Market research is one of the most important factors for your company’s success. You’ll use it to justify the feasibility of your business idea when you’re coming up with the initial plan, analyze market trends in advance of new product development, and even retroactively analyze a brand failure.
But despite its ubiquity in the entrepreneurial realm, market research isn’t a simple or straightforward process. Every year, thousands of new entrepreneurs end up making basic mistakes that compromise the effectiveness of their research—and ultimately threaten their company’s chances of success.
There are multiple phases and components of market research, each of which is susceptible to its own set of potential errors:
Before delving into any one specific demographic, market researchers need to first segment their potential demographics into groups, deciding which will be the best to target.
- Targeting and understanding
At that point, researchers identify one or a cluster of groups to dig into, and start using surveys, demographic data, and other resources to improve their understanding.
- Asking key questions
Researchers need to ask specific questions to guide their research, such as the appearance of behavioral traits, purchasing decisions, or other tendencies.
- Uncovering the data
Then, researchers uncover more resources to find the data necessary to answer those questions.
- Monitoring and adjusting
As an ongoing step, researchers need to pay close attention to demographic behavioral shifts, adjusting their assumptions and expectations accordingly.
The Most Common Mistakes
So what are the most common mistakes you’ll need to avoid?
- Inappropriate budgeting
Most commonly, researchers make mistakes in budgeting. If you spend too little on your research, you won’t get high-quality data that you need to form accurate conclusions. If you spend too much, you’ll end up wasting money. There’s a balance to strike here, and no matter how much money you spend, you need to take measures to ensure you spend it wisely.
- Targeting the wrong group
Most market research starts with identifying a target demographic, like millennials, then learning everything you can about that demographic. But if you identify an irrelevant or inappropriate demographic to start, all of your market research will be practically useless. Imagine, for example, targeting baby boomers with your market research, then finding out millennials have a greater need for your product.
- Sampling errors
There are many types of sampling errors you can make, but because they all belong to the same category, we’re listing them as one. The idea here is that you aren’t getting information from a truly representative sample of the group you’re trying to study; this can happen when your sample size is too small, when your selection isn’t random, or when your sample frame targets an incorrect sub-population.
- Cognitive biases
The human brain is wired with dozens of cognitive biases, which can lead us to inaccurate or misleading conclusions. For example, if you enter your market research with a previously held assumption, such as that most college students love coffee, you might disproportionately favor evidence that supports your assumption, and inadvertently downplay evidence that contradicts it.
- Misplaced trust
Because most market research involves consulting secondary sources, it’s possible to consult bad or unreliable sources. If you collect inaccurate information and form your conclusions around it, there’s little hope of recovery.
- Asking the wrong questions
Remember, you should be conducting market research to find answers to specific questions you’ve developed ahead of time. If you’re asking the wrong questions, your answers will be unhelpful, even if they’re accurate. For example, you might be asking about how a specific demographic would use your product, when you should be asking whether they want to use it at all.
- Poor applications
Finally, you might make the mistake of using the conclusions you’ve gathered for inefficient or unhelpful applications. The key to making your research effective is using the data you’ve gathered to form actionable takeaways; you need to make use of the data before it becomes valuable to you. What changes or actions are you going to make now that you have this data?
There are many ways to tackle market research, and anything you do that leads to a better understanding of your target demographics can be a benefit for your organization. However, missteps like these can lead you to gather inaccurate conclusions, or waste your time and money in that pursuit.
Strive to conduct your market research efficiently, and with accuracy and actionable takeaways as main goals.