Planning and conducting market and customer research

Conducting market and customer research gives you insight and data on local and global market trends that will help you make decisions when starting or growing a business.

Market research is a broad term covering:

  • past and current market conditions
  • customer demographics
  • demand for products and services.

Customer research will help you develop profiles of specific target customer groups and forms part of your market research.

When you should do market or customer research

When developing and changing aspects of your business, including offerings to customers, it's important to do thorough research to have confidence in the actions you're taking, including research into:

  • pricing
  • branding
  • product names
  • new retail outlets
  • advertising campaigns
  • new products or services.

There are several methods you can use to do research, including:

  • conducting your own research using customer surveys, feedback and interviews
  • conducting analysis of your own business using your past performance in sales, goods returned and repeat business
  • researching industry and market trend information
  • reviewing reports, industry journals and government information.

Understanding market research and customer research

Market research is a methodology used to gain reliable data about specific markets and target customers. Market research organisations and industry associations provide data and statistical reports on markets and future trends.

Data and statistics can also be taken from the Australian Census and by using search engines and social media to explore trends in the market and discover what customers are searching for.

A subset of market research is customer research. Customer research tools help you target and understand your buyer's behaviour and demographics.

The differences between market research and customer research are:

  • market research involves data and statistics for
    • overall industry
    • market attributes
    • economic and population fluctuations
    • technology innovations
    • internet and mobile phone usage
    • competitor activities
  • customer research involves data and insights into
    • what, when and how often customers want to buy (quantitative data)
    • why they make their decisions (qualitative insights).

By exploring customer profiles and motivations, you can gain insight into demographics such as geographical populations, buying habits, preferences and the projected growth or decline of targeted groups.

Using a combination of market and customer research helps you to keep up to date with market trends and build reliable customer profiles to target. It is important to build more than 1 customer profile to prevent marketing too broadly.

The value of market research

Market research is valuable at the start-up stage of your business, and you should conduct research regularly to ensure you adapt your business to changes in the market.

Planning and conducting your market research involves using methods and tools to ensure your marketing activities will be:

  • profitable and cost effective
  • linked to the needs and trends of the market
  • in line or ahead of competitors.

Market research tools

Read about the tools to use when planning your market research and their benefits below.

Research can be undertaken yourself or outsourced to professional market research organisations.

Industry report databases are useful if you are looking for an overview of an Australian industry. These reports include:

  • industry snapshots
  • supply chains
  • major players
  • current and historical performance data
  • industry outlooks
  • financial trends.

Data from industry reports is gathered regularly and provides insight into the strengths, weaknesses, opportunities and threats (SWOT) to the market, products and services customers are buying and those that are trending downwards. The results can help you discover potential markets for your products and services.

You can access industry reports from IBIS World Research with free State Library of Queensland membership.

Search engine trends tools find data and provide statistics about trends in what customers are searching for and questions they are asking.

Data sources include common web, image, news, social media and video services.

Search engines provide this trend data on various online platforms (e.g. identifying shopping trends by products, services, countries over a certain time using Google Trends).

You may wish to work with a professional market research organisation to conduct research for you. Rates vary for this type of service, but you can expect a report that is targeted to your business, which will help with your business direction and marketing plans.

For a list of research service providers, use the Company directory from The Research Society.

The value of customer research

Customer research gives you insight into why customers are currently buying or not buying from you, and what they may want to purchase from you in the future.

You can also research current customers by identifying what they are purchasing from you and investigating why—for example, you could ask your customers how often they shop online versus purchasing from a physical store, then ask why they choose their methods of purchase.

Customer research is beneficial to your business for:

  • understanding why sales are dropping
  • finding out what customers need
  • finding out what customers want from their relationship with you
  • identifying value you can add to your current products and services
  • building 2 or more distinctive customer segments and profiles that you will target—for example
    • business to consumer (B2C)
    • business to business (B2B)
    • business to government (B2G)
    • customers in certain age ranges or locations
    • customers with certain hobbies or interests.

As your business grows, regularly researching your current customers will help you refine your knowledge of them and expand to more customer types.

Set your objectives, collect data and analyse

Research should be conducted over multiple periods and segmented into focus areas for improving and growing your business (e.g. increasing your sales, adding new products and services, or improving customer service).

