develop suitable strategies to ensure sustainable and long-term future growth.

Each business will use different research methods depending on its specific goals, such as market expansion, launching new products or services, or implementing communication campaigns. However, in all situations, market research is a mandatory task to ensure the provision of accurate and complete information, from which businesses can plan reasonable strategies and achieve high business efficiency.

Types of Market Research

Primary Market Research

Primary market research is a type of research conducted directly in the target market area through methods such as observation, surveys, and experiments. The collected information is usually divided into two main types:

• Exploratory information: This type of information helps define the nature of a problem that was not clearly identified before.
• Conclusive information: This is data that helps redefine the problems identified by the exploratory research.

The final result of primary market research is a compilation from participants, collected as raw data. Afterward, the business synthesizes and analyzes it to extract deeper and more detailed information based on trends and comparative methods.

Secondary Market Research

Secondary market research is a type of research based on using data that has been previously collected and analyzed and is not owned by the business. Most information in secondary research is readily available and free, which helps save costs compared to primary research.

Secondary research is often conducted as a preparatory step for primary research activities. The collected information is sometimes insufficient to explain the results obtained, so this type of research is often carried out to clarify and analyze more deeply. Additionally, businesses need to prepare multiple methods for handling large amounts of data, as manual management can be quite complex.

In general, both types of research have their own advantages and limitations, but the results are optimized when they are combined appropriately. Proper application will help businesses gather a large amount of useful information and anticipate all possible scenarios.

2. Why do companies need to conduct market research?

In a fiercely competitive business environment, relying solely on experience or guesswork is often not enough to make the right decisions. This is why companies need to conduct market research. By clearly understanding customers, competitors, and trends, businesses can reduce risks, seize opportunities, and build more sustainable development strategies.

The Purpose of Market Research

The purpose of market research is not just about finding precise answers to problems that may arise during business operations. For any business, the market research process will aim for the following objectives:

• Understand market needs: Market research helps businesses better understand customer needs and requirements. This allows them to provide products and services that align with market demand.
• Analyze competitors: Market research helps businesses gain a clearer understanding of their competitors. This helps them build competitive strategies to gain an advantage in the market.
• Position the brand: Market research helps businesses position their brand in the minds of customers and in the marketplace. This helps them build their brand image and attract customers.
• Make strategic business decisions: Market research provides crucial information for businesses to make strategic decisions, including new product development, product pricing, choosing distribution channels, and marketing and advertising strategies.
• Evaluate business strategy effectiveness: Market research helps businesses assess the effectiveness of their implemented business strategies, allowing them to adjust, improve, or change strategies to maximize profits and compete in the market.

Importance for businesses

Market research plays an extremely important role in the business operations of companies. A clear understanding of the target market, consumers, and competitors helps businesses make more accurate strategic business decisions, thereby optimizing business efficiency.

Market research provides crucial information about needs, trends, and market conditions, helping businesses better understand the factors that affect their operations. It also helps businesses determine their brand positioning, identify target customers, and build appropriate marketing strategies to attract customers.

Most importantly, market research helps businesses avoid unnecessary risks, reduce the waste of financial resources, and strengthen their competitive position in the market. Therefore, market research not only helps businesses compete in the market but also helps them grow and achieve sustainable success in the future.

3. When should you conduct market research?

Conducting market research requires time, effort, and resources. Businesses should start the market research process at one of the four following times:

Before starting a new sales project

Before a business implements a new investment project or decides to enter a joint venture, it needs to spend time carefully researching the market situation, social needs, and relevant legal regulations and policies. In particular, it is crucial to have a clear understanding of partners or competitors.

This includes learning about their strengths and weaknesses, pricing, marketing strategies, and distribution systems. This research information then helps the business make well-founded and accurate decisions.

Before entering or joining a new market

Before preparing to enter a new market, a business will face many new challenges and risks that they cannot predict. Therefore, this process requires a deep understanding of the economic situation, market demand, legal regulations, competitors, and target customers. Conducting market research will help the business minimize avoidable mistakes.

Before developing and launching a new product or service

Before launching a product, businesses need to clearly understand the market and correctly identify their target customers. This will help the business determine customer needs and wants, thereby improving the product to best meet customer expectations.

For tangible products, businesses often conduct market surveys to gather customer opinions. These surveys can be conducted in the form of focus groups, individual interviews, or questionnaires. Additionally, businesses can let customers test the product to evaluate and experience it.

