how to do market research for a business plan

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Understanding market research for your business plan.

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When you’re building a business plan, market research needs to happen pretty early in the process. It’s where you learn about your audience’s wants and needs and the financial trends in your industry, and where you combine the data, and uncover trends that tell you what customers want and how to provide it most effectively.

The results of that research and analysis will shape aspects of the rest of your business plan. Assessments of your market and competition inform critical decisions in areas such as product design or service offerings, price, marketing methods, and business location.

That means accurate and comprehensive market research matters. To be comprehensive, your information and analysis should answer every possible question about the market you plan to enter and the consumers you believe will buy your product or service, including (but not limited to):

• Demand: Do consumers want what you’re offering?

• Economic indicators: Do they have the money to buy your product/service?

• Pricing: How much will they pay for your product/service?

• Location: Where do they live, and where are they likely to make their purchases?

• Saturation: How many other options do they currently have for that product/service?

First Steps: Budget

You can spend a lot answering these questions. Many large businesses hire firms to do the research and analysis, employing large-scale surveys, focus groups and statistical models, among other methods. However, for entrepreneurs just starting out, marketing budgets are typically too slim to cover that kind of research.

So, the work needs to stay in-house and fit a small marketing budget. Affordable, effective market research is possible. It may not be as specific to your market as the big-budget stuff, but it can get you the information you need to work out a solid understanding of your market.

First Steps: Market-Research Objectives

Before you start your research and analysis, determine your objectives. Decide what you want to learn from the process. It will guide the data you search for and how you use it, so be specific. Write down actual goals – what would give you the most accurate, comprehensive and useful picture of your market? This could include areas such as demographics, competitor offerings and customer pain points.

First Steps: Research Terminology

In market research, you’re basically dealing with two types of research and two types of data:

• Primary research: This is research you perform yourself in order to get very specific insights into your very specific business. It includes methods such as surveys, interviews and direct observations (by visiting competitor locations, for instance). It can help you gather qualitative data. This is data that goes beyond statistics and market trends. It can tell you what your consumers want, what they don’t want and how they feel about your offerings.

• Secondary research: This is research other people have performed and analyzed. To conduct secondary research, you can visit government websites such as the U.S. Census Bureau and the Bureau of Labor Statistics, as well as private data collectors such as Google and market-research companies. It can help you gather quantitative data. This is generally statistical data and can reveal insights on consumer demographics, spending patterns, market trends and earnings projections.

Where To Start Your Market Research

There’s a ton of existing research out there, and a lot of it is totally free. The Small Business Administration website has a list of free government sources for various types of quantitative data, such as industry statistics, consumer demographics, consumer demand and spending, and sales indicators. Much of it comes from the U.S. Census Bureau and the Bureau of Labor Statistics. A simple search will turn up enough places to start gathering secondary research to build a picture of your market.

With a good understanding of your market from secondary sources, you’re in a good position to know which types of primary research, if any, would be worth an investment of your time and energy. Maybe a well-designed survey completed by everyone you know could help fill in some holes.

You can also conduct primary research by visiting and speaking with your would-be competition and their customers; through crowdsourcing forums such as Quora, where you can glean raw data from comments and responses and post questions related to your product, service and market; on social-media websites such as Facebook, where you can parse conversations in relevant interest groups; and by reading product and service reviews on sites such as Amazon or Yelp.

Analyzing Your Market Research

Armed with all your data, you’ll draw conclusions that will help guide many of your business decisions.

But first, make sure all of your data will benefit those decisions. Don’t start analyzing until you weed out extraneous information that will waste your time and hinder focused insights. If it doesn’t relate directly to your business and your market, set it aside.

Then organize the relevant data into tables, graphs, lists and pie charts, and see what trends emerge. What do those trends mean for your business? Your product? Your location? Your planned promotions?

Be open to whatever the data tells you. Even if your research findings are unexpected, embrace them, and make any necessary adjustments. Listening to good market research can save you a lot of headaches down the road: The better you know your consumers, the better your chances of successfully selling to them.

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Market Research: A How-To Guide and Template

Discover the different types of market research, how to conduct your own market research, and use a free template to help you along the way.

MARKET RESEARCH KIT

5 Research and Planning Templates + a Free Guide on How to Use Them in Your Market Research

Updated: 02/21/24

Published: 02/21/24

Today's consumers have a lot of power. As a business, you must have a deep understanding of who your buyers are and what influences their purchase decisions.

Enter: Market Research.

Whether you're new to market research or not, I created this guide to help you conduct a thorough study of your market, target audience, competition, and more. Let’s dive in.

Table of Contents

What is market research?

Primary vs. secondary research, types of market research, how to do market research, market research report template, market research examples.

Market research is the process of gathering information about your target market and customers to verify the success of a new product, help your team iterate on an existing product, or understand brand perception to ensure your team is effectively communicating your company's value effectively.

Market research can answer various questions about the state of an industry. But if you ask me, it's hardly a crystal ball that marketers can rely on for insights on their customers.

Market researchers investigate several areas of the market, and it can take weeks or even months to paint an accurate picture of the business landscape.

However, researching just one of those areas can make you more intuitive to who your buyers are and how to deliver value that no other business is offering them right now.

How? Consider these two things:

• Your competitors also have experienced individuals in the industry and a customer base. It‘s very possible that your immediate resources are, in many ways, equal to those of your competition’s immediate resources. Seeking a larger sample size for answers can provide a better edge.
• Your customers don't represent the attitudes of an entire market. They represent the attitudes of the part of the market that is already drawn to your brand.

The market research services market is growing rapidly, which signifies a strong interest in market research as we enter 2024. The market is expected to grow from roughly $75 billion in 2021 to $90.79 billion in 2025 .

Free Market Research Kit

• SWOT Analysis Template
• Survey Template
• Focus Group Template

You're all set!

Click this link to access this resource at any time.

Why do market research?

Market research allows you to meet your buyer where they are.

As our world becomes louder and demands more of our attention, this proves invaluable.

By understanding your buyer's problems, pain points, and desired solutions, you can aptly craft your product or service to naturally appeal to them.

Market research also provides insight into the following:

• Where your target audience and current customers conduct their product or service research
• Which of your competitors your target audience looks to for information, options, or purchases
• What's trending in your industry and in the eyes of your buyer
• Who makes up your market and what their challenges are
• What influences purchases and conversions among your target audience
• Consumer attitudes about a particular topic, pain, product, or brand
• Whether there‘s demand for the business initiatives you’re investing in
• Unaddressed or underserved customer needs that can be flipped into selling opportunity
• Attitudes about pricing for a particular product or service

Ultimately, market research allows you to get information from a larger sample size of your target audience, eliminating bias and assumptions so that you can get to the heart of consumer attitudes.

As a result, you can make better business decisions.

To give you an idea of how extensive market research can get , consider that it can either be qualitative or quantitative in nature — depending on the studies you conduct and what you're trying to learn about your industry.

Qualitative research is concerned with public opinion, and explores how the market feels about the products currently available in that market.

Quantitative research is concerned with data, and looks for relevant trends in the information that's gathered from public records.

That said, there are two main types of market research that your business can conduct to collect actionable information on your products: primary research and secondary research.

Primary Research

Primary research is the pursuit of first-hand information about your market and the customers within your market.

It's useful when segmenting your market and establishing your buyer personas.

Primary market research tends to fall into one of two buckets:

• Exploratory Primary Research: This kind of primary market research normally takes place as a first step — before any specific research has been performed — and may involve open-ended interviews or surveys with small numbers of people.
• Specific Primary Research: This type of research often follows exploratory research. In specific research, you take a smaller or more precise segment of your audience and ask questions aimed at solving a suspected problem.

Secondary Research

Secondary research is all the data and public records you have at your disposal to draw conclusions from (e.g. trend reports, market statistics, industry content, and sales data you already have on your business).

Secondary research is particularly useful for analyzing your competitors . The main buckets your secondary market research will fall into include:

• Public Sources: These sources are your first and most-accessible layer of material when conducting secondary market research. They're often free to find and review — like government statistics (e.g., from the U.S. Census Bureau ).
• Commercial Sources: These sources often come in the form of pay-to-access market reports, consisting of industry insight compiled by a research agency like Pew , Gartner , or Forrester .
• Internal Sources: This is the market data your organization already has like average revenue per sale, customer retention rates, and other historical data that can help you draw conclusions on buyer needs.
• Focus Groups
• Product/ Service Use Research
• Observation-Based Research
• Buyer Persona Research
• Market Segmentation Research
• Pricing Research
• Competitive Analysis Research
• Customer Satisfaction and Loyalty Research
• Brand Awareness Research
• Campaign Research

1. Interviews

Interviews allow for face-to-face discussions so you can allow for a natural flow of conversation. Your interviewees can answer questions about themselves to help you design your buyer personas and shape your entire marketing strategy.

2. Focus Groups

Focus groups provide you with a handful of carefully-selected people that can test out your product and provide feedback. This type of market research can give you ideas for product differentiation.

3. Product/Service Use Research

Product or service use research offers insight into how and why your audience uses your product or service. This type of market research also gives you an idea of the product or service's usability for your target audience.

4. Observation-Based Research

Observation-based research allows you to sit back and watch the ways in which your target audience members go about using your product or service, what works well in terms of UX , and which aspects of it could be improved.

5. Buyer Persona Research

Buyer persona research gives you a realistic look at who makes up your target audience, what their challenges are, why they want your product or service, and what they need from your business or brand.

6. Market Segmentation Research

Market segmentation research allows you to categorize your target audience into different groups (or segments) based on specific and defining characteristics. This way, you can determine effective ways to meet their needs.

7. Pricing Research

Pricing research helps you define your pricing strategy . It gives you an idea of what similar products or services in your market sell for and what your target audience is willing to pay.

8. Competitive Analysis

Competitive analyses give you a deep understanding of the competition in your market and industry. You can learn about what's doing well in your industry and how you can separate yourself from the competition .

9. Customer Satisfaction and Loyalty Research

Customer satisfaction and loyalty research gives you a look into how you can get current customers to return for more business and what will motivate them to do so (e.g., loyalty programs , rewards, remarkable customer service).

10. Brand Awareness Research

Brand awareness research tells you what your target audience knows about and recognizes from your brand. It tells you about the associations people make when they think about your business.

11. Campaign Research

Campaign research entails looking into your past campaigns and analyzing their success among your target audience and current customers. The goal is to use these learnings to inform future campaigns.

• Define your buyer persona.
• Identify a persona group to engage.
• Prepare research questions for your market research participants.
• List your primary competitors.
• Summarize your findings.

1. Define your buyer persona.

You have to understand who your customers are and how customers in your industry make buying decisions.

This is where your buyer personas come in handy. Buyer personas — sometimes referred to as marketing personas — are fictional, generalized representations of your ideal customers.

Use a free tool to create a buyer persona that your entire company can use to market, sell, and serve better.

Don't forget to share this post!

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How to Create a Market Research Plan

Table of Contents

While having a great idea is an important part of establishing a business, you’ll only get so far without laying the proper groundwork. To help your business take off, not only do you need to size up the competition, but you also need to identify who will buy your product, how much it will cost, the best approach to selling it and how many people will demand it.

To get answers to these questions, you’ll need a market research plan, which you can create yourself or pay a specialist to create for you. Market research plans define an existing problem and/or outline an opportunity. From there, the marketing strategy is broken down task by task. Your plan should include objectives and the methods that you’ll use to achieve those objectives, along with a time frame for completing the work.

What should a market research plan include?

A market research plan should provide a thorough examination of how your product or service will fare in a defined area. It should include:

• An examination of the current marketplace and an analysis of the need for your product or service: To know where you fit in the market, it’s important to have a broad understanding of your industry — covering everything from its annual revenue to the industry standards to the total number of businesses operating within it. Start by gathering statistical data from sources like the U.S. Bureau of Labor Statistics and BMI Research and consider the industry’s market size, potential customer base and how external factors such as laws, technology, world events and socioeconomic changes impact it.
• An assessment of the competition: By analyzing your competitors, you can discover strategies to fill market gaps. This involves identifying well-known competitors and noting trends they employ successfully, scrutinizing customer feedback about businesses in your sector, such as through online reviews, and understanding competitors’ product or service offerings. This knowledge can then guide the refinement of your own products or services to differentiate them from others in the market.
• Data about customers: Identify which segment of potential customers in your industry you can effectively target, considering their demographics — such as age, ethnicity, income and location and psychographics, including beliefs, values and lifestyle. Learn about the challenges your customers face in their daily lives and determine how the features and benefits of your offerings address their needs.
• The direction for your marketing in the upcoming year: Your plan should provide a clear roadmap for your marketing strategies for the next year, focusing on approaches to distinguish your brand from competitors. Develop marketing messages that resonate with and display empathy toward your target market and find ways to address customers’ needs and demonstrate value.
• Goals to be met: Outline goals your business would like to achieve and make these goals clear to all employees on your team. Create goals that are realistic and attainable while also making a meaningful impact on the business’s growth. Consider factors including your target number of products or services, the expected number of units to sell based on market size, target market behavior, pricing for each item and the cost of production and advertising.

How to create your market research plan

Doing business without having a marketing plan is like driving without directions. You may eventually reach your destination, but there will be many costly and time-consuming mistakes made along the way.

Many entrepreneurs mistakenly believe there is a big demand for their service or product but, in reality, there may not be, your prices may be too high or too low or you may be going into a business with so many restrictions that it’s almost impossible to be successful. A market research plan will help you uncover significant issues or roadblocks.

Step 1. Conduct a comprehensive situation analysis.

One of the first steps in constructing your marketing plan is to create a strengths, weaknesses, opportunities and threats (SWOT) analysis , which is used to identify your competition, to know how they operate and then to understand their strengths and weaknesses.

When developing a market research plan, it is essential that you do your homework to determine your possible customer base, to gain knowledge about the competition and to have a solid foundation for your marketing strategy.

Step 2: Develop clear marketing objectives.

In this section, describe the desired outcome for your marketing plan with realistic and attainable objectives, the targets and a clear and concise time frame. The most common way to approach this is with marketing objectives, which may include the total number of customers and the retention rate, the average volume of purchases, total market share and the proportion of your potential market that makes purchases.

Step 3: Make a financial plan.

A financial plan is essentia l for creating a solid marketing plan. The financial plan answers a range of questions that are critical components of your business, such as how much you intend to sell, what will you charge, how much will it cost to deliver your services or produce your products, how much will it cost for your basic operating expenses and how much financing will you need to operate your business.

In your business plan, be sure to describe who you are, what your business will be about, your business goals and what your inspiration was to buy, begin or grow your business.

Step 4: Determine your target audience.

Once you know what makes you stand out from your competitors and how you’ll market yourself, you should decide who to target with all this information. That’s why your market research plan should delineate your target audience. What are their demographics and how will these qualities affect your plan? How do your company’s current products and services affect which consumers you can realistically make customers? Will that change in the future? All of these questions should be answered in your plan.

Step 5: List your research methods.

Rarely does one research avenue make for a comprehensive market research plan. Instead, your plan should indicate several methods that will be used to determine the market share you can realistically obtain. This way, you get as much information as possible from as many sources as possible. The result is a more robust path toward establishing the exact footprint you desire for your company.

A good market research plan involves using more than one type of research to obtain the information you need.

Step 6: Establish a timeline.

With your plan in place, you’ll need to figure out how long your market research process will take. Project management charts are often helpful in this regard as they divide tasks and personnel over a timeframe that you have set. No matter which type of project management chart you use, try to build some flexibility into your timeframe. A two-week buffer toward the home stretch comes in handy when a process scheduled for one week takes two — that buffer will keep you on deadline.

Step 7: Acknowledge ethical concerns.

Market research always presents opportunities for ethical missteps. After all, you’ll need to obtain competitor information and sensitive financial data that may not always be readily available. Your market research plan should thus encourage your team to not take any dicey steps to obtain this information. It may be better to state, “we could not obtain this competitor information,” than to spy on the competitor or pressure their current employees for knowledge. Plus, there’s nothing wrong with simply feeling better about the final state of your plan and how you got it there.

Using a market research firm

If the thought of trying to create your own market research plan seems daunting or too time-consuming, there are plenty of other people willing to do the work for you.

You don’t need to pay thousands of dollars for assistance crafting a market research plan. University business schools often provide free resources that can assist you.

Pros of using a market research firm

As an objective third party, businesses can benefit from a market research firm’s impartial perspective and guidance, helping to shape impactful brand strategies and marketing campaigns. These firms, which can help businesses with everything from their marketing campaigns to brand launches, deliver precise results, drawing on their expertise and experience to provide in-depth insights and solutions tailored specifically to your company’s needs. 