To conduct effective research, you need to complete each of the following steps.

  1. Decide on the specific improvement or growth area and set your research objectives—for example:
    • test the reaction to a new brand, product, service or advertising campaign
    • understand competitors in the market and how you can add value
    • understand demographics to identify how many potential customers there are in a specific geographical location
    • identify product and service trends to plan for growth of your offerings.
  2. Understand what customers think about your business and your competitors.
    • Find out if your product or service could be needed by another market segment (e.g. if you are currently marketing to consumers, you may also be able to market to businesses).
    • Find out how much customers are willing to pay for the product or service.
  3. Decide if you'll do the research yourself or use a specialist company.
  4. Identify the data you need and plan the research methods you will use and over what period.
  5. Collect the data you need, checking it is:
    • valid—well-founded, logical, rigorous, sound and unbiased
    • accurate—free from error and includes the required detail
    • reliable—it can be reproduced by other people researching in the same way
    • timely—current and gathered within an appropriate period
    • complete—it includes all the information you need to support your business decisions.
  6. Add your data to a spreadsheet or software that allows you to manage many criteria (e.g. age, location, income, interests).
  7. Analyse and interpret the information—what does it tell you about the specific areas you are focussing on?
  8. Identify and implement the changes you need to make to your operations or the products and services you have identified that will grow the business.

Understand your buying benefit

Use our customer research tool to consider your customers' reasons for buying a product or service (the buying benefit) from your business and categorise the customer types these benefits target.

Planning research methods and activities

Customer research can involve different elements to cover key aspects of your business or marketing planning, such as:

  • researching your industry and market factors or trends to understand influences on the market
  • researching your competitors to build profiles and compare them with your business
  • researching your customers to build your ideal target customer profiles.

Use our market research kit for help with planning your research.

Types of market and customer research

Market and customer research methods you can use for your own business fall into 2 main categories.

  • Primary research is focused on your business, gathering information from your own customers or potential customers (e.g. surveying or interviewing them).
  • Secondary research is about finding and analysing other existing information sources (e.g. looking at industry reports and online research results).

The type of information gathered is also categorised into 2 types of research.

  • Quantitative research involves gathering data that can be measured, such as number of sales or visitors to an expo. It is about understanding the 'what' (e.g. how many, how often, how much, what colour, price or preference).
  • Qualitative research helps you understand the 'why' (e.g. why do the customers feel a certain way about you, your products, prices or competitors?). For example, your qualitative research could be using focus groups to answer questions and give feedback about your products and services, or when you visit a competitor to see how they do business.

Common customer research methods and activities

You should use various research methods to get accurate and reliable data. The following is a list of methods and activities you could try, the research type and the benefits.

Primary research

Consider using the following primary research methods to understand your customers and your business's place in the market.

Use customer feedback to understand how your products and services suit your target market (e.g. when you are adding a new product or service or when sales are dropping).

Gauge the level of interest in the product and the expected price with focus-group testing to help you decide if you should sell it.

This is useful when starting your business or when adding new products and services.

Attending expos or interviewing prospective customers will help you find out about your reputation in the market, understand more about your customers' needs and wants, lifestyle, beliefs and attitudes.

Read reviews about your business to find out more about how well you are meeting customer needs and expectations.

Position your products and services better by visiting your competitors' locations or online stores and seeing their prices and sales techniques. You can also look at their advertising and social media.

Use online polls to understand simple customer preferences (e.g. preferred colours or delivery options).

Understand what your customers are buying and when, will help you to decide on the best products to stock.

Secondary research

Consider using the following secondary research methods to review information sources to supplement your own business data.

Understand overall market demand for the type of products or services you sell to know if your market is growing or declining.

Review data that has been gathered from various sources and gives general information and analysis for your industry, which is helpful for reducing your risk.

Note that your business situation may not be identical to the general industry and the analysis may not fit all your needs.

Reading market research reports helps to identify competitors, industry trends and consumer sentiment.

Search engines gather customer queries, search terms and data from local and global sources. Analysing this data show interests, lifestyle and market channels used by consumers (e.g. websites, social media).

Government provides data that has been verified and collected using sets of standards and is analysed (e.g. Queensland ABS statistical data, Regional Development Australia, local government reports, import-exports). It is helpful for choosing locations and reducing your risk.

