How to do Market Research in 7 Simple Steps?

I used to believe that a great product was all it took to build a successful business. If the idea was strong enough, the market would follow…at least, that’s what I thought.

I poured everything into my first business. But…

I never researched my target market. I assumed I knew my ideal customer profile, but I had no idea who they were, what they wanted, or why they’d pick me over competitors.

These sorts of mistakes have taken down even the biggest companies. Samsung’s Galaxy Note 7 disaster could have been avoided with better research. Rushing to beat Apple, they didn’t properly test consumer safety concerns, leading to overheating batteries, recalls, and a $5.3 billion loss.

If billion-dollar brands can fail without market research, so can any business. That’s why, in this blog, we’ll walk you through how to do market research.

But first…

Companies employ primary research (e.g., customer questionnaires and focus groups) and secondary research (e.g., competitive analysis and market size reports) to make sound decisions.

Given its impact, it's no wonder the market research is projected to reach $160 billion by 2027, reaffirming that data-driven insights are critical to business success. For startups and small businesses, market analysis in a business plan guarantees your approach is aligned with actual demand, providing you with a competitive advantage.

The best choices are made from extensive market studies, and it is critical to every phase of business development, such as introducing new products, realigning prices, monitoring competition, and identifying industry trends.

But the most important question is…

When should you conduct market research?

Think market research is just for startups? Not quite.

Even established businesses use it to refine pricing, introduce new products, and understand changing customer needs. Without it, companies risk losing customers to competitors who actually listen.

Here are a few times when conducting market research is essential:

• Before launching a business
• Before expanding into a new market
• Before launching a new product or service
• When consumer preferences shift
• When sales drop or customer engagement declines
• When competitors gain an edge
• When rebranding or repositioning
• While making major company decisions

Timing your market research right can mean the difference between growth and setbacks. However, research takes time, expertise, and resources.

Some companies conduct research internally, while others leverage outsourced market research services to gain deeper consumer insights. So…

Should you outsource market research?

Yes,  especially if you want fast, accurate market information without spending a fortune. Outsourcing gives you access to experts who know how to run surveys, gather data, and analyze competitors or customers, without the hassle of hiring and training a team. You also get unbiased results, which helps with clear, fact-based decisions.

Research firms can handle small tasks like quick surveys or deep work like industry analysis and customer segmentation. They offer tools and expertise that most companies don’t have in-house.

If your research needs are rare and simple, you can manage internally. But for bigger decisions, trend forecasts, or detailed customer insights, outsourcing is usually the smarter option.

Types of market research

There are two methods of gathering these insights: Primary research (direct data collection) and secondary research (existing data analysis). Although both assist companies in crafting their market positioning, pricing policy, and segmentation of customers, they vary in methodology, cost, and reach.

Let’s break it down.

1. Primary market research

Primary research refers to the process of collecting fresh and new data directly from sources to solve particular business queries. Companies employ this technique to obtain live consumer information and test ideas before making a decision.

It involves:

Interviews

When businesses conduct interviews, it helps them explore customer thoughts, pain points, and decision-making processes. While they provide nuanced feedback and authentic customer language, they are time-intensive and require skilled interviewers. Recording interviews and using open-ended questions ensures valuable responses.

Airbnb regularly conducts customer interviews to understand guest preferences and pain points, leading to improvements in its user experience. ​

Focus groups

This is a type of qualitative research that combines different points of view, initiating discussions that uncover information not obtainable through individual interviews.

They help businesses learn about how opinions are created, change, and impact buying decisions, which makes them well-suited for product testing and brand perception research. In the 1980s, Coca-Cola used focus groups when developing "New Coke."

Product/service use research

Again, it’s one of the qualitative methods where businesses observe real interactions with a product to find usability issues that users may not even realize exist, bridging the gap between intended and actual user experience.

While this research provides concrete data for product improvements, artificial testing environments can slightly alter behaviors, and long-term patterns may go unnoticed. Dropbox observed users interacting with their product, identifying usability issues that informed improvements in their onboarding process.

Buyer persona research

This type of research looks deeper than just population data and demographics to find the drivers, actions, and decision patterns of your most desirable customers. It develops an in-depth, actionable profile that enables companies to align their sales, product development, and marketing strategies.

HubSpot uses in-depth buyer personas to align its marketing efforts and develop targeted content that speaks directly to its ideal customers.