Through these surveys, businesses will receive useful feedback from customers. The research and development department will use this feedback to improve the product until it achieves the satisfaction of the target customers. Conducting market research and improving the product before launching it is extremely important. It helps businesses increase the chances of the product or service’s success in the real world.

4. Effective market research methods

To truly understand customers and the market, businesses cannot rely solely on intuition but need to apply scientific research methods. Each method offers a different perspective: some help uncover deep-seated motivations, while others provide measurements with specific data. Choosing the right approach will help businesses save costs and obtain accurate data to make effective business decisions.

Observing customer behavior

This is a market research method that gives businesses the most intuitive and realistic perspective, allowing them to create hypothetical situations and collect feedback from customers. Therefore, the business will be better prepared with various scenarios instead of having to predict issues based purely on data.

Market research through direct interviews

This method is often applied in densely populated areas with a large number of customers. The main goal of the direct interview method is to PR the product, helping to reach users more effectively. However, this approach requires a lot of effort, time, and expense.

Focus groups and in-depth interviews

The focus group method is a form of market research involving 6-10 research subjects. These subjects will discuss together to give opinions on a product, service, concept, or marketing campaign.

This method has the following advantages:

• Cost-effective: This method does not require much equipment or manpower, so the implementation cost is relatively low.
• Quick results: The opinions generated during the discussion are the result of interaction among the research subjects, so they often have high feasibility.
• Easy to implement: This method does not require high-level professional skills, making it easy to carry out.
• Flexible: This method can be flexibly adjusted based on the behavior of the research group.

Overall, the focus group method is an effective market research technique, suitable for businesses with limited budgets that need to gather opinions quickly.

Market Research via Telephone

This market research method is considered the most cost-effective, but the positive response rate only ranges from about 40 – 60%. In other words, telephone surveys often face difficulties in persuading people to participate and even greater difficulty in converting them into customers.

Email Surveys

Surveying customers via email is one of the most effective market research methods for small businesses, with the advantage of low cost while being able to reach a large number of customers. This method is even more effective if the business operates under a B2B model.  

Market Research through Online Surveys

Online surveys are a simple and cost-effective market research method. This method can gather necessary information about customer opinions and needs.

However, online surveys also have some limitations, such as:

• Difficult to predict responses: Online surveys often attract a large number of participants, making it difficult to predict their responses.
• Unreliable results: Online surveys can be easily manipulated by dishonest participants.

Experiments

Experiments are a qualitative market research method that helps businesses collect data from customers’ verbal feedback and body language. This method is conducted by organizing a survey at a specific location where the business can control the conditions.

The advantages of the experimental method are:

• Accurate data collection: This method allows businesses to control factors that could affect survey results, thereby ensuring the accuracy of the outcomes.
• Multidimensional data collection: This method helps businesses gather data from various sources, including both customers’ verbal feedback and body language.

Overall, experiments are an effective market research method, suitable for gathering information about customer reactions to a product, service, or marketing campaign.

5. The 7-Step Effective Market Research Process for Businesses

Market research only truly delivers value when implemented through a clear and systematic process. For businesses, following each step not only helps in collecting accurate data but also transforms that information into concrete actions. Below are 7 effective market research steps to help businesses correctly understand customer needs, evaluate competitors, and make more accurate business decisions.

The market research process consists of the following 7 basic steps:

Step 1: Define Market Research Objectives

In a market research strategy, businesses need to accurately define specific objectives. This ensures that the research results will be achieved effectively and with high quality, avoiding deviations from the original plan and predictions.

Step 2: Collect Information

There are many methods one can use to collect information from the market, including surveys, direct interviews, analysis of market reports, statistical data, experiments, and more. The business will choose the appropriate method based on the level of research they need to conduct.

Step 3: Analyze and Evaluate Data

From the notes collected during the market research process, the business will compile them into comprehensive data and then analyze and evaluate the information. Through this process, they can identify trends, influencing factors, and assess the current market situation. Only then can the business develop the next implementation plan.

Step 4: Identify Potential Customers

In the next step of the market research process, one needs to identify the characteristics of the potential customer group they are targeting. From there, they can build suitable business strategies that yield better results.

Step 5: Analyze Competitors

In addition to collecting customer information, one must also research and evaluate information related to direct competitors in the market. This provides an opportunity to analyze the strengths and weaknesses of both oneself and the competitors, thereby building a more suitable competitive strategy.

Step 6: Forecast the Future Market

Based on the collected information and assessment of current market trends, you can predict the market’s future development. The next step is to build a business strategy to meet the demands of the future market.