You can also access business regulations and demographics, including age, level of schooling, income and language spoken.

Tips for conducting surveys, focus groups and interviews

Follow these tips to learn how to design questions for customers and how to make the most of their responses.

Surveys are questions used to collect information (e.g. people's opinions on a particular product) and are usually:

  • multiple choice
  • 'true/false' or 'yes/no'
  • rankings or ratings (e.g. 1–5 or scales of 'strongly agree to strongly disagree').

Use the following best practice methods when gathering information:

  • Surveys are usually most effective when conducted face to face, but they can be completed over the phone, online (e.g. websites, social media or email) or via SMS.
  • Customers get many offers to do surveys, so providing an incentive to participate (e.g. a gift card) may improve the value and number of responses.
  • Keep the number of questions in your surveys small but clear. This will help you get more useful information and reduce the chances of participants losing interest or giving misleading answers.
  • Test your questions on friends or family to make sure they are easy to answer.
  • Some questions could be simple yes/no answers, but always allow space for comments.

There are commercial software options (e.g. SurveyMonkey, Google Forms) that can provide various survey design and analysis tools as an alternative to developing your own.

A larger sample size is ideal for surveys to help gather reliable conclusions from the data you collect.

Remember that you are conducting customer research, so make sure the people you choose represent your ideal customer profile that you previously identified.

Focus groups and interviews involve a set of questions or discussion that allows you to explore people's opinions and attitudes (e.g. how they feel about your products and what improvements they would like to see in your business).

Focus groups and interviews can be conducted face to face or online using meeting software (e.g. Teams, Zoom), and they might include visual concepts and even product samples to trial.

To ensure your conversations with participants are productive, make sure you are prepared by developing a list of questions and key discussion points beforehand.

To get the most out of a focus group or interview:

  • ask open-ended questions—that is, ones that cannot be answered with 'yes', 'no' or another single word. For example, rather than ask 'are you happy with our products?', ask 'which of our products are you happy with and why?'
  • ask open questions that allow customers, competitors and suppliers to provide thoughtful answers (e.g. what do you like to use the product for?)
  • repeat a participant's answers to make sure you understand what they are saying
  • ask follow-up questions if you need more information about a participant's answer
  • ask questions that will give you diverse data to analyse
  • keep your own preferences and opinions out of all discussions or the data will not be independent or as useful
  • have a clear goal for your research (e.g. find out how customers interact with your product, why they choose one product over another, or how your products should look and feel)
  • conduct your research with different people in a variety of settings and using several methods—this will give you more data to analyse.

A typical focus group may consist of 6–8 people but you may need to conduct many focus groups to get the ideal mix of data you need.

Analysing and reaching conclusions

As you conduct your primary and secondary research, you should prepare a document or spreadsheet to capture your data. This document can keep all findings in 1 place and allow you to see data correlations.

Your research on the objectives should be used as part of your business plan.

Research and analysis example

This is an example of using both primary and secondary research.

You have secondary research in a local government area profile report that identifies the number of new houses and increasing numbers of parents with children.

Your primary research survey (undertaken at a local shopping centre) finds that this demographic group of new parents cannot get the children's play facilities they need and want in the new housing area.

You see this correlation in your spreadsheet and conclude there may be a market opportunity for your children's play centre business in this area.

You then do more research around the location, competition and household incomes to identify the best types of play centre activities for these customers.

You prepare interview questions and invite parents to focus groups where you ask:

  • about the specific type of play centre activities their children would prefer (e.g. painting and craft workshops, indoor rock climbing, Lego club)
  • how often they would use the service
  • how much they would be willing to pay.

Research resources for business

Visit the following resources and learn about how they might be useful for your research.

Industry-specific research resources

Industry associations

Most industries in Australia are represented by industry associations, which are typically not-for-profit organisations that provide member services and lobby on their behalf.

Industry associations can help with your research by:

  • giving you information about your industry (e.g. how changes to legislation will affect your business)
  • providing information and programs to help you meet industry standards
  • delivering training and education programs
  • managing mentoring programs.

They may offer some information and services for free, but it's possible you will need to become a member and pay a fee to access their full range of information, resources and services.

Search online to find industry associations relevant to your business.

Learn more about industry associations from the Australian Competition and Consumer Commission.

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