Market segmentation research

Market segmentation divides the market into specific groups based on behaviors, needs, or demographics, companies can create targeted messages and offer the product or service that customers want.

This research is essential for launching new products, entering new markets, and refining brand positioning. Nike segments its market by sport and athlete type, tailoring products and marketing strategies to each group.

Pricing Research

This technique helps companies achieve the balance between profitability and willingness to pay from customers. They apply this technique when making price adjustments. It is especially effective in creating tiered pricing models that address various customer segments and optimize profitability.

Slack’s pricing model is a result of thoughtful research. Each tier is designed around real user needs and tested willingness to pay.

Customer satisfaction and loyalty research

Businesses use customer satisfaction and loyalty to minimize churn by determining which customers are at risk and what makes others stick around. It quantifies the satisfaction of the customer and assesses long-term loyalty and word-of-mouth advocacy.

Apple actually listens to what users say in surveys. That feedback helps them tweak both their products and how they support customers.

2. Secondary market research

Secondary research involves analyzing existing data collected by external sources such as business reports, government publications, competitor research, and academic studies. It’s widely used for business trends analysis, industry benchmarking, and competitor research.

Competitive analysis research

In this process, businesses examine competitor’s strengths, weaknesses, pricing, and market positioning by using public data, reports, and financial statements.

It helps them find underserved niches and anticipate competitor moves. Pop Mart looked at what other collectible brands weren’t doing—like having stores in Australia. They used that info to go where the competition wasn’t.

Brand awareness research

Businesses employ this technique by using existing surveys, social media mentions, and public opinion studies. It measures how well a brand is recognized and perceived in the market by consumers.

L'Oréal used brand awareness research to design the #WorthSaying campaign, which centered on meaningful conversations rather than appearance.

Campaign research

This process involves analyzing past marketing campaigns, using performance data and consumer responses to determine what works, and replicating successful elements for better ROI. Starbucks went digital, changed its loyalty program, and made things more personal. It resulted in more happy customers and higher sales.

Competitive intelligence research

In this process, businesses track all the market shifts, consumer sentiment, and competitor strategies with the help of industry-based reports, analyst research, and economic forecasts to stay ahead of emerging trends. Zara’s use of competitive intelligence enables rapid response to evolving trends and consumer needs, positioning it as a leader in fast fashion.

Now, let’s compare primary and secondary research.

Primary vs. secondary research

Primary research is ideal when companies require exclusive insights, probe customer likes and dislikes, or confirm innovative concepts. It provides precise, customized data, making it ideal for pricing research, product development, and customer behavior analysis.

Secondary research is useful when businesses need industry analysis and benchmarks or competitor insights. It is a cost-efficient way to gather extensive background information without investing in full-scale efforts. Most companies combine both to create a well-rounded market research strategy.

Now that we’ve explored the differences between the two, the next step is putting that knowledge into action. But where do you start?

How to do market research step-by-step?

If you have always been worried about how to do market research in a structured format, here is a step-by-step process for doing it right.

Step 1: Define your research goals

Before gathering primary data, ask yourself: What do I need to know? There’s a lot of collected data available, but without a clear goal, you risk analyzing market dynamics that don’t even apply to your business.

Are you identifying a market segment, improving brand image, or understanding current customers? Your strategic choices should be based on specific research goals.

A well-defined goal also helps in choosing methods. Online surveys work for honest feedback while analyzing internal data helps evaluate loyalty programs.

For small businesses, every research effort must be efficient. Setting a clear goal ensures your marketing efforts are aligned with real needs.

Step 2: Identify your ideal customers

Your service or product will not be of interest to all, therefore, finding your target market smaller assists you in targeting the appropriate people with your marketing strategy.

Begin with determining what market segment you can target.

• Who are your potential customers? Think about their demographics (age, location, income) and psychographics (lifestyle, values, aspirations).
• What are the challenges they face? What specific problems are they trying to solve?
• How do they describe these problems? Check social media, customer reviews, and competitor engagement to see how they talk about their needs.
• How does your offering solve their problems? What features and benefits matter most to them?
• What marketing campaigns will they relate to? Which words, phrases, or ideas will make your brand accessible and desirable?

Then, once you have this, develop a buyer persona, an imaginary profile that personifies your potential customers based on their wants, actions, and buying process.

