What type of market research is best for your business question? 6 points you MUST get right

Not all market research is created equal. They say that beauty is in the eye of the beholder. In market research, value is in the alignment with the business question.

In this article, I am going to give you a simple yet comprehensive framework for assessing market research solutions and companies.

The Conundrum

If you're looking to acquire market research, you probably came across various solutions, with a blend of methodologies and promises. Google searches might have returned big names, or trendy buzzwords, such as artificial intelligence.

What is best for your particular business and question? Often, it is hard to judge before long engagements with many market research companies.

This is an issue that I found highly salient in market research. It is typically down to two underlying confusions:

1/ You might know the problem you're facing, or the answer you're looking for, but have no idea how to get there. It is similar to when your car is making that weird noise that you want fixed, but you wouldn't know how to fix it yourself.

2/ You see market research as an homogeneous umbrella term. In this case, you might be in a similar situation to somebody who is looking for a doctor with a complete disregard for his specialty. You make no difference between a dentist, an orthopedist, or a surgeon.

These two issues are highly prevalent in the market research world. But there's a simple solution that help solve both problems at once.

The Five Types of Market Research

A market is made of five main actors and events. You need a seller, you need a seller's product or service, you need a place of exchange where the seller meets the buyer, you need the product to be bought, and you need a buyer.

There are market research companies at each of the five points. They all are using different methodologies to understand their section of the market. See a very non-exhaustive list below.

Now, your goal as a business is to increase profits. This usually means more sales. What is stopping you from getting more sales?

Let's look at some examples across our diagram:

• [Marketing - Buyers] It could be an understanding of your customers. Perhaps you've been trying to sell to the wrong demographics. If that is your problem, you definitely want a market research company involved with the buyers. This means survey capabilities, trend monitoring, focus groups.

• [Conversion - Buyers' Products] It turns out that you've got the right audience, people want your products. What is stopping your products from being bought more? They might be bought alongside other brands. They might be forgotten in the cart on websites. If that's your problem, definitely delve into receipts, web data and credit card records.

• [Sales - Place of Exchange] You discover that people do buy other brands alongside yours. Why is that so? You might have your products in the wrong shops or shelves. You might be undercut by promotional offers from your competitors. If that's the case, you want to look at scan data and store checks.

• [Price - Sellers' Products] Everything points you to the fact that your product is too expensive. However, you can't lower the price. The other option is to lower your cost to create this product. Here, you'll need market research that's specialised in your industry and understands the supply chain of your product.

• [Competition - Sellers] Finally, you decide to take a step back. You want to look at the bigger picture and understand the competitive environment in which you're operating. For this, you need market research that's in touch with the sellers, with the brands. You want to see trade interviews and expert engagements.

These are just some examples to illustrate that there are logical marriages between business questions and market research methodologies.

This is very important to know and understand.

But that's not all.

Moving Across Diagram

One axis you've got to be mindful of in our diagram is the tactical against strategic. You might have noticed that buyer-side market questions are often more tactical, and seller-side market research questions are more strategic.

How come?

There are two reasons.

1/ You bump into seller-side problems once you're big enough as a company. Why would you care about the market share of PepsiCo if you're selling lemonade in front of your garage?

2/ There are less sellers than buyers in a market. Looking at sellers is bound to have bigger impacts than looking at buyers. For large companies, small decisions are big decisions.

It's therefore good for you to think about where you are in your journey as a company or product. If you're just starting out, you might not need a full-blown strategic plan. But once you're big enough and starting to rub shoulders, this is when you leave the tactical for the strategic.

Match Making

If you're picking a market research firm without clearly defining where your business question currently is in the market diagram, you won't be able to adequately solve it.

It's got to be a logical flow between:

Business Question => Type of Data => Methodology => Market Research Firm

If you're picking a market research firm that's misaligned with your business question, you'll struggle. What sometimes ends up happening is that the market research firm is trying to fit a square into a circle. Because you have a seller-side business question, but they're a buyer-side market research firm, they're attempting to stretch their buyer-side methodology and data to answer your question.

A simple example is trying to answer a highly strategic competitive question with a consumer survey. It's doable. You can run surveys asking the brands people are purchasing overtime and see who are your main competitors and how fast they're growing. You might do it if you're on a budget.

However, this isn't the easiest and most reliable way of answering that question and building that dataset. The easiest way in that case is to directly look at the sellers' products and the sellers.

If you're cooking, you want the right material and the right ingredients. Don't try to make pizza in a pan.

Picking Right

It is hard to pick a market research company, methodology and data type. I can empathise with buyers, as I am myself constantly discovering methodologies and new perspectives.

However, the basics are the basics and they rarely change.

Get these 6 points right before selecting a market research company:

• 1/ Spend a lot of time refining your business question, your hypothesis, what you're trying to figure out.
• 2/ Identify where your business question sits in the simplified diagram of a market. Is it more of a seller-side or buyer-side question?
• 3/ Think about the type of data you already have in-house, and the type of data you'd need in addition to that.
• 4/ Try and divide the data you'd like into super-must-haves and optional. Scopes often get out of control & counterproductive.
• 5/ If you're offered a solution, think about whether other sections of the market would have better data for your business question.
• 6/ Remember that alignment between the business question, data type, methodology, and firm, is more important than the brand-name.

Not easy, but worth it

At the beginning of this article, I talked about two issues people faced when selecting a market research company. The first one was about not knowing how to solve their business question, and the second was about seeing market research as an umbrella term.

Kill two birds with one stone with one simple solution: knowing exactly where you business question sits in a market.

If you know this, you can't get it too wrong (but you still can). You will at least get a market research company with the relevant methodologies and data types. You will have the right tools and ingredients.

In conclusion, you want to spend a lot of time refining your business question and thinking about where you are in the market and what type of data you'll need. Nonetheless, keep an open mind. Rarely will a business question only benefit from one part of the market. However, the business question might have a primary answer in one part of a market and secondary answers in others. Focus and prioritise the primary, get the secondary if you can.

Found that helpful? Let me know in the comments or DM!

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