Even more, working with a market research firm can elevate a brand above the competition, as they provide credible and unique research that is highly valued by the media, enhancing brand credibility and potentially increasing website traffic, social media shares and online visibility.

Cons of using a market research firm

Although hiring a firm can provide businesses with tremendous results, certain downsides can lead a business toward the do-it-yourself route. Most notably, market research firms can be a costly expense that some businesses can’t afford. However, businesses that can allocate the funds will likely see a positive return on investment, as they are paying for the expertise and proficiency of seasoned professionals in the field.

Additionally, finding the right market research firm for your business’s needs can take some time — and even longer, ranging from weeks to months, for a market research firm to complete a plan. This lack of immediate results can be detrimental for businesses that don’t have the time to wait. 

Market research firms can charge into the thousands of dollars for a market research plan, but there are ways to get help more affordably, including:

• Outline your plans carefully and spell out objectives.
• Examine as many sources as possible.
• Before paying for any information, check with librarians, small business development centers or market research professors to see if they can help you access market research data for free.
• You may think you’ll need to spend a hefty sum to create a market research plan, but there are plenty of free and low-cost sources available, especially through university business schools that will guide you through the process.

Miranda Fraraccio contributed to this article. 

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How to Write a Market Analysis for a Business Plan

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A lot of preparation goes into starting a business before you can open your doors to the public or launch your online store. One of your first steps should be to write a business plan . A business plan will serve as your roadmap when building your business.

Within your business plan, there’s an important section you should pay careful attention to: your market analysis. Your market analysis helps you understand your target market and how you can thrive within it.

Simply put, your market analysis shows that you’ve done your research. It also contributes to your marketing strategy by defining your target customer and researching their buying habits. Overall, a market analysis will yield invaluable data if you have limited knowledge about your market, the market has fierce competition, and if you require a business loan. In this guide, we'll explore how to conduct your own market analysis.

How to conduct a market analysis: A step-by-step guide

In your market analysis, you can expect to cover the following:

Industry outlook

Target market

Market value

Competition

Barriers to entry

Let’s dive into an in-depth look into each section:

Step 1: Define your objective

Before you begin your market analysis, it’s important to define your objective for writing a market analysis. Are you writing it for internal purposes or for external purposes?

If you were doing a market analysis for internal purposes, you might be brainstorming new products to launch or adjusting your marketing tactics. An example of an external purpose might be that you need a market analysis to get approved for a business loan .

The comprehensiveness of your market analysis will depend on your objective. If you’re preparing for a new product launch, you might focus more heavily on researching the competition. A market analysis for a loan approval would require heavy data and research into market size and growth, share potential, and pricing.

Step 2: Provide an industry outlook

An industry outlook is a general direction of where your industry is heading. Lenders want to know whether you’re targeting a growing industry or declining industry. For example, if you’re looking to sell VCRs in 2020, it’s unlikely that your business will succeed.

Starting your market analysis with an industry outlook offers a preliminary view of the market and what to expect in your market analysis. When writing this section, you'll want to include:

Market size

Are you chasing big markets or are you targeting very niche markets? If you’re targeting a niche market, are there enough customers to support your business and buy your product?

Product life cycle

If you develop a product, what will its life cycle look like? Lenders want an overview of how your product will come into fruition after it’s developed and launched. In this section, you can discuss your product’s:

Research and development

Projected growth

How do you see your company performing over time? Calculating your year-over-year growth will help you and lenders see how your business has grown thus far. Calculating your projected growth shows how your business will fare in future projected market conditions.

Step 3: Determine your target market

This section of your market analysis is dedicated to your potential customer. Who is your ideal target customer? How can you cater your product to serve them specifically?

Don’t make the mistake of wanting to sell your product to everybody. Your target customer should be specific. For example, if you’re selling mittens, you wouldn’t want to market to warmer climates like Hawaii. You should target customers who live in colder regions. The more nuanced your target market is, the more information you’ll have to inform your business and marketing strategy.

With that in mind, your target market section should include the following points:

Demographics

This is where you leave nothing to mystery about your ideal customer. You want to know every aspect of your customer so you can best serve them. Dedicate time to researching the following demographics:

Income level

Create a customer persona

Creating a customer persona can help you better understand your customer. It can be easier to market to a person than data on paper. You can give this persona a name, background, and job. Mold this persona into your target customer.

What are your customer’s pain points? How do these pain points influence how they buy products? What matters most to them? Why do they choose one brand over another?

Research and supporting material

Information without data are just claims. To add credibility to your market analysis, you need to include data. Some methods for collecting data include:

Target group surveys

Focus groups

Reading reviews

Feedback surveys

You can also consult resources online. For example, the U.S. Census Bureau can help you find demographics in calculating your market share. The U.S. Department of Commerce and the U.S. Small Business Administration also offer general data that can help you research your target industry.

Step 4: Calculate market value

You can use either top-down analysis or bottom-up analysis to calculate an estimate of your market value.

A top-down analysis tends to be the easier option of the two. It requires for you to calculate the entire market and then estimate how much of a share you expect your business to get. For example, let’s assume your target market consists of 100,000 people. If you’re optimistic and manage to get 1% of that market, you can expect to make 1,000 sales.

A bottom-up analysis is more data-driven and requires more research. You calculate the individual factors of your business and then estimate how high you can scale them to arrive at a projected market share. Some factors to consider when doing a bottom-up analysis include:

Where products are sold

Who your competition is

The price per unit

How many consumers you expect to reach

The average amount a customer would buy over time

While a bottom-up analysis requires more data than a top-down analysis, you can usually arrive at a more accurate calculation.

Step 5: Get to know your competition

Before you start a business, you need to research the level of competition within your market. Are there certain companies getting the lion’s share of the market? How can you position yourself to stand out from the competition?

There are two types of competitors that you should be aware of: direct competitors and indirect competitors.

Direct competitors are other businesses who sell the same product as you. If you and the company across town both sell apples, you are direct competitors.

An indirect competitor sells a different but similar product to yours. If that company across town sells oranges instead, they are an indirect competitor. Apples and oranges are different but they still target a similar market: people who eat fruits.

Also, here are some questions you want to answer when writing this section of your market analysis:

What are your competitor’s strengths?

What are your competitor’s weaknesses?

How can you cover your competitor’s weaknesses in your own business?

How can you solve the same problems better or differently than your competitors?

How can you leverage technology to better serve your customers?

How big of a threat are your competitors if you open your business?

Step 6: Identify your barriers

Writing a market analysis can help you identify some glaring barriers to starting your business. Researching these barriers will help you avoid any costly legal or business mistakes down the line. Some entry barriers to address in your marketing analysis include:

Technology: How rapid is technology advancing and can it render your product obsolete within the next five years?

Branding: You need to establish your brand identity to stand out in a saturated market.

Cost of entry: Startup costs, like renting a space and hiring employees, are expensive. Also, specialty equipment often comes with hefty price tags. (Consider researching equipment financing to help finance these purchases.)

Location: You need to secure a prime location if you’re opening a physical store.

Competition: A market with fierce competition can be a steep uphill battle (like attempting to go toe-to-toe with Apple or Amazon).

Step 7: Know the regulations

When starting a business, it’s your responsibility to research governmental and state business regulations within your market. Some regulations to keep in mind include (but aren’t limited to):

Employment and labor laws

Advertising

Environmental regulations

If you’re a newer entrepreneur and this is your first business, this part can be daunting so you might want to consult with a business attorney. A legal professional will help you identify the legal requirements specific to your business. You can also check online legal help sites like LegalZoom or Rocket Lawyer.

Tips when writing your market analysis

We wouldn’t be surprised if you feel overwhelmed by the sheer volume of information needed in a market analysis. Keep in mind, though, this research is key to launching a successful business. You don’t want to cut corners, but here are a few tips to help you out when writing your market analysis:

Use visual aids

Nobody likes 30 pages of nothing but text. Using visual aids can break up those text blocks, making your market analysis more visually appealing. When discussing statistics and metrics, charts and graphs will help you better communicate your data.

Include a summary

If you’ve ever read an article from an academic journal, you’ll notice that writers include an abstract that offers the reader a preview.

Use this same tactic when writing your market analysis. It will prime the reader of your market highlights before they dive into the hard data.

Get to the point

It’s better to keep your market analysis concise than to stuff it with fluff and repetition. You’ll want to present your data, analyze it, and then tie it back into how your business can thrive within your target market.

Revisit your market analysis regularly

Markets are always changing and it's important that your business changes with your target market. Revisiting your market analysis ensures that your business operations align with changing market conditions. The best businesses are the ones that can adapt.

Why should you write a market analysis?

Your market analysis helps you look at factors within your market to determine if it’s a good fit for your business model. A market analysis will help you:

1. Learn how to analyze the market need

Markets are always shifting and it’s a good idea to identify current and projected market conditions. These trends will help you understand the size of your market and whether there are paying customers waiting for you. Doing a market analysis helps you confirm that your target market is a lucrative market.

2. Learn about your customers

The best way to serve your customer is to understand them. A market analysis will examine your customer’s buying habits, pain points, and desires. This information will aid you in developing a business that addresses those points.

3. Get approved for a business loan

Starting a business, especially if it’s your first one, requires startup funding. A good first step is to apply for a business loan with your bank or other financial institution.

A thorough market analysis shows that you’re professional, prepared, and worth the investment from lenders. This preparation inspires confidence within the lender that you can build a business and repay the loan.

4. Beat the competition

Your research will offer valuable insight and certain advantages that the competition might not have. For example, thoroughly understanding your customer’s pain points and desires will help you develop a superior product or service than your competitors. If your business is already up and running, an updated market analysis can upgrade your marketing strategy or help you launch a new product.

Final thoughts

There is a saying that the first step to cutting down a tree is to sharpen an axe. In other words, preparation is the key to success. In business, preparation increases the chances that your business will succeed, even in a competitive market.

The market analysis section of your business plan separates the entrepreneurs who have done their homework from those who haven’t. Now that you’ve learned how to write a market analysis, it’s time for you to sharpen your axe and grow a successful business. And keep in mind, if you need help crafting your business plan, you can always turn to business plan software or a free template to help you stay organized.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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How to Conduct Market Research for a Startup

• 17 Mar 2022

With every innovative product idea comes the pressing question: “Will people want to buy it?”

As an entrepreneur with a big idea, what’s the best way to determine how potential customers will react to your product? Conducting market research can provide the data needed to decide whether your product fits your target market.

Before launching a new venture, you should understand market research. Here’s how to conduct market research for a startup and why it’s important.

Access your free e-book today.

What Is Market Research?

Market research is the process of gathering information about customers and the market as a whole to determine a product or service’s viability. Market research includes interviews, surveys, focus groups, and industry data analyses.

The goal of market research is to better understand potential customers, how well your product or service fits their needs, and how it compares to competitors’ offerings.

There are two types of research you can conduct: primary and secondary.

• Primary research requires collecting data to learn about your specific customers or target market segment. It’s useful for creating buyer personas, segmenting your market, and improving your product to cater to customers’ needs .
• Secondary research is conducted using data you didn’t collect yourself. Industry reports, public databases, and other companies’ proprietary data can be used to gain insights into your target market segment and industry.

Why Is Market Research Important for Entrepreneurs?

Before launching your venture, it’s wise to conduct market research to ensure your product or service will be well received. Feedback from people who fall into your target demographics can be invaluable as you iterate on and improve your product.

Performing market research can also help you determine a pricing strategy by gauging customers’ willingness to pay for your product. Additionally, it can improve the user experience by revealing what features matter most to potential customers.

When assessing which startups to fund, investors place heavy importance on thorough market research that indicates promising potential. Providing tangible proof that your product fulfills a market need and demonstrating you’ve taken the time to iterate on and improve it signal that your startup could be a worthwhile investment.

Related: How to Talk to Potential Investors: 5 Tips

How to Do Market Research for a Startup

1. form hypotheses.

What questions do you aim to answer through market research? Using those questions, you can make predictions called hypotheses . Defining your hypotheses upfront can help guide your approach to selecting subjects, researching questions, and testing designs.

An example question you may ask is: “How much are people in my target demographic willing to pay for the current version of my product?” Your hypothesis could be: “If my product contains all its current features, customers will be willing to pay $500 for it.”

Another example question you may ask is: “What’s the user’s biggest pain point, and is my product meeting their needs?” Your hypothesis could be: “I believe the user’s biggest pain point is needing an easy, unintimidating way to learn basic car maintenance, and I predict that my product meets that need.”

You can and should test multiple hypotheses, but try to select no more than a few per test, so the research stays focused.

Related: A Beginner’s Guide to Hypothesis Testing in Business

2. Select the Type of Research Needed to Test Hypotheses

Once you’ve formed your hypotheses, determine which type of research to conduct.

If your hypotheses focus on determining your startup’s place in the broader market, start with secondary research. This can include using existing data to determine market size, how much of that market your startup could reasonably own, who your biggest competitors are, and how your brand and product compare to theirs.

If your hypotheses require primary research, decide which data collection method best fits your needs. These can include one-on-one interviews, surveys, focus groups, and polls. Primary research allows you to gather insights into customer satisfaction and loyalty, brand awareness and perception, and real-time product usability.

3. Identify Target Demographics and Recruit Subjects

To gather meaningful insights, you need to understand your target demographic. Do you aim to cater to working parents, young athletes, or pet owners? Determine the type of person who can benefit from your product.

If you conduct primary research, you need to recruit subjects. This can be done in several ways, including:

• Word of mouth: The simplest but least reliable way to recruit participants is by word of mouth. Ask people you know to refer others to be research subjects, then screen them to confirm they fit your target demographic.
• Promoting the study on social media: Many social media platforms enable you to show an ad to people who fall into specific demographic categories or have certain interests. This allows you to get the word out to a large number of people who qualify.
• Hiring a third-party market research company: Some companies provide full market research services and recruit participants and conduct research on your behalf.

However you recruit subjects, ensure they take a screener survey beforehand, which allows you to determine whether they fit the specific demographic you want to study or have a trait that eliminates them from the research pool. It also provides demographic data—such as age and race—that enables you to select a diverse subset of your target demographic.

In addition, you can offer compensation to boost participation, such as money, meal vouchers, gift cards, or early access to your product. Make it clear that compensation is in appreciation for subjects’ time and honest feedback.

4. Conduct the Research

Once you’ve determined the type of research and target demographic necessary to test your hypotheses, conduct your research. To reduce bias, enlist someone unfamiliar with your hypotheses to perform interviews or lead focus groups.

Ask questions based on your audience and hypotheses. For instance, if you’re aiming to test existing customers’ purchase motivations, you may ask: “What challenge were you trying to solve when you first bought the product?”

If examining brand perception, your audience should consist of potential customers who don’t yet know your brand. Present them with a list of competitor logos—with yours in the mix—and ask them to rank the brands by perceived reliability.

While the questions you ask are vehicles to prove or disprove hypotheses, ensure they don’t lead subjects in one direction. To craft unbiased research questions , use neutral language and vary the order of options in multiple-choice questions. This can keep subjects from selecting the same option each time if they sense the third option is always mapped to a certain outcome. It also helps account for primacy bias (the tendency to select the first option in a list) and recency bias (the tendency to select the final option in a list).

Once you’ve collected data, ensure it’s organized efficiently and securely so you can protect subjects’ identities .

Related: 3 Examples of Bad Survey Questions and How to Fix Them

5. Gather Insights and Determine Action Items

After you’ve organized your data, analyze it to extract actionable insights. While some of the data will be qualitative rather than quantitative, you can detect patterns in responses to make it quantifiable. For instance, noting that 15 of 20 subjects mentioned feeling overwhelmed when attempting to assemble your product.

Once you’ve analyzed the data and communicated emerging trends using data visualizations , outline action items.

If the majority of users in your target demographic reported feeling overwhelmed while assembling your product, action items might include:

• Creating different versions of assembly instructions to test with other groups, varying diagrams and instructional language
• Researching instruction manual best practices

Each round of market research can offer more information about how your product is perceived and experienced by potential users.

Market Research as an Ongoing Endeavor

While it’s useful to conduct market research before launching your product, you should revisit your hypotheses and form new ones over the course of building your venture.

By conducting market research with each version of your product, you can gradually improve it and ensure it continues to fit target customers’ needs.

Are you interested in bolstering your entrepreneurship skills? Explore our four-week online course Entrepreneurship Essentials and our other entrepreneurship and innovation courses to learn to speak the language of the startup world.

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How to do market research in 4 steps: a lean approach to marketing research

From pinpointing your target audience and assessing your competitive advantage, to ongoing product development and customer satisfaction efforts, market research is a practice your business can only benefit from.