If you are conducting primary research, you need the right participants. Here’s how to find them:

• Word of mouth: Easy, but results may be biased.
• Social media ads: Target specific demographics with precision.
• Market research firms: Best for small businesses that need data-backed insights.

A screener survey ensures participants match your buyer persona while filtering out irrelevant subjects.

Paul DeMott, CTO at Helium SEO stresses the importance of direct conversations over relying solely on data.

"I make sure to talk directly to potential clients, asking about their pain points, what they were frustrated with in the SEO space, and what kind of results they were truly looking for. This was really eye-opening because I realized that many businesses weren’t looking for the typical SEO 'magic bullet,' but were more focused on sustainable growth and transparency in results." said DeMott

Step 3: Define Your research hypotheses

Before conducting market research, you need to establish clear hypotheses—testable predictions that guide your business decisions and ensure relevant data collection. Without them, research can become unfocused, leading to misinterpreted consumer insights.

Start by identifying key questions your business needs answers to. For example:

➡️ Would a subscription model make customers stick around longer?

Hypothesis: Customers who subscribe will stay 30% longer than those making one-time purchases.

➡️ Do discounts actually increase customer loyalty, or do they just attract bargain hunters?

Hypothesis: Offering frequent discounts will boost short-term sales but won’t increase repeat customers.

These testable statements help determine whether you need quantitative research (price sensitivity surveys, data models) or qualitative research (customer interviews, behavioral analysis).

If you try to test too many things at once, it will lead to inconclusive results. Good market research means keeping your focus tight—one step at a time, one hypothesis at a time.

Step 4: Choose the right research method

Yes, we’ve talked about primary and secondary research before, but because choosing the wrong one can delay research efforts, here’s a quick breakdown again.

• Use secondary research when analyzing market size, consumer trends, or competitor strategies. This involves collected data, business reports, and brand awareness research.

• Conduct primary research if you require firsthand customer feedback—be it through interviews, focus groups, or surveys. This works best for pricing studies, customer satisfaction analysis, or usability testing.

Step 5: Start the research

With your research method set and your target audience defined, it’s time to execute the study. To ensure accurate results, have an unbiased facilitator lead interviews, surveys, or focus groups.

Here is how you can ask the right questions:

• If you want to understand buyer motivations, ask: “What problem were you trying to solve when you first purchased this product?”
• If you want to test brand awareness, show respondents a lineup of competitor logos (including yours) and ask them to rank by trustworthiness.

You can avoid common biases by

• Not leading responses: Keep language neutral so participants don’t feel nudged toward an answer.
• Shuffling multiple-choice options: Prevent people from always picking the first or last option due to primacy or recency bias.

A structured approach ensures your research findings reflect real market dynamics, not just what participants think you want to hear.

Structuring the study

A solid plan ensures your research reflects real consumer behavior, not just what people think you want to hear. Always create a discussion guide with the following:

• Time limits for each section
• Open-ended questions (avoid yes/no answers)

Thank them for their time and, if applicable, send a thank-you discount or sample.

Step 6: Analyze the competitive landscape

A well-executed analysis of competition helps businesses make data-backed decisions. One of the most practical methods for this is SWOT analysis, which assesses competitor strengths, weaknesses, external risks, and business opportunities across specific industries.

Here is how you can conduct a SWOT analysis better. List down:

• Strengths: What makes their brand strong? High customer loyalty, extensive marketing efforts, or unique product features?
• Weaknesses: What complaints do customers have? Inconsistent service, overpriced products, or outdated user experience?
• Opportunities: Are there emerging trends or market gaps they haven’t pursued yet?
• Threats: What external factors could impact them? New competitors, supply chain issues, or declining brand perception?

A thorough competitor analysis through SWOT guarantees you get the right information to enhance your business strategy, identify your competitors better, and leverage market gaps.

Joseph Passalacqua, CEO of Maid Sailors Cleaning Service, approached competitor analysis differently. Instead of using industry reports or data online, he became a customer himself.

"One of our most valuable research techniques was becoming a client of our competitors. By booking services with established cleaning companies, we gained firsthand experience of their pricing structures, customer onboarding processes, service quality, and follow-up strategies. This revealed that most companies had excellent cleaning quality but poor communication systems, creating a clear opportunity for differentiation." said Joseph

Step 7: Analyze all the data and take action

So, you’re done conducting market research, what now? Primary data sitting in a spreadsheet won’t help unless you apply it to improve your product or service.

