Conducting market research is an essential stage of any e-commerce business, particularly when it comes to encouraging growth. With an ever-changing sea of possibilities and challenges, market research can give you the guidance to navigate those waters without blowing your budget on the wrong moves.
Article Shortcuts:
- Primary vs. Secondary Market Research
- Some Benefits of Market Research for E-Commerce
- Steps for Conducting Market Research for E-Commerce Growth
What is Market Research?
Market research, in short, is the process involved in learning about a market for the sale of a product or service. It involves gathering, analyzing, and interpreting data about the market.
You can also research the product or service you wish to offer for sale in that market.
The idea is to figure out who your target audience is on a deeper level, understand the competition, and keep an eye on whatever the current market trends are.
You can use it to improve your B2B sales and marketing funnel, and it can include a variety of methods, such as surveys and interviews, focus groups, and data analysis.
The desired outcome is to make informed business decisions for growth and success that maximize your resources so you get the most bang for your buck.
Primary vs. Secondary Market Research
There are two main types of market research: Primary and secondary. Let’s delve into them here.
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Primary market research
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Primary market research is research that you conduct yourself, or through an agency specializing in this. The information you gather is first-hand, which essentially means that you own it.
You can gather this information through a number of research styles, such as surveys, observations, structured or unstructured interviews, or focus groups.
Pros:
The main pro of doing it this way is that you can get information that is the most relevant to your needs.
You can find out exactly what your target audience is into. You know that the information is up-to-date. And with social media, it’s now easier than ever to reach your target audience to ask questions.
Cons:
The main difficulty with this method is resource intensity.
Either you need to dedicate time and effort into conducting your own research via your team, or you need to outsource the work to an agency which can be expensive.
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Secondary Market Research
Secondary market research involves gathering information from public sources. These could be things like industry reports, government reports, statistics published online, or academic papers.
Pros:
Can be cheaper than doing your own research, since many resources are free. You can also enjoy a broader overview of the market, which has its own benefits.
Cons:
Some content comes behind a paywall. You also don’t get information that is hyper-curated for your e-commerce business.
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Why Not Both?
There’s no reason why you couldn’t use both primary and secondary market research methods for your business. You can pick and choose what’s most appropriate for your budget and in-house skills.
This will help you to get both a broader overview of the market, as well as learning valuable information about your target audience.
Some Benefits of Market Research for E-Commerce
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Market research is vital for the success of an e-commerce business because knowledge is power, especially where your budget allocation is concerned.
Here are some core benefits of market research for your e-commerce endeavors:
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Minimizing risk
Entering into any market with a new product or service, or starting a new business is risky business. It requires careful market research to make sure that your hosted VoIP solution ideas, for example, are viable, that the market is open to your offerings, that your target audience exists.
You wouldn’t start an egg farm in a town with a saturated egg market. You wouldn’t open a cat cafe in a culture where animals are deemed to be dirty. And you wouldn’t start an after school club for teenagers in a town where everyone is over the age of 20.
You can lose a lot of money if you misjudge the market and target audience, since businesses usually require a substantial investment of time and money. You can minimize this risk by understanding who your competitors are, whether the market is saturated or not, and the size of the market.
You can also learn about the average income for people in the area, as well as employment rates. You can get info on the location and how others price their products.
If you acquire this knowledge, you can start to identify gaps in the market. You can also use this information to steadily grow your business and adapt to sudden and gradual market changes.
What works one season doesn’t necessarily work in the next.
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Keeping an eye on the competition
We unfortunately operate in a system that forces us to compete with each other. As such, it’s vital that you keep an eye on your competitors so that you can offer something that they don’t.
You can take a look at their marketing methods, what customers are saying about them, and what they’re offering. Then, you can decide what it is you can offer that stands out from the others.
Do you have excellent customer service? More options? A nicer logo? It’s all gold.
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Keep the customer at the forefront
Another clear benefit of doing market research is learning about your customers. Who are they, what do they care about, why would they connect with your brand? These are all vital questions you need to answer.
Market research can help you to unearth the needs, desires, and behaviors of potential customers in the market you want to enter.
Steps for Conducting Market Research for E-Commerce Growth
Let’s delve into the steps you can follow to conduct your market research and grow your e-commerce business.
1. Define your goals
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Clearly outlining what you want to achieve through the market research you’re conducting will help you to make the most out of your market research efforts.
Whether it’s understanding your customers’ preferences, identifying potential new markets for your workplace management software, or improving what you can offer through your product, outline what your goals are clearly.
Other objectives could include things such as:
- Understanding customer needs in order to tailor your product features.
- Improving your customers' engagement and satisfaction in order to get repeat purchases.
- Evaluating the strategies your competitors are using in order to differentiate your brand in the market.
- Optimizing your pricing strategies on the basis of demand and consumer behavior.
Establishing your objectives clearly at the outset will allow you to streamline your efforts and ensure that your data is relevant to your business goals. You can then make informed decisions, and enhance your e-commerce performance for sustainable growth.