Learn how to conduct quick and effective market research using a lean approach in this article full of strategies and practical examples. 

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A comprehensive (and successful) business strategy is not complete without some form of market research—you can’t make informed and profitable business decisions without truly understanding your customer base and the current market trends that drive your business.

In this article, you’ll learn how to conduct quick, effective market research  using an approach called 'lean market research'. It’s easier than you might think, and it can be done at any stage in a product’s lifecycle.

How to conduct lean market research in 4 steps

What is market research, why is market research so valuable, advantages of lean market research, 4 common market research methods, 5 common market research questions, market research faqs.

We’ll jump right into our 4-step approach to lean market research. To show you how it’s done in the real world, each step includes a practical example from Smallpdf , a Swiss company that used lean market research to reduce their tool’s error rate by 75% and boost their Net Promoter Score® (NPS) by 1%.

Research your market the lean way...

From on-page surveys to user interviews, Hotjar has the tools to help you scope out your market and get to know your customers—without breaking the bank.

The following four steps and practical examples will give you a solid market research plan for understanding who your users are and what they want from a company like yours.

1. Create simple user personas

A user persona is a semi-fictional character based on psychographic and demographic data from people who use websites and products similar to your own. Start by defining broad user categories, then elaborate on them later to further segment your customer base and determine your ideal customer profile .

How to get the data: use on-page or emailed surveys and interviews to understand your users and what drives them to your business.

How to do it right: whatever survey or interview questions you ask, they should answer the following questions about the customer:

Who are they?

What is their main goal?

What is their main barrier to achieving this goal?

Pitfalls to avoid:

Don’t ask too many questions! Keep it to five or less, otherwise you’ll inundate them and they’ll stop answering thoughtfully.

Don’t worry too much about typical demographic questions like age or background. Instead, focus on the role these people play (as it relates to your product) and their goals.

How Smallpdf did it: Smallpdf ran an on-page survey for a couple of weeks and received 1,000 replies. They learned that many of their users were administrative assistants, students, and teachers.

Next, they used the survey results to create simple user personas like this one for admins:

Who are they? Administrative Assistants.

What is their main goal? Creating Word documents from a scanned, hard-copy document or a PDF where the source file was lost.

What is their main barrier to achieving it? Converting a scanned PDF doc to a Word file.

💡Pro tip: Smallpdf used Hotjar Surveys to run their user persona survey. Our survey tool helped them avoid the pitfalls of guesswork and find out who their users really are, in their own words. 

You can design a survey and start running it in minutes with our easy-to-use drag and drop builder. Customize your survey to fit your needs, from a sleek one-question pop-up survey to a fully branded questionnaire sent via email. 

We've also created 40+ free survey templates that you can start collecting data with, including a user persona survey like the one Smallpdf used.

2. Conduct observational research

Observational research involves taking notes while watching someone use your product (or a similar product).

Overt vs. covert observation

Overt observation involves asking customers if they’ll let you watch them use your product. This method is often used for user testing and it provides a great opportunity for collecting live product or customer feedback .

Covert observation means studying users ‘in the wild’ without them knowing. This method works well if you sell a type of product that people use regularly, and it offers the purest observational data because people often behave differently when they know they’re being watched. 

Tips to do it right:

Record an entry in your field notes, along with a timestamp, each time an action or event occurs.

Make note of the users' workflow, capturing the ‘what,’ ‘why,’ and ‘for whom’ of each action.

Don’t record identifiable video or audio data without consent. If recording people using your product is helpful for achieving your research goal, make sure all participants are informed and agree to the terms.

Don’t forget to explain why you’d like to observe them (for overt observation). People are more likely to cooperate if you tell them you want to improve the product.

💡Pro tip: while conducting field research out in the wild can wield rewarding results, you can also conduct observational research remotely. Hotjar Recordings is a tool that lets you capture anonymized user sessions of real people interacting with your website. 

Observe how customers navigate your pages and products to gain an inside look into their user behavior . This method is great for conducting exploratory research with the purpose of identifying more specific issues to investigate further, like pain points along the customer journey and opportunities for optimizing conversion .

With Hotjar Recordings you can observe real people using your site without capturing their sensitive information

How Smallpdf did it: here’s how Smallpdf observed two different user personas both covertly and overtly.

Observing students (covert): Kristina Wagner, Principle Product Manager at Smallpdf, went to cafes and libraries at two local universities and waited until she saw students doing PDF-related activities. Then she watched and took notes from a distance. One thing that struck her was the difference between how students self-reported their activities vs. how they behaved (i.e, the self-reporting bias). Students, she found, spent hours talking, listening to music, or simply staring at a blank screen rather than working. When she did find students who were working, she recorded the task they were performing and the software they were using (if she recognized it).

Observing administrative assistants (overt): Kristina sent emails to admins explaining that she’d like to observe them at work, and she asked those who agreed to try to batch their PDF work for her observation day. While watching admins work, she learned that they frequently needed to scan documents into PDF-format and then convert those PDFs into Word docs. By observing the challenges admins faced, Smallpdf knew which products to target for improvement.

“Data is really good for discovery and validation, but there is a bit in the middle where you have to go and find the human.”

3. Conduct individual interviews

Interviews are one-on-one conversations with members of your target market. They allow you to dig deep and explore their concerns, which can lead to all sorts of revelations.

Listen more, talk less. Be curious.

Act like a journalist, not a salesperson. Rather than trying to talk your company up, ask people about their lives, their needs, their frustrations, and how a product like yours could help.

Ask "why?" so you can dig deeper. Get into the specifics and learn about their past behavior.

Record the conversation. Focus on the conversation and avoid relying solely on notes by recording the interview. There are plenty of services that will transcribe recorded conversations for a good price (including Hotjar!).

Avoid asking leading questions , which reveal bias on your part and pushes respondents to answer in a certain direction (e.g. “Have you taken advantage of the amazing new features we just released?).

Don't ask loaded questions , which sneak in an assumption which, if untrue, would make it impossible to answer honestly. For example, we can’t ask you, “What did you find most useful about this article?” without asking whether you found the article useful in the first place.

Be cautious when asking opinions about the future (or predictions of future behavior). Studies suggest that people aren’t very good at predicting their future behavior. This is due to several cognitive biases, from the misguided exceptionalism bias (we’re good at guessing what others will do, but we somehow think we’re different), to the optimism bias (which makes us see things with rose-colored glasses), to the ‘illusion of control’ (which makes us forget the role of randomness in future events).

How Smallpdf did it: Kristina explored her teacher user persona by speaking with university professors at a local graduate school. She learned that the school was mostly paperless and rarely used PDFs, so for the sake of time, she moved on to the admins.

A bit of a letdown? Sure. But this story highlights an important lesson: sometimes you follow a lead and come up short, so you have to make adjustments on the fly. Lean market research is about getting solid, actionable insights quickly so you can tweak things and see what works.

💡Pro tip: to save even more time, conduct remote interviews using an online user research service like Hotjar Engage , which automates the entire interview process, from recruitment and scheduling to hosting and recording.

You can interview your own customers or connect with people from our diverse pool of 200,000+ participants from 130+ countries and 25 industries. And no need to fret about taking meticulous notes—Engage will automatically transcribe the interview for you.

4. Analyze the data (without drowning in it)

The following techniques will help you wrap your head around the market data you collect without losing yourself in it. Remember, the point of lean market research is to find quick, actionable insights.

A flow model is a diagram that tracks the flow of information within a system. By creating a simple visual representation of how users interact with your product and each other, you can better assess their needs.

You’ll notice that admins are at the center of Smallpdf’s flow model, which represents the flow of PDF-related documents throughout a school. This flow model shows the challenges that admins face as they work to satisfy their own internal and external customers.

Affinity diagram

An affinity diagram is a way of sorting large amounts of data into groups to better understand the big picture. For example, if you ask your users about their profession, you’ll notice some general themes start to form, even though the individual responses differ. Depending on your needs, you could group them by profession, or more generally by industry.

We wrote a guide about how to analyze open-ended questions to help you sort through and categorize large volumes of response data. You can also do this by hand by clipping up survey responses or interview notes and grouping them (which is what Kristina does).

“For an interview, you will have somewhere between 30 and 60 notes, and those notes are usually direct phrases. And when you literally cut them up into separate pieces of paper and group them, they should make sense by themselves.”

Pro tip: if you’re conducting an online survey with Hotjar, keep your team in the loop by sharing survey responses automatically via our Slack and Microsoft Team integrations. Reading answers as they come in lets you digest the data in pieces and can help prepare you for identifying common themes when it comes time for analysis.

Hotjar lets you easily share survey responses with your team

Customer journey map

A customer journey map is a diagram that shows the way a typical prospect becomes a paying customer. It outlines their first interaction with your brand and every step in the sales cycle, from awareness to repurchase (and hopefully advocacy).

The above  customer journey map , created by our team at Hotjar, shows many ways a customer might engage with our tool. Your map will be based on your own data and business model.

📚 Read more: if you’re new to customer journey maps, we wrote this step-by-step guide to creating your first customer journey map in 2 and 1/2 days with free templates you can download and start using immediately.

Next steps: from research to results

So, how do you turn market research insights into tangible business results? Let’s look at the actions Smallpdf took after conducting their lean market research: first they implemented changes, then measured the impact.

Implement changes

Based on what Smallpdf learned about the challenges that one key user segment (admins) face when trying to convert PDFs into Word files, they improved their ‘PDF to Word’ conversion tool.

We won’t go into the details here because it involves a lot of technical jargon, but they made the entire process simpler and more straightforward for users. Plus, they made it so that their system recognized when you drop a PDF file into their ‘Word to PDF’ converter instead of the ‘PDF to Word’ converter, so users wouldn’t have to redo the task when they made that mistake. 

In other words: simple market segmentation for admins showed a business need that had to be accounted for, and customers are happier overall after Smallpdf implemented an informed change to their product.

Measure results

According to the Lean UX model, product and UX changes aren’t retained unless they achieve results.

Smallpdf’s changes produced:

A 75% reduction in error rate for the ‘PDF to Word’ converter

A 1% increase in NPS

Greater confidence in the team’s marketing efforts

"With all the changes said and done, we've cut our original error rate in four, which is huge. We increased our NPS by +1%, which isn't huge, but it means that of the users who received a file, they were still slightly happier than before, even if they didn't notice that anything special happened at all.”

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Market research (or marketing research) is any set of techniques used to gather information and better understand a company’s target market. This might include primary research on brand awareness and customer satisfaction or secondary market research on market size and competitive analysis. Businesses use this information to design better products, improve user experience, and craft a marketing strategy that attracts quality leads and improves conversion rates.

David Darmanin, one of Hotjar’s founders, launched two startups before Hotjar took off—but both companies crashed and burned. Each time, he and his team spent months trying to design an amazing new product and user experience, but they failed because they didn’t have a clear understanding of what the market demanded.

With Hotjar, they did things differently . Long story short, they conducted market research in the early stages to figure out what consumers really wanted, and the team made (and continues to make) constant improvements based on market and user research.

Without market research, it’s impossible to understand your users. Sure, you might have a general idea of who they are and what they need, but you have to dig deep if you want to win their loyalty.

Here’s why research matters:

Obsessing over your users is the only way to win. If you don’t care deeply about them, you’ll lose potential customers to someone who does.

Analytics gives you the ‘what’, while research gives you the ‘why’. Big data, user analytics , and dashboards can tell you what people do at scale, but only research can tell you what they’re thinking and why they do what they do. For example, analytics can tell you that customers leave when they reach your pricing page, but only research can explain why.

Research beats assumptions, trends, and so-called best practices. Have you ever watched your colleagues rally behind a terrible decision? Bad ideas are often the result of guesswork, emotional reasoning, death by best practices , and defaulting to the Highest Paid Person’s Opinion (HiPPO). By listening to your users and focusing on their customer experience , you’re less likely to get pulled in the wrong direction.

Research keeps you from planning in a vacuum. Your team might be amazing, but you and your colleagues simply can’t experience your product the way your customers do. Customers might use your product in a way that surprises you, and product features that seem obvious to you might confuse them. Over-planning and refusing to test your assumptions is a waste of time, money, and effort because you’ll likely need to make changes once your untested business plan gets put into practice.

Lean User Experience (UX) design is a model for continuous improvement that relies on quick, efficient research to understand customer needs and test new product features.

Lean market research can help you become more...

Efficient: it gets you closer to your customers, faster.

Cost-effective: no need to hire an expensive marketing firm to get things started.

Competitive: quick, powerful insights can place your products on the cutting edge.

As a small business or sole proprietor, conducting lean market research is an attractive option when investing in a full-blown research project might seem out of scope or budget.

There are lots of different ways you could conduct market research and collect customer data, but you don’t have to limit yourself to just one research method. Four common types of market research techniques include surveys, interviews, focus groups, and customer observation.

Which method you use may vary based on your business type: ecommerce business owners have different goals from SaaS businesses, so it’s typically prudent to mix and match these methods based on your particular goals and what you need to know.

1. Surveys: the most commonly used

Surveys are a form of qualitative research that ask respondents a short series of open- or closed-ended questions, which can be delivered as an on-screen questionnaire or via email. When we asked 2,000 Customer Experience (CX) professionals about their company’s approach to research , surveys proved to be the most commonly used market research technique.

What makes online surveys so popular?  

They’re easy and inexpensive to conduct, and you can do a lot of data collection quickly. Plus, the data is pretty straightforward to analyze, even when you have to analyze open-ended questions whose answers might initially appear difficult to categorize.

We've built a number of survey templates ready and waiting for you. Grab a template and share with your customers in just a few clicks.

💡 Pro tip: you can also get started with Hotjar AI for Surveys to create a survey in mere seconds . Just enter your market research goal and watch as the AI generates a survey and populates it with relevant questions. 

Once you’re ready for data analysis, the AI will prepare an automated research report that succinctly summarizes key findings, quotes, and suggested next steps.

An example research report generated by Hotjar AI for Surveys

2. Interviews: the most insightful

Interviews are one-on-one conversations with members of your target market. Nothing beats a face-to-face interview for diving deep (and reading non-verbal cues), but if an in-person meeting isn’t possible, video conferencing is a solid second choice.

Regardless of how you conduct it, any type of in-depth interview will produce big benefits in understanding your target customers.

What makes interviews so insightful?

By speaking directly with an ideal customer, you’ll gain greater empathy for their experience , and you can follow insightful threads that can produce plenty of 'Aha!' moments.

3. Focus groups: the most unreliable

Focus groups bring together a carefully selected group of people who fit a company’s target market. A trained moderator leads a conversation surrounding the product, user experience, or marketing message to gain deeper insights.

What makes focus groups so unreliable?

If you’re new to market research, we wouldn’t recommend starting with focus groups. Doing it right is expensive , and if you cut corners, your research could fall victim to all kinds of errors. Dominance bias (when a forceful participant influences the group) and moderator style bias (when different moderator personalities bring about different results in the same study) are two of the many ways your focus group data could get skewed.

4. Observation: the most powerful

During a customer observation session, someone from the company takes notes while they watch an ideal user engage with their product (or a similar product from a competitor).

What makes observation so clever and powerful?

‘Fly-on-the-wall’ observation is a great alternative to focus groups. It’s not only less expensive, but you’ll see people interact with your product in a natural setting without influencing each other. The only downside is that you can’t get inside their heads, so observation still isn't a recommended replacement for customer surveys and interviews.

The following questions will help you get to know your users on a deeper level when you interview them. They’re general questions, of course, so don’t be afraid to make them your own.

1. Who are you and what do you do?

How you ask this question, and what you want to know, will vary depending on your business model (e.g. business-to-business marketing is usually more focused on someone’s profession than business-to-consumer marketing).

It’s a great question to start with, and it’ll help you understand what’s relevant about your user demographics (age, race, gender, profession, education, etc.), but it’s not the be-all-end-all of market research. The more specific questions come later.

2. What does your day look like?

This question helps you understand your users’ day-to-day life and the challenges they face. It will help you gain empathy for them, and you may stumble across something relevant to their buying habits.

3. Do you ever purchase [product/service type]?

This is a ‘yes or no’ question. A ‘yes’ will lead you to the next question.

4. What problem were you trying to solve or what goal were you trying to achieve?

This question strikes to the core of what someone’s trying to accomplish and why they might be willing to pay for your solution.

5. Take me back to the day when you first decided you needed to solve this kind of problem or achieve this goal.

This is the golden question, and it comes from Adele Revella, Founder and CEO of Buyer Persona Institute . It helps you get in the heads of your users and figure out what they were thinking the day they decided to spend money to solve a problem.

If you take your time with this question, digging deeper where it makes sense, you should be able to answer all the relevant information you need to understand their perspective.