Step 7: Synthesize the Results

This is the final step in completing a market research study. The business must ensure that all collected information and data are charted and evaluated in a scientific, easy-to-understand, and easy-to-follow manner. This step makes the process of identifying market trends faster and simpler.

6. Market Research by Business Sector

Each industry has its own unique characteristics regarding customers, access channels, decision-making cycles, and methods for measuring effectiveness. Therefore, market research cannot use a “one-size-fits-all” template for every field. Businesses need to define objectives based on the industry context, choose appropriate methods, and more importantly, turn findings into concrete actions for their products, sales channels, and marketing messages.

6.1. Retail

In the retail sector, market research goes beyond simply recording purchasing behavior; it must delve into customer motivations and expectations. This helps businesses clearly understand price sensitivity, loyalty, and the differences between segments.

• Common methods include: POS data, post-transaction surveys, online shopping cart analysis, conversion rates.

• Key metrics to track: average order value, repurchase frequency, NPS, display coverage.

• Practical applications: optimizing product portfolios, designing effective promotions, improving displays, shortening the checkout process.

For retail, market research is a direct tool for increasing sales and enhancing the shopping experience.

6.2. Services

The service industry is characteristically “intangible,” relying heavily on the experience at each touchpoint. Businesses need to focus on measuring satisfaction levels (CSAT, NPS) and understanding the reasons for customer churn.

• Commonly used methods: event-based surveys, in-depth interviews, mystery shoppers, social listening.

• Applications: improving SOPs, optimizing staff allocation, communication skills training, developing service recovery plans for incidents.

In the service industry, market research is not just for measurement but also serves as a guide to enhance the customer experience and foster long-term retention.

6.3. Manufacturing (B2B)

In B2B, purchasing decisions are often lengthy and involve multiple parties, so research needs to delve into the bidding process and technical criteria.

• Focus: selection criteria, price sensitivity, after-sales service.

• Approach: expert interviews, technical team surveys, data from associations/industry.

• Metrics to track: bid-to-order conversion rate, sales cycle, defect rate, technical service satisfaction level.

B2B research provides insights from decision-makers and creates a foundation for businesses to build more accurate bidding strategies.

6.4. Education

In education, customers include not only students but also parents and employers. Therefore, the scope of research must be broad and continuously updated to reflect online learning behaviors.

• Methods: pre/post-course surveys, small group interviews, research on recruitment needs.

• Metrics: enrollment rate, consultation-to-enrollment conversion rate, engagement level, post-graduation NPS.

• Applications: adjusting curricula, improving teaching methods, structuring tuition & scholarships, marketing that targets the “pain points” of parents/students.

Market research in education helps balance learning needs, parental expectations, and corporate requirements, thereby enhancing reputation and competitiveness.

6.5. Technology

The technology industry changes rapidly and has short product life cycles, so market research acts as a “radar” to verify Product-Market Fit and user retention capabilities.

• Key methods: Jobs-to-be-Done interviews, usability testing, cohort analysis, A/B testing.

• Metrics: DAU/WAU/MAU, retention behavior, pricing experiments, churn rate.

In technology, market research drives product innovation, ensuring products remain relevant to the market and maintain a long-term competitive edge.

7. Frequently Asked Questions

Do small businesses need to conduct market research?

Yes. Small businesses should especially conduct market research to avoid creating products based on intuition, choosing the wrong customers, or using the wrong sales channels from the start.

Should market research be done through surveys or interviews?

If you need data that is fast, broad, and easy to synthesize, you should use surveys. If you need to deeply understand customer behavior, needs, and decision-making reasons, you should prioritize interviews.

How many survey samples are enough to make a decision?

There is no fixed number for every case. For quick surveys or tests, you can collect 100-200 survey samples. For in-depth scientific research, the number of survey samples can be over 1000+.

When the budget is limited, which research method should be prioritized?

You should start with low-cost methods like online surveys, interviewing existing customers, analyzing competitors, and reading market feedback. These are easy methods that still provide real-world data.

Should we conduct market research in-house or outsource it?

If the needs are simple and you want to save costs, the business can do it in-house first. But when you need in-depth data, a large scope, or results reliable enough for important decisions, outsourcing is more suitable.

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The above is an overview of market research and related topics such as implementation types, methods, and the detailed process. We hope this article has provided your business with valuable information to assist in the market research process before your business project is launched. We wish you success!