How to Do Market Research for a Business Plan
If you’re in the process of creating a business plan, market research will play a central role in helping you to shape your strategy. You could be working on a business plan to raise investment for a new startup, or pulling together a detailed strategy that outlines the expansion of an existing business into a new market. Regardless, a business plan acts as a map, helping your organization move forwards with a clear path.
It’s impossible to create a comprehensive business plan without including market research. Doing so would be like flying blind: how can you formulate a plan if you don’t understand customer needs, market conditions, and industry trends? That’s why it’s so important you understand how to do market research for a business plan.
Conducting market research enables business leaders to fully understand the landscape of the markets they operate in. Armed with those insights, it’s possible to build a business plan that gives your organization a clear path to success.
If you’re new to market research, it can be easy to feel overwhelmed. After all, there are so many different types of market research tools and techniques you can use to collect data. But in reality, with the right guidance, it’s possible to tackle the majority of the process yourself.
In this guide, we’ll walk you through a four-step process that covers everything you need to know to conduct high-quality market research for a business plan. Let’s get started.
1. Exploratory Market Research
As you embark on your market research process, it’s likely that you have some existing ideas and preconceived notions in your mind. The role of exploratory market research is to enable you to validate some of these concepts and assumptions, and identify which topics you should conduct further research on.
This phase of the research is relatively informal. If you’re starting an entirely new business, set up time to talk to people who you think are representative of your target customer. In the early days, this could be as simple as talking to friends, family, or colleagues.
If you have an existing business you’re looking to expand, then it’s often best to talk directly with customers. Set up short informal interviews or focus groups. Prepare a loose agenda for these conversations, but make sure that you let the conversation flow and encourage your participants to openly share their ideas.
In this phase of the research, you’re not focused on collecting lots of data or proving any of your assumptions. Rather, the aim is to build a series of hypotheses that can be tested more rigorously through more data-driven research techniques. Some of these hypotheses will stem directly from your existing ideas, and some will be entirely novel. Both can be tested systematically through primary market research.
2. Primary Market Research
When most people think of market research, it’s likely that primary market research techniques are what come to mind. In this phase, researchers collect data from large groups of participants using two distinct types of research methods: quantitative market research and qualitative market research.
It’s important to include both quantitative and qualitative research methods in your primary research process. Generally, quantitative research tells researchers what is happening, and qualitative research tells researchers why this is happening. Fully understanding both is vital to the quality of any business plan.
How to Do Quantitative Market Research for a Business Plan
Quantitative market research makes use of survey-based techniques to collect high volumes of data. This data is then systematically analyzed to develop insights that can be used to shape your business plan.
There are a variety of different types of quantitative research: from straightforward surveys you can design yourself using a tool like Forsta, to more advanced forms of analysis, including conjoint analysis or TURF analysis.
How to Do Qualitative Market Research for a Business Plan
The goal of qualitative research is to build an understanding of the reasons that consumers make the decisions they do. This provides a rich layer of context to the data-driven results derived from quantitative techniques.
Qualitative market research uses techniques including in-depth interviews and focus groups. Participants will be asked open-ended questions that encourage discussion around their decision-making process, and aim to uncover the logic that drives consumers’ choices.
3. Secondary Market Research
Primary market research is highly valuable, but alone, it can only tell you so much. That’s why it’s crucial that you also conduct secondary market research as you shape your business plan. Secondary market research leverages existing bodies of data, industry reports, and other forms of published research to build a comprehensive understanding of the wider market.
The exact forms of secondary market research you should consult will depend on the scope of your business plan. A consumer packaged goods firm will look at entirely different secondary research sources to a pharmaceutical business. Regardless of the industry, it’s vital to only consult high-quality data sources.
Here are a few examples of the different types of secondary market research to consider as you write your business plan:
- Academic research
- Industry white papers and reports
- Financial reports and analyst reports
- Syndicated market research data from third parties
Collecting, organizing, and analyzing large amounts of secondary data can often present significant challenges. Often, researchers become overwhelmed by this deluge of data and ultimately fail to produce any meaningful insights.
Instead of struggling, consider using a competitive and market intelligence platform like Knowledge360Ⓡ, which comes with built-in integrations to high-quality data sources, and uses advanced AI technologies to surface critical information.
4. Synthesize Research Findings
Once you’ve completed all of this research, it’s critical that you allocate time to analyze the data you’ve collected. In a business plan, simply presenting interesting information from your market research isn’t enough: you need to craft a narrative around these insights and talk about why this is important to your business.
In a robust market research process, you might have dozens or even hundreds of pages of findings. Some of these might be game-changing, and it’s your role as the researcher to identify these. Your goal should be to distill the output of your research into key insights that can be explained easily over a page or two of a business plan.
There’s a fine line to walk in writing a business plan. Your research findings need to be concise enough that people will read them, but also detailed enough that people will be convinced by your work. Focus on a few key headlines that underline the rationale behind your business plan and support the vision you’re attempting to convey. Incorporate visual elements like graphs, charts, and other displays that illustrate your findings succinctly. If your supporting data is important, consider including an appendix that explores key topics in more detail.
Market Research: An Ongoing Process
Once your business plan is approved, your market research days aren’t over. As a startup business, understanding your competitors will be a vital component of your success, and it’s important that you commit to market research on an ongoing basis. These days, industries change faster than ever, and to remain competitive, it’s crucial you understand customer needs, competitor activities, and market trends.
As you set about building your business from the ground up, you should work to hone your understanding of the strategy and analysis frameworks that shape effective business leadership. Don’t worry – there’s no need to sign up for an MBA.
At Fahrenheit, our team has experience providing competitive strategy consulting to leading Fortune 500 businesses across a variety of industries.
Conduct the right research and get the most from it when preparing your business plan. Schedule a call with our experts today.
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MEET THE EXPERTS
Peter Grimm leverages his background in national security and experience as a strategy consultant and PE-backed CEO to help clients navigate rapidly changing environments. He is skilled in corporate strategy, market analysis, competitive intelligence, disruption planning, disruption preparedness, and organizational leadership.
Following service in the US Navy and as a counterterrorism analyst at a US government agency, Peter spent 8 years in the Strategy Practice of Deloitte Consulting. Peter then served as CEO of a PE-backed consulting and technology firm, leading the company through two successful exits. He’s helped middle market companies, Fortune 500 firms, and Federal agencies “see around the corner” and turn threats into opportunities.
Jennifer Buchwald has been helping companies make better decisions through strategic insights and competitive intelligence for more than 15 years. With a formal education in philosophy and experience working in a broad set of industries, Jennifer brings a holistic understanding of business challenges and forward-looking observations to a diverse set of clients.
Jennifer began her career fielding market research studies for clients in the Consumer Packaged Goods space before joining one of the largest grocery chains in the United States performing location intelligence and site analysis for their real estate division. After a period providing competitive intelligence services for a Fortune 100 infrastructure technology company, she joined a boutique firm offering strategic advice for clients in a variety of industries.