“The only scripted question I want you to ask them is this one: take me back to the day when you first decided that you needed to solve this kind of problem or achieve this kind of a goal. Not to buy my product, that’s not the day. We want to go back to the day that when you thought it was urgent and compelling to go spend money to solve a particular problem or achieve a goal. Just tell me what happened.”

— Adele Revella , Founder/CEO at Buyer Persona Institute

Bonus question: is there anything else you’d like to tell me?

This question isn’t just a nice way to wrap it up—it might just give participants the opportunity they need to tell you something you really need to know.

That’s why Sarah Doody, author of UX Notebook , adds it to the end of her written surveys.

“I always have a last question, which is just open-ended: “Is there anything else you would like to tell me?” And sometimes, that’s where you get four paragraphs of amazing content that you would never have gotten if it was just a Net Promoter Score [survey] or something like that.”

What is the difference between qualitative and quantitative research?

Qualitative research asks questions that can’t be reduced to a number, such as, “What is your job title?” or “What did you like most about your customer service experience?” 

Quantitative research asks questions that can be answered with a numeric value, such as, “What is your annual salary?” or “How was your customer service experience on a scale of 1-5?”

 → Read more about the differences between qualitative and quantitative user research .

How do I do my own market research?

You can do your own quick and effective market research by 

Surveying your customers

Building user personas

Studying your users through interviews and observation

Wrapping your head around your data with tools like flow models, affinity diagrams, and customer journey maps

What is the difference between market research and user research?

Market research takes a broad look at potential customers—what problems they’re trying to solve, their buying experience, and overall demand. User research, on the other hand, is more narrowly focused on the use (and usability ) of specific products.

What are the main criticisms of market research?

Many marketing professionals are critical of market research because it can be expensive and time-consuming. It’s often easier to convince your CEO or CMO to let you do lean market research rather than something more extensive because you can do it yourself. It also gives you quick answers so you can stay ahead of the competition.

Do I need a market research firm to get reliable data?

Absolutely not! In fact, we recommend that you start small and do it yourself in the beginning. By following a lean market research strategy, you can uncover some solid insights about your clients. Then you can make changes, test them out, and see whether the results are positive. This is an excellent strategy for making quick changes and remaining competitive.

Net Promoter, Net Promoter System, Net Promoter Score, NPS, and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld, and Satmetrix Systems, Inc.

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How to Do Market Research for a Business Plan Successfully

The entrepreneurial-minded folks may long have wondered how to do market research for a business plan. 

After all, a business plan lays out the foundation, purpose and expectations of a new business venture. Given that the risks of starting a new business are manifold , entrepreneurs must conduct market research.

20% of American businesses fail after only their first year of operation, a dismal reality that climbs to 30% after two years.

Newfound entrepreneurs and serial entrepreneurs alike should therefore carefully commit to and execute a business plan.

While market research applies to a wide breadth of applications that cover various business cycles and processes, including opening and operating a new business, it too can be used for producing a 

This article expounds upon how to do market research for a business plan — and succeed in your venture.

Defining A Business Plan and Its Needs

Before you set out to formulate a business plan, it is vital to fully understand all that it entails. Usually created for startups, it is necessary for all businesses to implement. 

A business plan is a written document that summarizes the main aspects of starting up and managing a business, making it the foundation for your business .

A business plan specifically details a business’s objectives, along with its financial, marketing and operational needs and a roadmap thereof. 

It is created to guide a business through each stage in its establishment and management.  As such, it allows business owners to lay out their needs and goals and track them as the business grows.

A business plan must be updated at regular intervals , as priorities and goals are subject to change. Additionally, when an established business moves in a different direction, it needs a new or completely updated business plan.  

The Importance of a Business Plan

A business plan is an important document and not merely for the purpose of monitoring your business as it develops. This is because this document is also needed to obtain investment , especially in the early stages of the business, in which it does not have an evidential track record.

Thus, a business plan shows investors whether your business is on the right course and is worth investing their funds into. Lenders will require proof of a business plan when they deliberate the approval of a loan. 

Here are several other reasons as to why creating and updating a business plan is important:

• Making important decisions. It allows you to answer difficult questions at the onset, before they emerge. Understanding these decisions helps you understand how they fit into your overall strategy.
• Addressing key issues to avoid future problems . These include pricing, competition evaluation, market demand, capital and team members.
• Proving the viability of your business . Planning your vision into a full-fledged business bridges the gap between an idea and reality. Market research is essential for this point, as it helps you find key insights on various aspects of your industry, including your competitors and customers. 
• Communicating objectives with team members and all those involved . This is important for larger teams, particularly for assistance when you are too busy to relay information or guidance to your team members. This may also help investors or partners who cannot reach you, as it lays out objectives and criteria.
• Standardizing and carrying out key objectives . Placing your objectives, criteria and other needs gives them more weight and attention. If they aren’t in your business plan, thereby, in writing, they can easily fall by the wayside. A business plan helps avoid this, standardizing key objectives and benchmarks.
• Guiding consultants, freelancers and other workers . When employing freelancers and contractors, you can turn to specific sections of a business plan to guide these workers, to ensure they understand your vision, goal and other key business aspects.
• Obtaining financial support. Whether it is via borrowing from a bank, turning to venture capitalists or putting your business up for an acquisition, a business plan makes your business and its viability clear for these key financial players. 
• Acclimating to market changes . Updating your business plan can help you during periods of critical change in your market. These changes include: changes in customer needs, new regulations, trends or updates in your industry.

Defining Market Research

Market Research is a wide-encompassing practice that involves gathering information to bolster knowledge about a business’s industry, niche and target market . 

It involves the systematic process of amassing, analyzing and interpreting data and information around the state of a business’s industry and its key actors . The key actors entail a business’s target market, competitors and the movers and shakers within its industry.

As such, it involves gathering research around the niche, trends and industry as a whole. 

This involves gathering secondary research , research that has already been conducted and made available, along with primary research , the kind that requires you to conduct yourself. These main types of research gathering involve various means, techniques and tools that researchers can use.

Market research largely deals with evaluating the viability of a new product or service, although this aspect is primarily referred to as customer development . By conducting market research, you can therefore gather information on virtually all areas of your business. 

Why a Business Plan Needs Market Research

A potent document, one that properly lays out the 7 components of a business plan , from the executive summary, to the market analysis, to the strategy, financial plan and all other in-betweens, most use market research to develop it. 

Market research provides the key data, information and nuances your business plan needs. Although a new business or business idea is born on intuition, a business plan must be backed up with data to prove its viability and positioning in its industry. 

As such, market research must be performed in the early stages of the business plan, as it is the phase in which you learn all about your niche, its trends and the demands of your target market (including the makeup of your target market via market segmentation ).

Only after analyzing all of your market research results, will you be able to populate the business plan within key areas such as market analysis, financial projections, strategy and implementation, marketing endeavors, pricing and location . 

A business plan must be comprehensive, another way in which market research is of utmost importance, in that there are various methods and tools you can use to conduct it. By consolidating all of the different market research techniques , you are establishing an exhaustive business plan, the kind that leaves no key consideration out.

The following presents the key data and information of a business plan that market research can extract:

• Demand : Does your product/service have enough market potential to justify a new business?
• Pricing : How will you determine the pricing of your offerings? 
• Target Market : Who makes up your target market? Do they have enough spending power to buy your product or service?
• Location : Does your business require opening a physical store or can it effectively reach its target market via ecommerce? Perhaps it needs both?
• Historic data on your product/ service : How have the products and services in your niche performed over time? How do they perform currently? 
• Marketing and Market Entry : How will you form an explanation on how you’ll enter the market? How will you promote your products/services to solidify your entry?
• Labor Requirements : Do you have enough manpower to form a business? How many employees and contractors will your business require?
• Financial Plan : Do you have the financial means to cover all operations?

How to Conduct Market Research for a Business Plan

Since a business plan ought to include concrete information to pave the way for business success, it requires thorough market research. Given that market research encompasses so many modes and forms, it can be overwhelming and even intimidating to begin to conduct it for your business plan.

The following provides a step-by-step guide on how to do market research for a business plan, so you can craft your plan in an informed manner, equipped with critical market research.

• First, search the secondary sources available; while some are free, there will be many that aren’t.
• Then, narrow it down to a specific niche, with suspected market segments.
• Focus your research via secondary sources on your market. Look at trade publications, new sites dedicated to your market, industry reports, local reports, statistics websites, blogs on the startups in your niche, including their stories of success and failure and other secondary resources.
• Conduct further secondary research on your priorities.
• Then, switch to primary research methods to zero in on your most critical research subjects.
• You can achieve this by conducting secondary research on your target market.
• Use an online survey, a focus group or a survey panel .
• Segment your target market further and start building personas from the shared characteristics they exhibit.
• Be sure to find similar offerings available to identify your competitors.
• Survey your target market on their needs and feelings towards similar products/services, along with their aversions and desires for updates.
• This will help you understand how to set up your prices as well.
• Research the costs of marketing and publicizing the launch of your business.
• Compare all costs and establish a preliminary business budget.
• Jot down their strengths and weaknesses.
• Compare your offering to theirs, does it fill any gaps or voids? Is it better price-wise?
• Break this down from high to low levels of research. Ex: From the general industry to the exact niche, from a large target market, to specific segments, to specific personas.
• Adjust your budget, goals and plans.
• The executive summary, company description, products and services, market analysis, strategy and implementation, organization and management, financial plan and projections.
• Assure that everything makes sense. If there are gaps in the information you have outlined, consider conducting more research.
• Highlight areas of opportunity, along with areas of risk. 
• Edit your business plan as needed.

Empowering Your Market Research-Powered Business Plan

Market research is a wide-reaching practice that blends consumer behavior and economic trends to help you validate and improve a business idea. It can also help you change the course or style of an already established business.

Thus, it is not solely for startups. Market research can be difficult to conduct and manage , as there are so many business aspects you’ll need to consider to lower your risk of failure. Concurrently, there is so many kinds of market research you can stand to conduct.

Even with the steps listed above, navigating through the jungle of market research can be a laborious and difficult task. While you can’t control secondary resources, you can wield control of your primary research endeavors via an online survey platform . 

This kind of market research tool allows you to take the reigns in every aspect: from asking the exact questions you seek answers to , to targeting a specific market segment , to deploying your surveys across the most-frequented websites and apps. 

A potent survey platform will complete all of these crucial tasks , making primary research an easy task. The trick is to find an online survey platform that can handle all of these tasks, along with making it easy to analyze the data.

Do you want to distribute your survey? Pollfish offers you access to millions of targeted consumers to get survey responses from $0.95 per complete. Launch your survey today.

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How to Conduct Market Research for a Business Plan

Rev › Blog › Marketing › How to Conduct Market Research for a Business Plan

Any successful business starts with a thorough, written business plan. For most small business owners, the prospect of gathering and compiling all the data required for a business plan can often seem intimidating. Fortunately, several helpful tools can make conducting market research faster and easier, especially when conducting target customer interviews.

What Does a Business Plan Include?

When building a business plan, you may include different sections or topics depending on how you intend to use the final product. For instance, business plans for internal use might not need to be quite as detailed or structured as plans that will be presented externally in order to secure financing from investors. Regardless of your purpose, most business plans include the following core sections:

• Industry Background – Include analysis of special business considerations that apply to your particular industries, such as trends, growth rates, or recent litigation.
• Value Proposition – Your value proposition (or Unique Selling Proposition) outlines how your business plans to bring value to its target customers in a way that isn’t currently being fulfilled in the market.
• Product Analysis – Describe in detail the product or service you offer, including features that are better than or differentiate you from current market offerings.
• Market Analysis – Examine your company’s target market, including customer demographics, estimated market capture, personas, and customer needs.
• Competitive Analysis – Here, you’ll compare the intended product or service to other offerings in the market and outline your company’s competitive advantages.
• Financial Analysis – Typically, your financial analysis will include estimated sales for the first 1-3 years of operation, as well as more detailed financial projections depending on who will be reading the plan.

Conducting a Market Analysis

Specific industries have different potential customers. It’s easier to reach your potential customers when you have a clear view of who they are. A market analysis helps clarify your ideal customer personas by researching both qualitative and quantitative aspects of your target market.

To better understand your potential customers, start by researching the demographics and segmentation of individuals who typically buy products and services in your industry. Your market analysis should also include:

• Research on the total size of the market
• How much additional market share is available
• Any currently unmet needs that could be sources of competitive advantage
• Features and qualities potential customers find valuable  

Using Market Research to Support Your Business Plan

Market research helps assess a business idea’s strengths and weaknesses. his research will serve as the basis for strategic marketing decisions, price positioning, and financial projections listed in the Financial Analysis section of your business plan. You can also use it to help your management team think through important decisions, ultimately leading to choices that will resonate with your target audience and get customers to buy your product or service.

Secondary Research

Conducting market research begins with fact-finding through the internet and other publicly available resources. This secondary research, or research originally conducted and compiled by others, gathers statistics on market size, average market pricing, competitor promotional effectiveness, manufacturing costs, and more.

Secondary research is necessary because it is often expensive and time-consuming for individual business owners to conduct this research firsthand. There are many reliable professional research firms that gather comprehensive industry statistics and make them available at a much more granular level than individuals could gather on their own. Some governmental organizations, such as the U.S. Bureau of Labor Statistics will even provide this information at no charge. Fortunately for business owners, a free resource is still perfectly valid as long as it’s reputable.

Primary Research

Beyond the initial secondary research, you should also conduct thorough primary research to vet your business idea. Primary research is conducted by talking to members of the target audience firsthand through surveys, interviews, and focus groups . These tools can provide valuable insight into how prospects judge your product or service and how they compare it to alternative options.

Primary research efforts will typically generate qualitative data in the form of audio and video recordings. These interviews are not always brief, and therefore can be difficult to process efficiently unless first converted to text. You can quickly and easily incorporate the content of these interviews into your plan once they’ve been transcribed.

With a speech-to-text service like Rev, you can get 99% accurate transcripts of your market research interviews in a matter of hours. Dramatically streamlining your business planning process with Rev gives you faster access to valuable customer feedback and potential insights, letting you skip the busy-work and get down to business.

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How to do market research: The complete guide for your brand

Written by by Jacqueline Zote

Published on  April 13, 2023

Reading time  10 minutes

Blindly putting out content or products and hoping for the best is a thing of the past. Not only is it a waste of time and energy, but you’re wasting valuable marketing dollars in the process. Now you have a wealth of tools and data at your disposal, allowing you to develop data-driven marketing strategies . That’s where market research comes in, allowing you to uncover valuable insights to inform your business decisions.

Conducting market research not only helps you better understand how to sell to customers but also stand out from your competition. In this guide, we break down everything you need to know about market research and how doing your homework can help you grow your business.

Table of contents:

What is market research?

Why is market research important, types of market research, where to conduct market research.

• Steps for conducting market research
• Tools to use for market research

Market research is the process of gathering information surrounding your business opportunities. It identifies key information to better understand your audience. This includes insights related to customer personas and even trends shaping your industry.

Taking time out of your schedule to conduct research is crucial for your brand health. Here are some of the key benefits of market research:

Understand your customers’ motivations and pain points

Most marketers are out of touch with what their customers want. Moreover, these marketers are missing key information on what products their audience wants to buy.

Simply put, you can’t run a business if you don’t know what motivates your customers.

And spoiler alert: Your customers’ wants and needs change. Your customers’ behaviors today might be night and day from what they were a few years ago.

Market research holds the key to understanding your customers better. It helps you uncover their key pain points and motivations and understand how they shape their interests and behavior.

Figure out how to position your brand

Positioning is becoming increasingly important as more and more brands enter the marketplace. Market research enables you to spot opportunities to define yourself against your competitors.

Maybe you’re able to emphasize a lower price point. Perhaps your product has a feature that’s one of a kind. Finding those opportunities goes hand in hand with researching your market.

Maintain a strong pulse on your industry at large

Today’s marketing world evolves at a rate that’s difficult to keep up with.

Fresh products. Up-and-coming brands. New marketing tools. Consumers get bombarded with sales messages from all angles. This can be confusing and overwhelming.

By monitoring market trends, you can figure out the best tactics for reaching your target audience.

Not everyone conducts market research for the same reason. While some may want to understand their audience better, others may want to see how their competitors are doing. As such, there are different types of market research you can conduct depending on your goal.

Interview-based market research allows for one-on-one interactions. This helps the conversation to flow naturally, making it easier to add context. Whether this takes place in person or virtually, it enables you to gather more in-depth qualitative data.

Buyer persona research

Buyer persona research lets you take a closer look at the people who make up your target audience. You can discover the needs, challenges and pain points of each buyer persona to understand what they need from your business. This will then allow you to craft products or campaigns to resonate better with each persona.

