The Complete Guide to Market Research for Your Retail Business

Feb 28, 2021

The Complete Guide to Market Research for Your Retail Business

Consumers are no longer solely concerned just with price points. Purchase decisions are now being made with more factors at play, things such as brand differentiation, reputation, and customer-centric return policies.

But it’s hard to read a customer’s mind, and it’s also a challenge for retailers to figure out where they fit when compared with their competition.

Especially for retailers just starting out, it may feel like a lot of decisions are made on guesswork or instinct. Market research can remove much of that uncertainty, by helping you understand your industry, your target customer, your competition, and your product. And when you understand all that, your chances of success are a lot greater.

There are many agencies that you can hire to conduct market research for you, but if you’re on a budget, there are ways you can do it yourself.

What Is Market Research?

In short, market research is the information you gather about consumers’ needs and preferences. But there’s much more to it than that.

Market research helps you understand why consumers want to buy your products.

With that information, you’re able to create products that provide solutions, market to consumers effectively, and increase your chances for success.

When you conduct market research, you’ll gain an understanding of the cultural, societal, socioeconomic, geographic, and personal makeup of your target customers. You’ll understand whether there’s a demand for your product, how big that demand is, and who is generating the demand. It’ll also help you understand the competitive landscape.

There are two types of market research: primary and secondary. Let’s take a closer look at both.

Primary research

Primary market research is when you study the market directly. This is when you conduct the research yourself (more on how to do that later). Examples of primary research include focus groups, customer surveys, and your own sales data.

Secondary research

Secondary market research is when you study the market through someone else’s research. You aren’t doing the research yourself — you’re leaning on data someone else has collected to inform your decisions about your products and customers.

Some examples of this include others’ reports, industry trends, and case studies.

Why Is Market Research Important?

Market research | Shopify Retail blog Market research essentially serves as validation for your product idea. It also provides the insights you need to make sure people buy your product through effective marketing, smart pricing, and effective brand positioning.

Without market research, you won’t have enough data to tell you who your customers are, what they buy, why they buy it, when they buy it, and what will make them buy it from you.

Market research will tell you where and how to find your customers, and how you can present your product and your brand to them and make them convert. Part of this includes differentiating your brand. Understanding your competition can help you develop your unique selling proposition, which will help you stand out and attract customers.

How to Do Market Research

There are two ways to conduct market research: do it yourself, or hire someone else to do it for you. If you plan to go the DIY route, here’s how:

It’s typically easier to start with your secondary research. Look for research reports, case studies in your industry, and leading publications.

Primary market research requires a different approach to gathering intel. You’ll need to conduct the research yourself. There are many ways you can do this:

Customer surveys: These can happen via email, through feedback or survey forms on your website, or polls.
In-depth customer interviews: One-on-one telephone or video-chat interviews with customers.
Customer reviews: See what people are saying about your brand, your products, your competitors, and similar products.
Contextual inquiry: A user research technique that involves observing and interviewing people while they perform tasks in context.
Focus groups: Hire an agency to conduct in-depth research via focus groups.
Sales records: Take a look back at the customer and sales information you already have available.
Employees: Ask sales associates for their findings on the floor, whether it’s commonly asked questions from customers or observations in customer behavior

For both types of market research, here are some things you’ll want to define as part of your process:

Industry information

Statistics and trends on business conditions in your vertical

Consumer insights

Statistics and trends on consumer behavior, both as it relates to your industry and as it relates to overall purchasing behavior in retail
Demographics information that will allow you to segment your audience into targeted groups and market to them better

Where your business stands

Determine existing customer demand
Where your customers are succeeding, and where the gaps exist

Tools to Conduct Your Market Research

Market research tools | Shopify Retail blog There are countless tools to use to conduct market research. Here are just a few:

Nielsen: Nielsen has research reports and studies on consumer behavior across more than 100 countries.

Pew Research Center: Pew also conducts scientific studies, many of which provide insight into consumer behavior and trends.

D&B Hoovers: You can purchase reports from D&B, a company which has researched 85 million corporations, 100 million people, and 1,000 industries. Expect to find insights ranging from consumer behavior to competitive analysis and industry trends.

MarketResearch.com: Much like D&B, MarketResearch.com has tons of independently conducts research and analysis reports you can purchase. Retailers can start by checking out their list of consumer goods reports.

U.S. Census Bureau: The U.S. Census Bureau provides a holistic look at the American economy. You can use it in your market research to understand the state of your industry both in the States and internationally (they have a whole section on retail trade).

Facebook Audience Insights: If you have a business Facebook page, you can use the audience insights tool to understand who your followers are. You’ll learn things like their age, income, lifestyle category (as determined by Facebook), and even spending behavior. The location insights are especially helpful for brick and mortars.

Survey tools: There are many free tools you can use to conduct customer surveys, such as Google Forms and SurveyMonkey. These are helpful if you already have an engaged audience, such as an active email list or social following.

If you need to get the survey out to some more people, you can pay for a service like Google Surveys, which also allows you to add targeting parameters to get more specific and relevant insights.

U.S. Small Business Administration: The SBA offers resources for American-based retailers to understand your target market and current economic conditions. Their free SizeUp tool is a great way to see how you stack up against your competition.

SEO tools: There are tons of SEO tools — both free and paid — that retailers can use to conduct market research. Google Trends can help you determine when topics are popular (and when you should run your promo or launch your new product), and Moz has a suite of robust tools. Read about more helpful SEO tools for retailers.

Bloomberry: Similar to how you would use some of the SEO tools, Bloomberry can help you learn more about what consumers are saying about your industry. Specifically, you can find out questions they’re asking about your products or your competitors’ products. Bloomberry aggregates search results from various forum sites, like Quora and Reddit, to identify trending topics and questions.

Know Your Customer: With this Shopify app, you’ll learn about who’s on your website, where they are, and when they’re browsing.

Customer.guru: This is another Shopify app, and it will provide information about customer satisfaction. It also integrates with Facebook Ads and Google Display Ads, so you can get a holistic view of where your brand stands in the eyes of the customer.

Bureau of Labor: The Bureau of Labor has an abundance of resources to help you learn about employment in the U.S. They provide employment rates and statistics on related topics like “occupational employment and wages, labor demand and turnover, and the dynamic state of the labor market.” If your market is in other countries,

Office for National Statistics: U.K.-based retailers can use the numerous resources here to learn about your industry, the economy, employment information, and consumer demographics.

FedStats: This is another great U.S.-based resource to find statistics and trends that cover a variety of topics and findings from trusted sources.

Consumer Price Index: Simply put, “The Consumer Price Indexes (CPI) program produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services.” This is a great way to learn how to set prices for your products.

Consumer Spending: The U.S. Bureau of Economics has personal consumption expenditures (PCE) resources that you can use to learn about how to price your products, similar to the CPI.

American FactFinder: The U.S. Census Bureau has a whole library of facts that are especially helpful in researching the demographics of your target customers.

Consumer Product Safety Commission: This U.S. agency reports injury statistics based on product category and by hazard category. It helps estimate how many injuries caused by products will be treated in the emergency room each year. You can use this information in a variety of ways, from determining your USP as a safe product provider to understanding how to communicate the safety of your product to customers.

Market Research Never Ends

The key to successfully doing and using market research is to remember that it never ends. You should always conduct market research. The market changes, and you need to be on top of it to stay ahead of the curve.

Source:https://www.shopify.ca/retail/how-to-do-market-research-the-retailer-s-guide-to-doing-homework-for-your-niche-business