2. Identify your target audience
Your next step should be to define your ideal customer profile and segment your target audience depending on factors such as demographics, consumer behavior, and your audience's personal preferences and values. To go into further detail, you should segment your audience based on some of the following:
- Demographics: Age, gender, income, education, and location.
- Psychographics: Values, interests, lifestyles, attitudes, and behaviors that influence purchasing decisions (e.g., environmentalist, vegetarian, active, etc.).
- Behavior: Online shopping habits, preferences, browsing patterns, and reasons for buying (e.g., sales).
- Pain points: Getting to know the challenges your target audience faces that you can address with your products or services.
Curating detailed customer profiles will allow you to personalize your marketing strategies, and eventually lead to higher conversion rates, increased customer loyalty, and sustainable e-commerce growth.
3. Select your research methods
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The next step once you have identified and segmented your audience is to choose the best research methods for your goals, such as surveys, interviews, focus groups, or data analysis.
The different methods offer various unique advantages that can help you in gathering useful information from your target audience. Let’s go a little further into each of the ones we mentioned:
- Surveys: Surveys typically involve collecting feedback from large numbers of respondents via a structured questionnaire. A popular choice when it comes to e-commerce is the online survey, which can be useful for gathering insights on customer preferences, satisfaction levels, and purchasing behaviors.
- Interviews: You can have unstructured, semi-structured, and structured interviews on a one-to-one basis. These can be with customers, experts in the field, and stakeholders. They can offer some in-depth qualitative data based on their experiences, ideas, and even make suggestions to help your business.
- Focus groups: Focus groups will typically involve bringing together a small group of participants. They then sit around and discuss specific topics or products in an interactive way, while you take notes. This helps with generating ideas, and gleaning some deeper insights around consumer perceptions and preferences.
- Data analysis: You can also go down the route of analyzing quantitative data, such as sales figures, website traffic, customer reviews, and social media metrics, etc. This may offer some valuable insights into market trends, customer behavior, and even business performance to help you see which direction you should head in.
Finding the most appropriate research methods for your goals, target audience, and budget will help you to work efficiently to achieve your targets.
You can gather relevant data to inform your e-commerce strategy and drive business growth.
Traditionally, inventory management for e-commerce—whether automated or manual—has relied on a hindsight perspective. However, in today’s dynamic marketplace, it’s widely recognized that past performance is not always the best benchmark for predicting future success.
Be sure to pick methods that align with your research goals and provide meaningful insights. The goal is data-driven decision-making at all times!
4. Collect your data
When you have your data collection methods in place, it’s time to start gathering the data and organizing it to be analyzed in the next stage. You should transcribe interviews, and put them into your software of choice for analysis.
Make up some charts and graphs about your B2B sales and marketing funnel, for example, for easy dissemination of the information, and put it in a digestible and shareable format for your colleagues.
5. Analyze the data
The fifth step is to analyze your data. This is the step that will help you figure out what actions you can take to drive growth.
You can identify patterns and trends, as well as opportunities to optimize your online business operations. You should consider the following key aspects of analyzing data for e-commerce growth:
- Identifying patterns: Look out for any recurring themes or behaviors that seem to have some significance. Are multiple customers saying the same things? Pay close attention.
- Uncovering trends: By analyzing data over a longer period of time, you can identify trends as they emerge, as well as shifts in consumer preferences, changes to market dynamics, or new competitors. Keeping your finger on the pulse of the market can help you to stay ahead of the curve and adapt business strategies proactively rather than reactively.
- Exploring opportunities: You can use data analysis to find out about untapped market opportunities, new customer segments, and even product innovations and new features that can help you to drive e-commerce growth. Data analysis can help you in identifying opportunities for expanding your business, and diversifying so that you can tap into the market demand and remain relevant and competitive.
6. Develop insights and implement strategies
Finally, you can take the opportunity to make informed decisions on the basis of your data analysis.
You can do this when it comes to developing your product, deciding how to price things, deciding on your marketing campaigns, when considering whether to buy leads, and how best to support your customers.
Data-driven decision-making can lead to more effective strategies and sustainable business growth.
7. Monitor and evaluate the situation
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The market is not a static sculpture that you find your niche in once and only once. It is a quickly evolving, often elusive beast.
You need to keep in close touch with your industry by continuously monitoring for changing market trends, keeping on top of customer feedback, and paying attention to performance metrics to adapt your strategies and stay competitive in the e-commerce landscape.
Final Thoughts
Market research is a vital component of any business strategy, and taking simple and deliberate steps can help your business to grow and flourish in a competitive market.
Defining your goals, identifying and segmenting your target audience, choosing the best research methods to meet those goals, and collecting and analyzing your data are core steps towards getting actionable insights.
And it’s not enough to stop there – you want to make sure that you implement strategies that are conducive to your growth, and that you keep monitoring the market and your performance so you can remain ahead of the curve.