Pricing research

In this type of research, brands compare similar products or services with a particular focus on pricing. They look at how much those products or services typically sell for so they can get more competitive with their pricing strategy.

Competitive analysis research

Competitor analysis gives you a realistic understanding of where you stand in the market and how your competitors are doing. You can use this analysis to find out what’s working in your industry and which competitors to watch out for. It even gives you an idea of how well those competitors are meeting consumer needs.

Depending on the competitor analysis tool you use, you can get as granular as you need with your research. For instance, Sprout Social lets you analyze your competitors’ social strategies. You can see what types of content they’re posting and even benchmark your growth against theirs.

Brand awareness research

Conducting brand awareness research allows you to assess your brand’s standing in the market. It tells you how well-known your brand is among your target audience and what they associate with it. This can help you gauge people’s sentiments toward your brand and whether you need to rebrand or reposition.

If you don’t know where to start with your research, you’re in the right place.

There’s no shortage of market research methods out there. In this section, we’ve highlighted research channels for small and big businesses alike.

Considering that Google sees a staggering 8.5 billion searches each day, there’s perhaps no better place to start.

A quick Google search is a potential goldmine for all sorts of questions to kick off your market research. Who’s ranking for keywords related to your industry? Which products and pieces of content are the hottest right now? Who’s running ads related to your business?

For example, Google Product Listing Ads can help highlight all of the above for B2C brands.

The same applies to B2B brands looking to keep tabs on who’s running industry-related ads and ranking for keyword terms too.

There’s no denying that email represents both an aggressive and effective marketing channel for marketers today. Case in point, 44% of online shoppers consider email as the most influential channel in their buying decisions.

Looking through industry and competitor emails is a brilliant way to learn more about your market. For example, what types of offers and deals are your competitors running? How often are they sending emails?

Email is also invaluable for gathering information directly from your customers. This survey message from Asana is a great example of how to pick your customers’ brains to figure out how you can improve your quality of service.

Industry journals, reports and blogs

Don’t neglect the importance of big-picture market research when it comes to tactics and marketing channels to explore. Look to marketing resources such as reports and blogs as well as industry journals

Keeping your ear to the ground on new trends and technologies is a smart move for any business. Sites such as Statista, Marketing Charts, AdWeek and Emarketer are treasure troves of up-to-date data and news for marketers.

And of course, there’s the  Sprout Insights blog . And invaluable resources like The Sprout Social Index™  can keep you updated on the latest social trends.

Social media

If you want to learn more about your target market, look no further than social media. Social offers a place to discover what your customers want to see in future products or which brands are killin’ it. In fact, social media is become more important for businesses than ever with the level of data available.

It represents a massive repository of real-time data and insights that are instantly accessible. Brand monitoring and social listening are effective ways to conduct social media research . You can even be more direct with your approach. Ask questions directly or even poll your audience to understand their needs and preferences.

The 5 steps for how to do market research

Now that we’ve covered the why and where, it’s time to get into the practical aspects of market research. Here are five essential steps on how to do market research effectively.

Step 1: Identify your research topic

First off, what are you researching about? What do you want to find out? Narrow down on a specific research topic so you can start with a clear idea of what to look for.

For example, you may want to learn more about how well your product features are satisfying the needs of existing users. This might potentially lead to feature updates and improvements. Or it might even result in new feature introductions.

Similarly, your research topic may be related to your product or service launch or customer experience. Or you may want to conduct research for an upcoming marketing campaign.

Step 2: Choose a buyer persona to engage

If you’re planning to focus your research on a specific type of audience, decide which buyer persona you want to engage. This persona group will serve as a representative sample of your target audience.

Engaging a specific group of audience lets you streamline your research efforts. As such, it can be a much more effective and organized approach than researching thousands (if not millions) of individuals.

You may be directing your research toward existing users of your product. To get even more granular, you may want to focus on users who have been familiar with the product for at least a year, for example.

Step 3: Start collecting data

The next step is one of the most critical as it involves collecting the data you need for your research. Before you begin, make sure you’ve chosen the right research methods that will uncover the type of data you need. This largely depends on your research topic and goals.

Remember that you don’t necessarily have to stick to one research method. You may use a combination of qualitative and quantitative approaches. So for example, you could use interviews to supplement the data from your surveys. Or you may stick to insights from your social listening efforts.

To keep things consistent, let’s look at this in the context of the example from earlier. Perhaps you can send out a survey to your existing users asking them a bunch of questions. This might include questions like which features they use the most and how often they use them. You can get them to choose an answer from one to five and collect quantitative data.

Plus, for qualitative insights, you could even include a few open-ended questions with the option to write their answers. For instance, you might ask them if there’s any improvement they wish to see in your product.

Step 4: Analyze results

Once you have all the data you need, it’s time to analyze it keeping your research topic in mind. This involves trying to interpret the data to look for a wider meaning, particularly in relation to your research goal.

So let’s say a large percentage of responses were four or five in the satisfaction rating. This means your existing users are mostly satisfied with your current product features. On the other hand, if the responses were mostly ones and twos, you may look for opportunities to improve. The responses to your open-ended questions can give you further context as to why people are disappointed.

Step 5: Make decisions for your business

Now it’s time to take your findings and turn them into actionable insights for your business. In this final step, you need to decide how you want to move forward with your new market insight.

What did you find in your research that would require action? How can you put those findings to good use?

The market research tools you should be using

To wrap things up, let’s talk about the various tools available to conduct speedy, in-depth market research. These tools are essential for conducting market research faster and more efficiently.

Social listening and analytics

Social analytics tools like Sprout can help you keep track of engagement across social media. This goes beyond your own engagement data but also includes that of your competitors. Considering how quickly social media moves, using a third-party analytics tool is ideal. It allows you to make sense of your social data at a glance and ensure that you’re never missing out on important trends.

Email marketing research tools

Keeping track of brand emails is a good idea for any brand looking to stand out in its audience’s inbox.

Tools such as MailCharts ,  Really Good Emails  and  Milled  can show you how different brands run their email campaigns.

Meanwhile, tools like  Owletter  allow you to monitor metrics such as frequency and send-timing. These metrics can help you understand email marketing strategies among competing brands.

Content marketing research

If you’re looking to conduct research on content marketing, tools such as  BuzzSumo  can be of great help. This tool shows you the top-performing industry content based on keywords. Here you can see relevant industry sites and influencers as well as which brands in your industry are scoring the most buzz. It shows you exactly which pieces of content are ranking well in terms of engagements and shares and on which social networks.

SEO and keyword tracking

Monitoring industry keywords is a great way to uncover competitors. It can also help you discover opportunities to advertise your products via organic search. Tools such as  Ahrefs  provide a comprehensive keyword report to help you see how your search efforts stack up against the competition.

Competitor comparison template

For the sake of organizing your market research, consider creating a competitive matrix. The idea is to highlight how you stack up side-by-side against others in your market. Use a  social media competitive analysis template  to track your competitors’ social presence. That way, you can easily compare tactics, messaging and performance. Once you understand your strengths and weaknesses next to your competitors, you’ll find opportunities as well.

Customer persona creator

Finally, customer personas represent a place where all of your market research comes together. You’d need to create a profile of your ideal customer that you can easily refer to. Tools like  Xtensio  can help in outlining your customer motivations and demographics as you zero in on your target market.

Build a solid market research strategy

Having a deeper understanding of the market gives you leverage in a sea of competitors. Use the steps and market research tools we shared above to build an effective market research strategy.

But keep in mind that the accuracy of your research findings depends on the quality of data collected. Turn to Sprout’s social media analytics tools to uncover heaps of high-quality data across social networks.

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The Complete Guide to Market Research for Startups

The importance of doing market research for startups is often underrated by those who need it most. The number one reason most startups fail is a lack of market understanding; it’s easy to see how so many new businesses don’t succeed in the early stages.

Success becomes an uphill battle when going to market without fully understanding who a target audience is and how to meet their needs.

Before we show you why and how to do market research for your startup, look at these stats.

The benefits of doing market research for a startup

You’ve seen the stats, and likely, you’re going to want to do everything possible to ensure you don’t end up being one of the many businesses that don’t make it through the early years. As you’ve started learning how to do market research for your startup, you’re on the right track to future-proofing your business – giving it (and you) the best chance of success.

Here are seven things startup market research allows you to do:

• Identify target market
• Understand customer’s needs
• Tailor marketing or a product launch
• Choose the best channels to market your business
• Understand the competitive landscape
• Formulate an effective pricing strategy
• Identify your Unique Selling Proposition (USP)

The information you need to succeed (in almost any market) is at your fingertips – ready and waiting to be discovered. With the right intel, you can refine your go-to-market strategy, remove the guesswork from your marketing, and plan activities based on what you know is working.

What’s more, with software like Similarweb Digital Research Intelligence , you can access instant insights that tell you where opportunities exist in your market.

How to do a market analysis for a startup

In this section, I’m going to show you six of the best ways to do market research for startups. Whether new to a market or a seasoned expert, these activities will give you the insights you need to formulate a successful plan.

If you’re still in the pre-planning stage, you can read more about how to do market research for a business plan here.

1. Size your market

Before entering a new market, it’s crucial to size up the opportunity. Market sizing allows you to see the potential share of your reachable market. The three metrics you need to work out are listed below, along with relevant formulas for each.

• Total Addressable Market (TAM)
• Serviceable Addressable Market (SAM)
• Serviceable Obtainable Market (SOM)

2. Research the competition

Startups can use market research to get a clear picture of the competitive landscape . With the right tools, you can analyze a market and evaluate industry leaders and emerging players in just a few hours. Any new business can use this information to shape its strategy and benchmark itself against competitors.

• Select between 2-4 competitors to analyze.
• Systematically collect data for each business that considers company, product, marketing, and customers, to build the ultimate competitive blueprint.
• Take advantage of our free market research templates to save time. Each is designed to help you better understand your market, customers, and competition. Use a template to record your findings to compare and benchmark easily.

To quickly get a handle on your nearest and dearest rivals, sign up for a free trial of Similarweb . Next, head to the industry overview tab of the Similarweb Digital Research Intelligence solution to start grabbing the data you need.

Industry Overview : The best place to begin any competitive research is here. View website traffic and engagement metrics for your industry to see industry-standard benchmarks. 

A quick click on Industry Leaders module (below) will immediately show you industry leaders and rising players. Here’s where things start to get interesting.

Use Industry Leaders to view your industry leaders and any rising stars that have been gaining traffic at pace. These rising stars are just as important to analyze as market leaders.

Further reading: This post covers seven types of Competitive Analysis Frameworks and includes a free template to help you record and compare findings.

3. Discover what marketing channels work

Whether you’re bootstrapping or have a healthy budget, managing your marketing spending is key. Market research helps you quickly see what channels work for others in your space and uncover competitors’ marketing strategies.

• Take or create a list of competitors.
• Evaluate their marketing channels, including direct, social, email, referrals, and ads.
• Determine if competitors are neglecting any high-value marketing channels.
• Document findings and analyze which channels offer the best ROI.

Use this intel to develop a marketing strategy tailored to today’s market. With Similarweb Digital Research Intelligence, you can do this element of startup market research in under an hour.

With a free trial of Similarweb, you can see granular insights about your rival’s most successful channels. This includes affiliates and referral partners, high-performing ads, upwards and downward turns, mobile app analysis , and more.

4. Identify best-performing pages and keywords

Discover which pages get the most traffic and conversions to find the keywords that drive traffic to competitors’ sites. This will help inform your keyword and content strategy. To create a list of relevant keywords (both long and short-tail), follow these pointers. The key to success is taking a broad view and not just going for the most obvious keywords everyone else is targeting.

• Analyze high-traffic keywords of your rivals, looking at both high and low keyword difficulty (KD).
• Avoid the apparent wins, and do a quick keyword gap analysis to reveal hidden gems.
• Evaluate search trends relevant to the industry you want to enter. Consider keyword seasonality too.
• Review rival sites and dig into their highest-performing pages. This will show you what keywords to use and provide a more informed view of what good content looks like in your market.

Pro Tip: When looking at top-performing pages, visit them and note the different calls to action your rivals use, as this will help you decide which to implement on your site.

With the pages element of Similarweb Digital Research Intelligence, you can analyze up to 10,000 pages per site. In an instant, you can unpack and track their highest-hitting pages as well as those growing or declining over time.

5. Analyze audience demographics

Knowing your target audience is critical for any startup market research.  Establish the following factors to build a picture of your potential audience.

• Use geographical data to see relevant gender and age distribution
• Review audience loyalty metrics to understand how people behave – e.g., do they shop around
• See what search terms they use to discover sites in your niche
• Do they view sites like yours on a mobile device or desktop?

As you can see, you can learn many things about your target audience before starting a business. With this data, you can refine your marketing activities like advertising, outreach, strategy, positioning, and more.

Further reading : Read our guide on how to identify your ideal niche audience

6. Monitor social media engagement and presence

Establishing a social media presence takes a lot of work, and you must evaluate how useful it is at the beginning before deciding how to allocate your resources.

• Review both industry leaders and new players in your industry
• List what channels they have a presence on.
• Look at the number of followers vs. the level of engagement.
• Record how many posts they make daily and weekly.

You can create a spreadsheet to track this or add this to your competitive framework. Don’t try to overdo things. Choose the best channels based on what you already see working for others.

Market research questions for startups

When doing any type of market research for a new business, you need to ask the right questions. There’s no point delving into company research and competitive analysis in a market without first considering what you’re trying to learn from the research.

Here’s a list of market research questions that you might want to consider:

• Do you know who your direct and indirect competitors are?
• Have you sized your market – and do you know your total addressable market (tam), serviceable available market (sam), and share of market (som)?
• What is your Unique Selling Proposition (USP)?
• How much are people willing to pay for your product or service?
• Will you go to market with a promotion, such as a free trial or discounted offering?
• How much do your competitors charge, and do they offer a like-for-like service?
• What trends are currently emerging or impacting your market?
• Do seasonal trends impact your business?
• How do your rivals onboard new customers? Will you do this in the same way or not?
• Do your competitors offer any loyalty or new-customer discounts?
• What are the most effective marketing channels in your industry?
• Are your rivals active on social media? If yes, which channels are the most successful?
• What type of customer support channels will you offer? Consider what your competition offers at present.
• What are your trading hours going to be? Consider the competition here too.
• What keywords are the most successful for your market?

Doing Startup research with Similarweb

Conducting thorough market research and analysis as a startup will help you direct your resources and sharpen your business plan to ensure you take advantage of market opportunities.

With Similarweb Digital Research Intelligence, you’ll access comprehensive industry data in real-time. This way, you’ll be able to track industry trends and the demographic makeup of your target audience to reach them better.

Because we provide real-time data, you get to see emerging market trends as they open. When you’re ready to launch your startup, you can use all that knowledge to your advantage.

Because we provide real-time data, you see emerging market trends as they happen. When you’re ready to launch your startup, you can use all that knowledge to your advantage and ensure your business is prime for the market you’re about to enter.

Don’t delay – start your market research strategy today. Try Similarweb’s Research Intelligence tool for free!

How do you do market research for a startup?

First, measure your market share, then identify best-performing pages and keywords, investigate marketing channels, analyze your audience demographics, compare metrics, and monitor social media.

What is the best type of market research for a startup?

When time and money are key considerations, the best type of research for any startup is secondary market research, AKA desk research . It’s low-cost, can be done with little-to-no market research experience, and the data is readily available online.

What are the 4 types of market research?

The four core types of market research are primary research , secondary research , quantitative research, and qualitative research .

Related Posts

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How to Research a Company: The Ultimate Guide

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Fresh Updates: Analyze Entire Companies With Company Analysis

Wondering what similarweb can do for you.

Here are two ways you can get started with Similarweb today!

How to Do Market Research: The Complete Guide

Learn how to do market research with this step-by-step guide, complete with templates, tools and real-world examples.

Access best-in-class company data

Get trusted first-party funding data, revenue data and firmographics

What are your customers’ needs? How does your product compare to the competition? What are the emerging trends and opportunities in your industry? If these questions keep you up at night, it’s time to conduct market research.

Market research plays a pivotal role in your ability to stay competitive and relevant, helping you anticipate shifts in consumer behavior and industry dynamics. It involves gathering these insights using a wide range of techniques, from surveys and interviews to data analysis and observational studies.

In this guide, we’ll explore why market research is crucial, the various types of market research, the methods used in data collection, and how to effectively conduct market research to drive informed decision-making and success.

What is market research?