If your findings show that potential customers struggle with your checkout process, don’t guess, fix it based on real insights. Check how competitors handle similar challenges using the research, then go straight to your users for clarity.

To organize your insights, break them down into a simple report:

• What’s the biggest takeaway?
• How do customers make buying decisions?
• What needs to change immediately?

Additional research data should help you refine your business idea and strengthen your target market strategy. The sooner you act, the faster you see results.

You can conduct market research, but optimizing your approach with the right methods will save time and effort.

Market research tips to simplify the process

Reaching the right target market is what makes market research important. Use these tips to make the process faster and easier.

1. Keep surveys short

When you conduct market research, keep surveys, questionnaires, and interviews short and to the point. A study analyzing 100,000 online surveys found that response rates dropped by about 3% at 10 questions and approximately 6% at 20 questions, with the decline slowing thereafter.

The easier it is for your target audience to participate, the more accurate your data will be.

2. Use secondary data before running primary research

Before collecting primary data, analyze secondary data from various sources to refine your business idea and understand where your product or service fits within your target market.

3. Conduct brand research

Many businesses assume they know how customers see their product or service, but brand perception often differs. Research how your target audience views your brand by assessing:

• Brand awareness and recognition
• Customer trust compared to competitors
• Overall reputation based on online presence, advertising, and customer feedback

2. Understand your target audience beyond demographics

Knowing your target market involves more than just age and income. Use surveys and cell phone data tracking (with consent) to analyze consumer behavior, buying habits, and pain points. This helps tailor your product or service to meet real needs.

3. Avoid assumptions

It's easy to see a trend and assume a reason behind it, but effective market research is based on data. Use both primary data and secondary data to validate insights before making business decisions.

4. Communicate clearly to get reliable responses

Your research results are only as good as your questions. When you conduct market research, make sure your target customers understand the survey or interview questions without confusion. Simple, direct language leads to more accurate and actionable feedback.

5. Be transparent about how you collect data

If you’re collecting data through surveys, interviews, or cell phone interactions, inform participants how their responses will be used. Transparency builds trust and encourages honest feedback, leading to better insights for your product or service.

6. Break the research into smaller sessions

If your market research requires large amounts of data, break it down into smaller, focused surveys or interviews. This prevents participant fatigue and increases response quality while keeping research manageable and effective.

7. Validate findings with external research

Once you collect primary data, compare it against external research from competitor case studies, market reports, and industry trends. This ensures your findings reflect the bigger picture rather than just internal assumptions.

8. Refine your business idea based on new research

Business trends shift, and so do expectations of your potential customers. The best way to keep your business idea relevant is by regularly updating your market research strategy. Stay engaged with your target market to keep improving your product or service.

Tips and tricks help, but market research gets a lot easier when you have the right resources and tools.

Market research resources & tools

Having the right tools makes market research efficient and accurate. Here are the top resources to assist you in analyzing your industry, competitors, and target audience.

• U.S. Census Bureau: Provides in-depth demographic and economic data essential for U.S. businesses.

• Bureau of Labor Statistics (BLS):  Industry-specific hiring, wage, and expense data for market analysis.

• Consumer expenditure survey: Insights into consumer spending habits to tailor marketing strategies.

• SBDCNet Business Snapshots: Industry reports and market trends, perfect for small businesses.

• Upmetrics’ Research Assistant: AI-powered tool to conduct market research, analyze trends, and refine business strategies.

• Social media platforms (LinkedIn, Reddit, etc.): Helps engage with your target audience and track trends.

• Search engines (Google, Bing, etc.): Helps with analysis of competitors and researching industry insights.

• Industry reports and trade publications: Resources like Gartner, Statista, and IBISWorld offer detailed market trends.

• Market research platforms (SurveyMonkey, Typeform, etc.): Ideal for surveying customers and analyzing responses.

• AI Tools (ChatGPT, Bard, etc.): Help in trend analysis and customer segmentation, though verification is necessary.

• Free templates (SWOT, survey forms, etc.): Pre-made research tools to help structure your findings.

The bottom line

Selling successfully isn’t just about having a great product or service—it’s about knowing what your target market is, what customers want, and how they make buying decisions. And market research does this work for you.

No need to stress about how to do market research for a business plan—PlanGrowLab does it for you! If you require a market analysis template or an in-depth breakdown of your sector, our experts deliver the insights startups and small businesses require to develop confidently.