Market research is the systematic process of gathering, analyzing and interpreting information about a specific market or industry. The purpose of market research is to offer valuable insight into the preferences and behaviors of your target audience, and anticipate shifts in market trends and the competitive landscape. This information helps you make data-driven decisions, develop effective strategies for your business, and maximize your chances of long-term growth.

Why is market research important? 

By understanding the significance of market research, you can make sure you’re asking the right questions and using the process to your advantage. Some of the benefits of market research include:

• Informed decision-making: Market research provides you with the data and insights you need to make smart decisions for your business. It helps you identify opportunities, assess risks and tailor your strategies to meet the demands of the market. Without market research, decisions are often based on assumptions or guesswork, leading to costly mistakes.
• Customer-centric approach: A cornerstone of market research involves developing a deep understanding of customer needs and preferences. This gives you valuable insights into your target audience, helping you develop products, services and marketing campaigns that resonate with your customers.
• Competitive advantage: By conducting market research, you’ll gain a competitive edge. You’ll be able to identify gaps in the market, analyze competitor strengths and weaknesses, and position your business strategically. This enables you to create unique value propositions, differentiate yourself from competitors, and seize opportunities that others may overlook.
• Risk mitigation: Market research helps you anticipate market shifts and potential challenges. By identifying threats early, you can proactively adjust their strategies to mitigate risks and respond effectively to changing circumstances. This proactive approach is particularly valuable in volatile industries.
• Resource optimization: Conducting market research allows organizations to allocate their time, money and resources more efficiently. It ensures that investments are made in areas with the highest potential return on investment, reducing wasted resources and improving overall business performance.
• Adaptation to market trends: Markets evolve rapidly, driven by technological advancements, cultural shifts and changing consumer attitudes. Market research ensures that you stay ahead of these trends and adapt your offerings accordingly so you can avoid becoming obsolete. 

As you can see, market research empowers businesses to make data-driven decisions, cater to customer needs, outperform competitors, mitigate risks, optimize resources and stay agile in a dynamic marketplace. These benefits make it a huge industry; the global market research services market is expected to grow from $76.37 billion in 2021 to $108.57 billion in 2026 . Now, let’s dig into the different types of market research that can help you achieve these benefits.

Types of market research 

• Qualitative research
• Quantitative research
• Exploratory research
• Descriptive research
• Causal research
• Cross-sectional research
• Longitudinal research

Despite its advantages, 23% of organizations don’t have a clear market research strategy. Part of developing a strategy involves choosing the right type of market research for your business goals. The most commonly used approaches include:

1. Qualitative research

Qualitative research focuses on understanding the underlying motivations, attitudes and perceptions of individuals or groups. It is typically conducted through techniques like in-depth interviews, focus groups and content analysis — methods we’ll discuss further in the sections below. Qualitative research provides rich, nuanced insights that can inform product development, marketing strategies and brand positioning.

2. Quantitative research

Quantitative research, in contrast to qualitative research, involves the collection and analysis of numerical data, often through surveys, experiments and structured questionnaires. This approach allows for statistical analysis and the measurement of trends, making it suitable for large-scale market studies and hypothesis testing. While it’s worthwhile using a mix of qualitative and quantitative research, most businesses prioritize the latter because it is scientific, measurable and easily replicated across different experiments.

3. Exploratory research

Whether you’re conducting qualitative or quantitative research or a mix of both, exploratory research is often the first step. Its primary goal is to help you understand a market or problem so you can gain insights and identify potential issues or opportunities. This type of market research is less structured and is typically conducted through open-ended interviews, focus groups or secondary data analysis. Exploratory research is valuable when entering new markets or exploring new product ideas.

4. Descriptive research

As its name implies, descriptive research seeks to describe a market, population or phenomenon in detail. It involves collecting and summarizing data to answer questions about audience demographics and behaviors, market size, and current trends. Surveys, observational studies and content analysis are common methods used in descriptive research. 

5. Causal research

Causal research aims to establish cause-and-effect relationships between variables. It investigates whether changes in one variable result in changes in another. Experimental designs, A/B testing and regression analysis are common causal research methods. This sheds light on how specific marketing strategies or product changes impact consumer behavior.

6. Cross-sectional research

Cross-sectional market research involves collecting data from a sample of the population at a single point in time. It is used to analyze differences, relationships or trends among various groups within a population. Cross-sectional studies are helpful for market segmentation, identifying target audiences and assessing market trends at a specific moment.

7. Longitudinal research

Longitudinal research, in contrast to cross-sectional research, collects data from the same subjects over an extended period. This allows for the analysis of trends, changes and developments over time. Longitudinal studies are useful for tracking long-term developments in consumer preferences, brand loyalty and market dynamics.

Each type of market research has its strengths and weaknesses, and the method you choose depends on your specific research goals and the depth of understanding you’re aiming to achieve. In the following sections, we’ll delve into primary and secondary research approaches and specific research methods.

Primary vs. secondary market research

Market research of all types can be broadly categorized into two main approaches: primary research and secondary research. By understanding the differences between these approaches, you can better determine the most appropriate research method for your specific goals.

Primary market research 

Primary research involves the collection of original data straight from the source. Typically, this involves communicating directly with your target audience — through surveys, interviews, focus groups and more — to gather information. Here are some key attributes of primary market research:

• Customized data: Primary research provides data that is tailored to your research needs. You design a custom research study and gather information specific to your goals.
• Up-to-date insights: Because primary research involves communicating with customers, the data you collect reflects the most current market conditions and consumer behaviors.
• Time-consuming and resource-intensive: Despite its advantages, primary research can be labor-intensive and costly, especially when dealing with large sample sizes or complex study designs. Whether you hire a market research consultant, agency or use an in-house team, primary research studies consume a large amount of resources and time.

Secondary market research 

Secondary research, on the other hand, involves analyzing data that has already been compiled by third-party sources, such as online research tools, databases, news sites, industry reports and academic studies.

Here are the main characteristics of secondary market research:

• Cost-effective: Secondary research is generally more cost-effective than primary research since it doesn’t require building a research plan from scratch. You and your team can look at databases, websites and publications on an ongoing basis, without needing to design a custom experiment or hire a consultant. 
• Leverages multiple sources: Data tools and software extract data from multiple places across the web, and then consolidate that information within a single platform. This means you’ll get a greater amount of data and a wider scope from secondary research.
• Quick to access: You can access a wide range of information rapidly — often in seconds — if you’re using online research tools and databases. Because of this, you can act on insights sooner, rather than taking the time to develop an experiment. 

So, when should you use primary vs. secondary research? In practice, many market research projects incorporate both primary and secondary research to take advantage of the strengths of each approach.

One rule of thumb is to focus on secondary research to obtain background information, market trends or industry benchmarks. It is especially valuable for conducting preliminary research, competitor analysis, or when time and budget constraints are tight. Then, if you still have knowledge gaps or need to answer specific questions unique to your business model, use primary research to create a custom experiment. 

Market research methods

• Surveys and questionnaires
• Focus groups
• Observational research
• Online research tools
• Experiments
• Content analysis
• Ethnographic research

How do primary and secondary research approaches translate into specific research methods? Let’s take a look at the different ways you can gather data: 

1. Surveys and questionnaires

Surveys and questionnaires are popular methods for collecting structured data from a large number of respondents. They involve a set of predetermined questions that participants answer. Surveys can be conducted through various channels, including online tools, telephone interviews and in-person or online questionnaires. They are useful for gathering quantitative data and assessing customer demographics, opinions, preferences and needs. On average, customer surveys have a 33% response rate , so keep that in mind as you consider your sample size.

2. Interviews

Interviews are in-depth conversations with individuals or groups to gather qualitative insights. They can be structured (with predefined questions) or unstructured (with open-ended discussions). Interviews are valuable for exploring complex topics, uncovering motivations and obtaining detailed feedback. 

3. Focus groups

The most common primary research methods are in-depth webcam interviews and focus groups. Focus groups are a small gathering of participants who discuss a specific topic or product under the guidance of a moderator. These discussions are valuable for primary market research because they reveal insights into consumer attitudes, perceptions and emotions. Focus groups are especially useful for idea generation, concept testing and understanding group dynamics within your target audience.

4. Observational research

Observational research involves observing and recording participant behavior in a natural setting. This method is particularly valuable when studying consumer behavior in physical spaces, such as retail stores or public places. In some types of observational research, participants are aware you’re watching them; in other cases, you discreetly watch consumers without their knowledge, as they use your product. Either way, observational research provides firsthand insights into how people interact with products or environments.

5. Online research tools

You and your team can do your own secondary market research using online tools. These tools include data prospecting platforms and databases, as well as online surveys, social media listening, web analytics and sentiment analysis platforms. They help you gather data from online sources, monitor industry trends, track competitors, understand consumer preferences and keep tabs on online behavior. We’ll talk more about choosing the right market research tools in the sections that follow.

6. Experiments

Market research experiments are controlled tests of variables to determine causal relationships. While experiments are often associated with scientific research, they are also used in market research to assess the impact of specific marketing strategies, product features, or pricing and packaging changes.

7. Content analysis

Content analysis involves the systematic examination of textual, visual or audio content to identify patterns, themes and trends. It’s commonly applied to customer reviews, social media posts and other forms of online content to analyze consumer opinions and sentiments.

8. Ethnographic research

Ethnographic research immerses researchers into the daily lives of consumers to understand their behavior and culture. This method is particularly valuable when studying niche markets or exploring the cultural context of consumer choices.

How to do market research

• Set clear objectives
• Identify your target audience
• Choose your research methods
• Use the right market research tools
• Collect data
• Analyze data 
• Interpret your findings
• Identify opportunities and challenges
• Make informed business decisions
• Monitor and adapt

Now that you have gained insights into the various market research methods at your disposal, let’s delve into the practical aspects of how to conduct market research effectively. Here’s a quick step-by-step overview, from defining objectives to monitoring market shifts.

1. Set clear objectives

When you set clear and specific goals, you’re essentially creating a compass to guide your research questions and methodology. Start by precisely defining what you want to achieve. Are you launching a new product and want to understand its viability in the market? Are you evaluating customer satisfaction with a product redesign? 

Start by creating SMART goals — objectives that are specific, measurable, achievable, relevant and time-bound. Not only will this clarify your research focus from the outset, but it will also help you track progress and benchmark your success throughout the process. 

You should also consult with key stakeholders and team members to ensure alignment on your research objectives before diving into data collecting. This will help you gain diverse perspectives and insights that will shape your research approach.

2. Identify your target audience

Next, you’ll need to pinpoint your target audience to determine who should be included in your research. Begin by creating detailed buyer personas or stakeholder profiles. Consider demographic factors like age, gender, income and location, but also delve into psychographics, such as interests, values and pain points.

The more specific your target audience, the more accurate and actionable your research will be. Additionally, segment your audience if your research objectives involve studying different groups, such as current customers and potential leads.

If you already have existing customers, you can also hold conversations with them to better understand your target market. From there, you can refine your buyer personas and tailor your research methods accordingly.

3. Choose your research methods

Selecting the right research methods is crucial for gathering high-quality data. Start by considering the nature of your research objectives. If you’re exploring consumer preferences, surveys and interviews can provide valuable insights. For in-depth understanding, focus groups or observational research might be suitable. Consider using a mix of quantitative and qualitative methods to gain a well-rounded perspective. 

You’ll also need to consider your budget. Think about what you can realistically achieve using the time and resources available to you. If you have a fairly generous budget, you may want to try a mix of primary and secondary research approaches. If you’re doing market research for a startup , on the other hand, chances are your budget is somewhat limited. If that’s the case, try addressing your goals with secondary research tools before investing time and effort in a primary research study. 

4. Use the right market research tools

Whether you’re conducting primary or secondary research, you’ll need to choose the right tools. These can help you do anything from sending surveys to customers to monitoring trends and analyzing data. Here are some examples of popular market research tools:

• Market research software: Crunchbase is a platform that provides best-in-class company data, making it valuable for market research on growing companies and industries. You can use Crunchbase to access trusted, first-party funding data, revenue data, news and firmographics, enabling you to monitor industry trends and understand customer needs.

• Survey and questionnaire tools: SurveyMonkey is a widely used online survey platform that allows you to create, distribute and analyze surveys. Google Forms is a free tool that lets you create surveys and collect responses through Google Drive.
• Data analysis software: Microsoft Excel and Google Sheets are useful for conducting statistical analyses. SPSS is a powerful statistical analysis software used for data processing, analysis and reporting.
• Social listening tools: Brandwatch is a social listening and analytics platform that helps you monitor social media conversations, track sentiment and analyze trends. Mention is a media monitoring tool that allows you to track mentions of your brand, competitors and keywords across various online sources.
• Data visualization platforms: Tableau is a data visualization tool that helps you create interactive and shareable dashboards and reports. Power BI by Microsoft is a business analytics tool for creating interactive visualizations and reports.

5. Collect data

There’s an infinite amount of data you could be collecting using these tools, so you’ll need to be intentional about going after the data that aligns with your research goals. Implement your chosen research methods, whether it’s distributing surveys, conducting interviews or pulling from secondary research platforms. Pay close attention to data quality and accuracy, and stick to a standardized process to streamline data capture and reduce errors. 

6. Analyze data

Once data is collected, you’ll need to analyze it systematically. Use statistical software or analysis tools to identify patterns, trends and correlations. For qualitative data, employ thematic analysis to extract common themes and insights. Visualize your findings with charts, graphs and tables to make complex data more understandable.

If you’re not proficient in data analysis, consider outsourcing or collaborating with a data analyst who can assist in processing and interpreting your data accurately.

7. Interpret your findings

Interpreting your market research findings involves understanding what the data means in the context of your objectives. Are there significant trends that uncover the answers to your initial research questions? Consider the implications of your findings on your business strategy. It’s essential to move beyond raw data and extract actionable insights that inform decision-making.

Hold a cross-functional meeting or workshop with relevant team members to collectively interpret the findings. Different perspectives can lead to more comprehensive insights and innovative solutions.

8. Identify opportunities and challenges

Use your research findings to identify potential growth opportunities and challenges within your market. What segments of your audience are underserved or overlooked? Are there emerging trends you can capitalize on? Conversely, what obstacles or competitors could hinder your progress?

Lay out this information in a clear and organized way by conducting a SWOT analysis, which stands for strengths, weaknesses, opportunities and threats. Jot down notes for each of these areas to provide a structured overview of gaps and hurdles in the market.

9. Make informed business decisions

Market research is only valuable if it leads to informed decisions for your company. Based on your insights, devise actionable strategies and initiatives that align with your research objectives. Whether it’s refining your product, targeting new customer segments or adjusting pricing, ensure your decisions are rooted in the data.

At this point, it’s also crucial to keep your team aligned and accountable. Create an action plan that outlines specific steps, responsibilities and timelines for implementing the recommendations derived from your research. 

10. Monitor and adapt

Market research isn’t a one-time activity; it’s an ongoing process. Continuously monitor market conditions, customer behaviors and industry trends. Set up mechanisms to collect real-time data and feedback. As you gather new information, be prepared to adapt your strategies and tactics accordingly. Regularly revisiting your research ensures your business remains agile and reflects changing market dynamics and consumer preferences.

Online market research sources

As you go through the steps above, you’ll want to turn to trusted, reputable sources to gather your data. Here’s a list to get you started:

• Crunchbase: As mentioned above, Crunchbase is an online platform with an extensive dataset, allowing you to access in-depth insights on market trends, consumer behavior and competitive analysis. You can also customize your search options to tailor your research to specific industries, geographic regions or customer personas.

• Academic databases: Academic databases, such as ProQuest and JSTOR , are treasure troves of scholarly research papers, studies and academic journals. They offer in-depth analyses of various subjects, including market trends, consumer preferences and industry-specific insights. Researchers can access a wealth of peer-reviewed publications to gain a deeper understanding of their research topics.
• Government and NGO databases: Government agencies, nongovernmental organizations and other institutions frequently maintain databases containing valuable economic, demographic and industry-related data. These sources offer credible statistics and reports on a wide range of topics, making them essential for market researchers. Examples include the U.S. Census Bureau , the Bureau of Labor Statistics and the Pew Research Center .
• Industry reports: Industry reports and market studies are comprehensive documents prepared by research firms, industry associations and consulting companies. They provide in-depth insights into specific markets, including market size, trends, competitive analysis and consumer behavior. You can find this information by looking at relevant industry association databases; examples include the American Marketing Association and the National Retail Federation .
• Social media and online communities: Social media platforms like LinkedIn or Twitter (X) , forums such as Reddit and Quora , and review platforms such as G2 can provide real-time insights into consumer sentiment, opinions and trends. 

Market research examples

At this point, you have market research tools and data sources — but how do you act on the data you gather? Let’s go over some real-world examples that illustrate the practical application of market research across various industries. These examples showcase how market research can lead to smart decision-making and successful business decisions.

Example 1: Apple’s iPhone launch

Apple ’s iconic iPhone launch in 2007 serves as a prime example of market research driving product innovation in tech. Before the iPhone’s release, Apple conducted extensive market research to understand consumer preferences, pain points and unmet needs in the mobile phone industry. This research led to the development of a touchscreen smartphone with a user-friendly interface, addressing consumer demands for a more intuitive and versatile device. The result was a revolutionary product that disrupted the market and redefined the smartphone industry.

Example 2: McDonald’s global expansion

McDonald’s successful global expansion strategy demonstrates the importance of market research when expanding into new territories. Before entering a new market, McDonald’s conducts thorough research to understand local tastes, preferences and cultural nuances. This research informs menu customization, marketing strategies and store design. For instance, in India, McDonald’s offers a menu tailored to local preferences, including vegetarian options. This market-specific approach has enabled McDonald’s to adapt and thrive in diverse global markets.

Example 3: Organic and sustainable farming

The shift toward organic and sustainable farming practices in the food industry is driven by market research that indicates increased consumer demand for healthier and environmentally friendly food options. As a result, food producers and retailers invest in sustainable sourcing and organic product lines — such as with these sustainable seafood startups — to align with this shift in consumer values. 

The bottom line? Market research has multiple use cases and is a critical practice for any industry. Whether it’s launching groundbreaking products, entering new markets or responding to changing consumer preferences, you can use market research to shape successful strategies and outcomes.

Market research templates

You finally have a strong understanding of how to do market research and apply it in the real world. Before we wrap up, here are some market research templates that you can use as a starting point for your projects:

• Smartsheet competitive analysis templates : These spreadsheets can serve as a framework for gathering information about the competitive landscape and obtaining valuable lessons to apply to your business strategy.
• SurveyMonkey product survey template : Customize the questions on this survey based on what you want to learn from your target customers.
• HubSpot templates : HubSpot offers a wide range of free templates you can use for market research, business planning and more.
• SCORE templates : SCORE is a nonprofit organization that provides templates for business plans, market analysis and financial projections.
• SBA.gov : The U.S. Small Business Administration offers templates for every aspect of your business, including market research, and is particularly valuable for new startups. 

Strengthen your business with market research

When conducted effectively, market research is like a guiding star. Equipped with the right tools and techniques, you can uncover valuable insights, stay competitive, foster innovation and navigate the complexities of your industry.

Throughout this guide, we’ve discussed the definition of market research, different research methods, and how to conduct it effectively. We’ve also explored various types of market research and shared practical insights and templates for getting started. 

Now, it’s time to start the research process. Trust in data, listen to the market and make informed decisions that guide your company toward lasting success.

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Home QuestionPro Business

How to Do Market Research for a Business Plan

Business plan research.

For a successful market research and analysis business plan, you will need answers to many critical  market research questions . What demographic is your product or service most likely to appeal to? What is the forecast for the industry you are in? How have other products or services similar to your own done over time? What are your competitors doing right or wrong and how can you capitalize on any market openings?

All these questions have to be addressed to have a strong Market Analysis section within the business plan. If not, when it comes time to deliver your business plan to a potential investor, they will quickly spot the lack of factual data to back up your business promises and they will most likely walk away. To get a strong Market Analysis section, make sure to do your homework and include relevant data, graphs, and charts to make your case.

How to Get Started with Market Research

First, you need to gather your resources and collect data to get the numbers right. Let’s go over how you can do market research for a variety of topics included in your Market Analysis section. They are:

• Demographics – If you have been managing a website, you already know a bit about the demographics your niche attracts. Using Google Analytics or Quantcast.com you can find out not only your own demographics, but those of your top competitors. This can help you find ways to create different sales channels and campaigns to target different demographics from income level and age to other important factors.

• Product or Service Review – The product or service lifecycle will need to be reviewed to make sure you are not trying to promote a product or service in an over-saturated market. You can look at product sales on different websites that specialize in specific industries. For instance, if you’re thinking of promoting a new electronic device, you can obtain market research on product sales information from the Consumer Electronics organization at CE.org.
• Competitors Analysis – You will have to visit your competitor’s websites and do analytical research for traffic, sales, and niche to make sure you can compete successfully. You can also get valuable insights on how well their business is doing by simply adding your name to a marketing list so that they will send you their news more often.
• Risks and Opportunities – This will take a bit of thinking to determine how you can best exploit your competitors weaknesses and emphasize your strengths in the marketplace. You will want to differentiate your offering enough from your competitors so that your target audience has a clear choice. Never compete solely on price as that is a failing strategy that ends up with the lowest price driving everyone out of business. Instead, look at the features and services your competitor offers and improve upon them and/or find a way to widen your market share geographically in ways that they cannot, for whatever reason.

Select your respondents

A business plan is not a document written once and then forgotten. Economic and market forces in your day-to-day operations will cause you to review the document every year to see where you have met your objectives, where you haven’t, and how to revise the business plan when you find out more about the market conditions. New market conditions will also impact how you proceed and will need to be included in a newer version of your business plan so that your business stays nimble and is flexible enough to meet new challenges with clearer insights than before. This will ensure the survival of your business in the short-term and provide a good basis for long-term prosperity.

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The Best Ways to Do Market Research for Your Business Plan Showing that you know the state of the market and understand what you need to do to succeed is critical in a business plan. Here's how to gather the facts you need.

By The Staff of Entrepreneur Media, Inc. • Jan 20, 2015

In their book Write Your Business Plan , the staff of Entrepreneur Media, Inc. offer an in-depth understanding of what's essential to any business plan, what's appropriate for your venture, and what it takes to ensure success. In this edited excerpt, the authors discuss the whys and hows of conducting market research.

Market research aims to understand the reasons consumers will buy your product. It studies such things as consumer behavior, including how cultural, societal and personal factors influence that behavior.

Market research is further split into two varieties: primary and secondary. Primary research studies customers directly, whereas secondary research studies information that others have gathered about customers. Primary research might be telephone interviews or online polls with randomly selected members of the target group. You can also study your own sales records to gather primary research. Secondary research might come from reports found on the websites of various other organizations or blogs written about the industry. For your plan, you can use either type of research or a combination of both.

The basic questions you'll try to answer with your market research include:

Who are your customers? Describe them in terms of age, occupation, income, lifestyle, educational attainment, etc.

What do they buy now? Describe their buying habits relating to your product or service, including how much they buy, their favored suppliers, the most popular features and the predominant price points.

Why do they buy? This is the tricky one, attempting as it does to delve into consumers' heads. Answers will depend on the product and its uses. Cookware buyers may buy the products that offer the most effective nonstick surfaces, or those that give the most pans in a package for a given amount of money, or those that come in the most decorative colors.

What will make them buy from you? Although some of these questions may seem difficult, you'd be surprised at the detailed information that's available about markets, sales figures and consumer buying motivations. Tapping information sources to provide the answers to as many questions as you can will make your plan more convincing and your odds of success higher. Also, the business plan software programs have detailed research included and online research available. Utilize this functionality if you're using such software, and add additional data you find elsewhere. The reason to add some of your own unique material is that everyone using the software program is tapping into the same database and you want your business plan to differ from that of the last entrepreneur in your field.

You can also find companies that will sell you everything from industry studies to credit reports on individual companies. Market research isn't cheap. It requires significant amounts of expertise, manpower and technology to develop solid research. Large companies routinely spend tens of thousands of dollars researching things they ultimately decide they're not interested in. Smaller firms can't afford to do that too often.

For companies of all sizes, the best market research is the research you do on your own. In-house market research might take the form of original telephone interviews with consumers, customized crunching of numbers from published sources or perhaps competitive intelligence you've gathered on your rivals through the social media. You can gather detailed research on customers, including their likes, dislikes and preferences, through Facebook, and use Google Analytics to sort out the numbers as they pertain to your web visitors. People are researching and making their opinions felt through their actions on the web, so you can gain a lot of marketing insight by looking closely at what is going on electronically.

You'll also want to do your due diligence within your industry. When looking at comparable businesses (and their data), find a close match. For comparative purposes, consider:

1. Companies of relative size

2. Companies serving the same geographic area, which could be global if you are planning to be a web-based business

3. Companies with a similar ownership structure. If your business has two partners, look for businesses run by a couple of partners rather than an advisory board of 12.

4. Companies that are relatively new. While you can learn from long-standing businesses, they may be successful today because of their 25-year business history and reputation.

You'll want to use the data you've gathered not only to determine how much business you could possibly do but also to figure out how you'll fit into and adapt to the marketplace.

Follow these steps to spending your market research dollars wisely:

1. Determine what you need to know about your market. The more focused the research, the more valuable it will be.

2. Prioritize the results of the first step. You can't research everything, so concentrate on the information that will give you the best (or quickest) payback.

3. Review less-expensive research alternatives. Small Business Development Centers and the Small Business Administration can help you develop customer surveys. Your trade association will have good secondary research. Be creative.

4. Estimate the cost of performing the research yourself. Keep in mind that with the internet you should not have to spend a ton of money. If you're considering hiring a consultant or a researcher, remember this is your dream, these are your goals, and this is your business. Don't pay for what you don't need.

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Small Business Trends

Guide to how to do marketing research.

Have you ever kicked off an advertising campaign with high hopes, only to be disappointed by the results? Or what about introducing a new product with great fanfare, just to discover the market wasn’t interested? These situations happen in business. And this is where doing marketing research makes a difference.

If you have big goals, market research can help your business make the right moves and avoid wasting time and money on the wrong ones.

Not only that, but marketing research can help you get happier customers. For example, 94% of diners choose a restaurant based on online reviews, one study suggests. Another study found that 82% of customers expect an immediate response on sales or marketing questions. Knowing these kinds of facts can help you put into place the processes and tools to delight the customer and attract new ones.

In this article we define what is marketing research in plain language, including the different types of market research. You will learn fast and easy techniques for how to do marketing research, which techniques work best, and how to take advantage of third-party information that already exists.  The end goal is to find success.

What is Market Research?

Market research is the process of collecting information about target prospects, clients, market size, competitors and more. Businesses use this information to develop products and services, set prices, increase lead flow, boost sales, improve customer satisfaction, and develop marketing and advertising campaigns.

If you take nothing else away from this market research definition, remember one thing: data is the foundation of a company’s marketing strategy. Research is the starting point that guides your marketing in the right direction.

Marketing research prevents you from acting on incorrect assumptions or one-size-fits-all advice, and making costly mistakes. In a world of trial and error, market research achieves more trial with less error.

The Evolution of Marketing Research in the Digital Age

Integrating Digital Data Sources : In today’s digital-driven market, traditional marketing research methods are being complemented with new data sources. Online behavior tracking, social media analytics, and digital footprint analysis provide a wealth of information about consumer preferences and trends.

Understanding how to integrate these digital data sources into traditional research frameworks can offer a more holistic view of the market landscape.

Leveraging Big Data and AI : The advent of big data and artificial intelligence (AI) has transformed marketing research. AI algorithms can process large datasets to uncover patterns and insights that might be invisible to human researchers. Businesses can leverage these tools to predict consumer behavior, personalize marketing strategies, and enhance decision-making processes.

Types of Market Research

Marketers leverage two different types of research:  primary and secondary research. Whether you know the terms or not, you probably are familiar with both.

First, let’s look at primary research. Primary research refers to the process of gathering data that hasn’t been collected yet by another party. In other words, primary information is simply information you uncover and collect yourself.

When people tell you their experience with your business or their level of satisfaction with your product or service — that’s primary information. Primary research includes the following:

Surveys involve asking people questions that they can quickly answer to reveal their opinions, perceptions, attitudes and behaviors.  Companies conduct surveys by mail, on the phone or increasingly today, online. Surveys are one of the most common research methods for a small business.

In Person Research

In-person research involves talking directly with a consumer, potential customers or existing customers — and includes:

• Interviews – These are one-on-one interactions to dive deeply into reasons driving the interviewee’s beliefs. Interviews are relatively inexpensive and can involve simply phoning a customer.
• Focus groups – A focus group gathers together between 5 to 10 people in a group setting to give feedback. Focus groups are expensive and really require an experienced facilitator to get unbiased information.
• Ethnography – Ethnography simply means interactions with others in their natural environment. A common method is “fly on the wall” where a researcher quietly observes someone in a store or using a product. A digital method involves heat maps to test where a visitor’s attention lingers on a web page.

Other Marketing Research

• Diaries – People track their behavior for observation about how they interact with your products or services.
• User testing – Users test and give feedback about how they experience your product or service in real-time. We’ve all seen examples of this on TV commercials: the blind taste testing.

Primary methods like the above have many uses, but small businesses find them invaluable in two situations. First, small businesses use them when trying to uncover the true user experience with their product or service. Second, they use primary methods when they need to understand how their clientele feels about their company.

Next let’s look at secondary research. Secondary research involves using information that has already been collected by another party. Much secondary information is online research and is free or low cost. Examples include:

Government Research

• U.S. Census data (a good place to start is Census Data Gems ).
• Information from government agencies like the Bureau of Labor Statistics, FEMA or the SBA.

Third Party Research

• Research reports (not your own), or information gathered by other companies. Example: a research chart from eMarketer .
• Secondary data from trade associations such as the National Retail Federation. It publishes industry statistics and studies.
• Information provided by specialized digital tools. An example is Google Trends data, showing public search trends.

Combining Qualitative and Quantitative Research

Balancing Depth and Breadth : Effective marketing research often involves a combination of qualitative and quantitative methods. Qualitative research, such as interviews and focus groups, provides depth and context to understand the ‘why’ behind consumer behaviors.

Quantitative research, like surveys and statistical analysis, offers breadth and generalizability to measure trends and patterns across larger populations.

Hybrid Research Models : Embrace hybrid models that blend qualitative and quantitative approaches for a more comprehensive analysis.

For example, a study might begin with qualitative interviews to explore consumer attitudes, followed by a large-scale quantitative survey to validate and quantify these attitudes across a broader audience.

Market Research Examples

Exactly what do you use marketing research for?  There are hundreds of uses. Below are just 15 examples:

• Identify revenue opportunities – Research may reveal customer segments you never considered, or the opportunity to cross sell or up-sell. You can also identify new verticals ripe for expansion.
• Set pricing – Research can reveal whether your prices are high or low compared to the market. Research may show that price increases are justifiable.
• Capitalize on competitor weaknesses – Learn what the market hates about your competition, so you can compare your brand and persuade prospects.
• Identify competitor strengths – Learn what the market likes better about your competitors, so you can meet or beat them.
• Spot trends – Trends may suggest new technologies to adopt.
• improve reputation – Your business may discover a reputation problem from bad online reviews that your team needs to overcome.
• Compose winning marketing messages – Research may reveal which advertising messages appeal to your target market.
• Identify a new offering – Changing habits, tastes and needs may trigger ideas for products or services.
• Delight customers – Customer expectations may be different from what you assume, and research reveals what matters most.
• Demonstrate industry authority – Find out what content your target buyer values and how they want it delivered to them.
• Test concepts – Poll the public as to whether a brand name appeals to them, and test concepts before launch.
• Determine key influencers – Ascertain who holds sway over buyer decisions, so you can connect and leverage influence.
• Elevate digital presence – Assess your visibility in search engines and on social media. Identify opportunities to gain a bigger footprint.
• Identify product features – Research helps guide your development efforts by suggesting the qualitative value proposition at every stage of the product life cycle.
• Improve your website – Collect data about what draws prospects to your website. Identify elements they love, and discover what makes them convert.

How to Do Market Research

Now that we understand the market research meaning, the steps to conduct research are straight forward. Here are seven market research steps to follow:

1. Identify Your Goals

Start with your goals. Write down what market research information you want to gather and how you will use it.  Be specific about the challenges in your business.  A few sample goals include the following:

• Compare competitor prices to see if your business has room to raise prices.
• Increase word of mouth referrals by improving customer service levels.
• Identify your ideal potential customers so you can tailor products and services to meet their needs. Include age, gender, location, income and specific problems your customer wants solved. Create customer personas to guide your sales outreach.
• Isolate the messaging that resonates best for an ad campaign.
• Size the market before developing a new product or starting a new business.

2. Choose a Type of Research 

Choose the type of marketing information needed to meet your goals. Start with these simple steps:

• Primary or secondary? Decide which type will give you the information needed for your goal(s).
• If primary, determine the format. For instance, you could invite current clients to participate in interviews. Ask your social media followers to participate in an online survey. Or try a service like Google Surveys to get responses from consumers and the general public.
• If secondary, determine what sources to investigate. Always check first to see if government research has what you need. Google searches will point you to other secondary information, including industry organizations.

For more, see these 21 market research tools .

3. Conduct the Research

Now it’s time to actually do the research. The best way to know what people are thinking is to ask them directly. In this section we will focus on the main three ways to get customer research: interviews, focus groups and surveys.

Interviewing Customers

Interviewing customers can be done over the phone, in-person or using one of many web-based tools.

Speak to 10 to 15 individuals to make sure that you are getting feedback representative of your target audience. Request 20 to 30 minutes to talk at a mutually convenient time. Be prepared ahead of time with your questions.

Ask respondents if they give you permission to record the interviews so you can refer back later. Alternatively, have someone with you to take notes.

Remember not to coach people or guide them to answers that you want to hear. You want their honest feedback. Do not react to what they say. Your job is to get their thoughts, not correct any assumptions or perceptions you may disagree with.

Holding Focus Groups

A good focus group size is 8 to 10 participants.

Conduct focus groups in-person or online using apps that lend themselves to the purpose. Many local libraries and community centers have rooms that you can use at little or no cost. Trade shows and conferences also offer an opportunity to conduct interviews and focus groups. You can also use online conferencing tools to facilitate this group interaction.

Start off the group with self introductions. Let everyone know that all opinions are valid and there are no incorrect answers. Then guide them through a discussion that you prepare ahead of time.

Limit the session to no more than two hours, or even 90 minutes. This should be plenty of time to get insights, while giving everyone a chance to voice opinions.

Conducting Surveys

Surveys are terrific for gathering customer feedback. Today most customer surveys are done online using a professional survey tool. Simply set up a survey and email a link.

Include questions to gather demographic or firmographic data such as zip code, age, title, gender, industry, purchase frequency, etc. (but skip anything you already know). This helps you analyze the data with specificity.

Then ask your substantive questions.

After collecting the information, take the time to isolate trends and segments. Most survey software today generates beautiful charts and graphs. But you will need to study them and perhaps do deeper analysis than the standard charts provide.

You can also survey non-customers. This option is great if you need industry data or general consumer input. Many survey software packages also provide access to a survey panel of non-customer respondents. You will have to pay for non-customer responses. Survey pricing varies for responses:

• Consumer samples are usually relatively inexpensive, perhaps $1 per response, although the cost will increase the more specific your needs are. Asking consumers over the age of 25 will be one price, for example, while asking men between the ages of 35-44 who have children, will be another price.
• For comparison: Google Surveys start at 10 cents per response for just one question, but that number can go up to $10 per each completed survey if you want 2 to 10 questions. If you want respondents screened for specific audience characteristics it costs more.
• Business-to-business responses are more expensive than consumer responses. It might cost as much as $100 per completed survey from a senior executive.
• If budget is a challenge, see if you can barter with another organization that has a large membership. You can increase the power behind this ‘ask’ if you partner with other businesses such as your vendors to see if they will join you in making this request.

Best Practices

As you begin exploratory research, follow these best practices:

• Pre-test. Do a dry run of a customer interview with someone on your team in role play. For a survey, ask a few colleagues take it as a test. This goes a long way to ensure questions are understandable and that information will be useful.
• Respect respondents’ time. Keep interactions short. For instance, it’s better to do a branched survey where respondents only see relevant questions based on prior responses, rather than forcing them to wade through a dozen irrelevant questions. People lose interest fast when they feel you take too much of their time.
• Use plain language. Use vocabulary respondents recognize. At the same time, tailor your questions to get specific answers. See these 75 market research questions to ask.
• Step into the customer’s shoes. Ask questions that make sense from your customer’s point of view. For instance, instead of asking a technical question about your software configuration process, ask the customer how long it took between opening an account and beginning to use your software.

Time and Skill

Before you begin, map out the research process so you’re clear on the effort, time and money needed. Small businesses tend to greatly underestimate the amount of time required and how much it will distract from other priorities.

Consider also whether you have the skills internally for the research process. For example, do you have the skill to develop a survey, get respondents, and analyze the data in-depth? What about time? A professional researcher may be able to complete the project in a fraction of the time of an unskilled staff member. In the end that may be faster and cost less.

Primary research can take anywhere from 1 to 3 months to complete.

Secondary research goes faster, but do set a time / hours budget.  Remember, it takes time for someone to locate the secondary data, analyze it and compile insights. Establish a certain number of hours per week for secondary sources, and then stick to that schedule. Don’t fall into “rabbit holes,” since there are so many sources.

Embracing Technology in Research Methods

Online Focus Groups and Virtual Interviews : The digital era has enabled virtual research methods. Online focus groups and video conferencing tools allow for remote interviews, making it easier to gather diverse perspectives without geographical constraints. These methods can be particularly valuable when targeting niche markets or global audiences.

Mobile Surveys and Real-Time Feedback : Utilize mobile technology to conduct surveys and collect real-time feedback. Mobile surveys offer convenience to respondents and can increase response rates. Real-time feedback mechanisms, such as in-app surveys or interactive polls on social media, can provide immediate insights into customer experiences and perceptions.

4. Analyze and Summarize

You’ve completed the market research – now what?

This is where good businesses often stumble.  They spend a lot of time doing a survey, for example, but then the survey sits. They do nothing other than look at some charts.

The best data is useless if not analyzed properly. Analyze the data, draw conclusions, and take evidence-based actions. Your research may identify new opportunities, or it may indicate that you should not take actions you were planning to take. Come up with a list of action items based upon the data.

Summarize the results into a report.  A report makes data usable internally. You and your team will forget the details a month later, so you need to be able to refer back to something.

5. Incorporate into Your Marketing Plan

Incorporate the research information into your marketing plan. Here are two examples.

Example 1: Company A used research to successfully adjust its marketing approach for a product launch. Social media research revealed that consumers responded to certain messages and not others. The company tweaked its marketing messaging to better convey the benefits consumers wanted to hear about, not the benefits the company thought were important.

Example 2: Company B conducted focus groups and found that instead of a single target market for the product, the market actually consisted of a few segments, all with different needs. The client was able to change its content marketing plan to address each segment with more meaning, rather than a one-size-fits-all plan.

For more, see these small business marketing ideas and strategies.

6. Adapt Internal Processes

Share the marketing research with your team and seek their ideas. Identify and implement a few actionable steps.

Market research may suggest that your processes and procedures need an overhaul. For instance, you may need to re-imagine your method of handling customer complaints. You may need to turn around reputation problems such as years worth of bad reviews. Or you may need to redesign your products to meet competitor offerings if your current value-add is low. Let’s look at two examples.

Example A: Company Y discovered after a focus group that while some of the services it offered were highly valued, others were not. The company was able to shift efforts and resources to the services customers wanted most.

Example B: Company Z observed a few business customers using its product in their offices, and discovered that customers in certain verticals were using the product in unexpected ways. Company Z was able to get testimonials that specifically mentioned these use cases and saw sales conversions in those verticals grow.

Staying Agile with Ongoing Research

Continuous Market Monitoring : The market is dynamic, and consumer preferences can change rapidly. Implement systems for ongoing market monitoring to stay ahead of trends. This might involve regular social media sentiment analysis, keeping an eye on competitor activities, and tracking industry news.

Feedback Loops and Iterative Learning : Establish feedback loops within your organization where insights from market research continually inform business strategies. Encourage a culture of iterative learning, where marketing initiatives are regularly reviewed and adjusted based on the latest research findings.

We hope this Guide has helped you understand what is market research in business. Most small businesses and startups could achieve greater success if they did simple exploratory research before launching a product or starting a business. Whatever your budget or staff size, research will make your business more proactive and results-oriented, with decisions based on fact, to power your growth.

Image: Depositphotos.com

Statistical surveying (or advertising research) is any arrangement of methods used to accumulate data and better comprehend an organization’s objective market

No it isn’t!

I appreciate you helping me learn the basics of how to do marketing research and I think it’s great that you elaborated on using layman’s language when interacting with your respondents to get specific answers. I agree with what you said about respecting the respondents’ personal time as I feel like this may be something that is easy to overlook. If I was in need of market research myself, I don’t think I would prefer to do it on my own due to its tedious nature. Instead, I would probably look for a quick but reliable service that has a great portfolio and can promise me accurate results.

Hi Angela! Many organizations share your perspective that they prefer to outsource this type of work rather than do it themselves. If you find yourself needing a consultant to do this for you, make sure that in addition to being capable of providing accurate results, they clearly communicate the methodology they would use, why it would be appropriate to go in that direction, and what they would do to not only provide accuracy, but also data that are actionable.

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BUSINESS STRATEGIES

How to start an eCommerce business in 10 steps

• Allison Lee
• 18 min read

Get started by: Create an online store →  | Getting a domain →

Learning how to start an eCommerce business can be a complex endeavor. To put your business on the path to success, you need more than an idea; you need a plan. This post provides a step-by-step guide to the process of starting a business , from initial inspiration to the first online sale and beyond. 

You have a business idea and you’d like to build it online. After all, eCommerce is big and the market is growing; with a tap or two on your phone, you can place orders for everything from dog treats to jeans to meal planning kits. And with the variety of ecommerce tools  available, building an eCommerce website and an eCommrce business is easier and more accessible than ever.

Ready to start selling? Build your eCommerce website  with Wix.

What is an eCommerce business?

An eCommerce business is a company that sells products or services online. With an online store, you can serve customers around the world, and buyers can browse and make purchases at any time of the day. 

Ecommerce sales have increased faster than other retail businesses in recent years. In the third quarter of 2023, for example, the U.S. Department of Commerce reports that retail eCommerce sales grew 7.6% year over year  to $1.8 billion, compared with 2.3% growth in the overall retail sector. In the past 10 years, eCom merce has grown from 6% to more than 15% of all retail sales, according to the Department of Commerce.

Given this growth, it’s no wonder that merchants of all types now view eCommerce as an essential part of their business. The number of eCommerce websites worldwide nearly tripled  between 2019 and 2023 to 26.5 million.

It’s worth noting that while some eCommerce sellers operate exclusively online, others use their websites to enhance and complement offerings at physical store locations, manufacturing plants or offices. Business-to-consumer (B2C)  eCommerce serves individual retail shoppers, while business-to-business (B2B)  sellers offer products or services to other companies. 

Learn more: What is an eCommerce website?

Types of eCommerce

How to start an eCommerce business

As with any entrepreneurial venture, careful planning and preparation are essential to your success. Here are the steps to follow to get started with your own eCommerce business: 

Identify your online business niche

Do market research

Select the right product mix

Secure product sources

Write a strong business plan

Set your business name and legal structure

Choose an eCommerce platform

Create your online store

Manage your eCommerce business finances

Market your eCommerce business

01. Identify your online business niche

While it may seem counterintuitive, your chances of making it big in eCommerce are better when you start by thinking small—that is, when you start by defining a niche for your business.

While it’s helpful to study the general trends, broad categories can be crowded with competitors. As one example, health and personal care is slated for growth to over 13% of the eCommerce market  through 2027 but trying to compete with major drug chains or beauty retailers can prove difficult (if not impossible) for new players.  

Instead of targeting a large, general market, target a niche market. For instance, you could start an eCommerce business that focuses on organic skin care for teens, with a selection of cleansers, moisturizers and sunscreen for acne-prone skin.

It helps to have expertise in your chosen niche. You’ll spend a lot of time researching the right products or services to provide. You’ll dive into every detail of the business. And, at least at first, you’ll likely manage day-to-day operations, so you should be passionate about what your ecommerce business idea . 

Related reading: $300K in 7 days: building a million-dollar beauty subscription business  

02. Do market research

Once you’ve pinpointed an ecommerce business niche or idea, it’s time to research and evaluate your potential market. Not only will you learn more about your audience but you’ll also gather the quantifiable data you need to make revenue projections and calculate costs. To understand the market, consider these strategies:

Identify your audience type :   Are you catering to corporate professionals or individual consumers? The audience you have in mind will help determine th e type of business  you intend to operate. While many eCommerce businesses serve exclusively B2B or B2C customers, some sellers serve both. For example, a gourmet food seller that typically sells to individual consumers may offer corporate gifting services for the holidays. Or, an apparel retailer may provide customization options for bulk orders, enabling companies to print custom uniforms that include their logos. Get familiar with the main ecommerce KPIs before getting started.

Size your market : Build a profile of your ideal customer based on their demographics, geographic location, interests, spending habits and any other salient details. Then use that profile to guide your research into census and market data to arrive at realistic numbers. Your goal is to understand your potential customers better as you gauge the ultimate potential for growth for your eCommerce business. These benchmarks will also help you forecast revenue and demand as accurately as possible until you begin generating sales and have an earnings history to use as a guide.

Immerse yourself in the trade : Follow trade media and individual thought leaders in your chosen category and read up on overall eCommerce trends via publications. The Wix eCommerce Blog  is a great place to get started.

Study the competition : Dive deep into competitor websites, sign up for their email updates and track news coverage on your competitors. Pay attention to how they market themselves, both online and offline. If you can dig up financial reports or earnings, that information can guide your own forecasts and projections.

Ask your audience directly : Use surveys and polls to gather information from your potential customers. Hang out in relevant social media groups and forums and attend in-person events where potential customers congregate. 

03. Select the right product mix

Your niche and your target market will guide decisions about which products to sell or services to offer. Consider, for example, whether your audience would be receptive to curated kits or gift sets, and whether seasonality is a factor.

Price and profit margin are essential to consider, as they determine the potential for your business to scale. A break-even analysis will help you figure out how much of each product you need to sell to recoup your initial costs and begin making a profit. 

When selecting products to sell, you’ll want to consider factors like: 

Product life : Know your expected  product life cycle . This will help you create a multi-year plan for your eCommerce business. Some big-ticket items are built to last decades; buyers who ordered a sofa may not return to your site immediately, unless you offer complementary items. On the other end of the spectrum, replenishable goods like pet food or beauty supplies may inherently attract repeat purchases. For these, you may want to offer bulk discounts or start a subscription box business  to further encourage repeat business. 

Price expectations :   While offering a variety of price points can broaden your appeal with buyers, if your audience is used to purchasing luxury goods, then you may want to limit your selection to top-of-the-line offerings. If you’re a B2B seller, consider whether your corporate clients expect you to offer items in bulk at wholesale  prices. 

Cost of goods sold (COGS) :   As you select products, consider overhead costs and logistics , such as whether items require fancy packaging or “white-glove” delivery and installation. Digital products, by contrast, have no shipping or physical  procurement  requirements. You can calculate COGS with the following formula: beginning inventory + purchased inventory − ending inventory.

Once you have guidelines in place, dive into the specifics. If you need inspiration and want to see what’s trending, turn to competitor websites or search best-selling items on marketplaces like Amazon. Ecommerce tools like Google Trends and Algopix can also help identify hot products. Or, use your favorite SEO or keyword research tool, like Semrush, to find frequently searched products, validate a product concept and/or discover which brands are most frequently searched in your market.

04. Secure product sources and suppliers

Once you have specific items in mind, you’ll need to determine the right product sourcing method. Perhaps you create all of your products by hand and want to keep it that way. Or, maybe you’re interested in dropshipping with a platform like Modalyst , Wix’s native dropshipping solution.

Depending on your budget, resources and preferences, you have a few options to choose from:

Make goods by hand yourself : Quality is fully within your control, but it can be tricky to scale your business or keep up with high order volumes. 

Hire a manufacturer :   You source products from a third-party manufacturer but sell them under your brand name. Items are made to your specifications, and you retain control over production, pricing and branding. You can make goods efficiently in large quantities, but good communication with your production partner is essential to ensure quality is up to snuff.

Partner with name-brand manufacturers : If you seek products from specific manufacturers or designers, you can contract as an official reseller or dealer and offer those products through your eCommerce site. While your brand will get a boost from the affiliation, you’ll need to price items low enough to compete with other sellers, and some brands may have policies around a product’s minimum advertised price (MAP). Both can cut into margins. Retailers can also create their own branded merchandise via private label  lines in partnership with manufacturers, straddling the manufacturer/retailer divide. Costco’s Kirkland line or Amazon’s AmazonBasics are just two examples of this strategy.

Source from wholesalers : Wholesale suppliers offer catalogs of goods, often from multiple manufacturers. You can find inexpensive products to buy wholesale, which gives you leeway in pricing. On the flip side, products sourced overseas may bring additional delivery costs and tariffs as well as the expense of inventory and warehousing.

Work with dropship suppliers :   Dropshipping  shifts traditional retailer responsibilities to suppliers, enabling you to launch an eCommerce business with minimal upfront investment. You handle the marketing and choose your products, but incoming orders are routed directly to your suppliers, who are responsible for shipping items directly to your customers. You never have to buy and hold inventory, run a warehouse or ship items yourself. On the flip side, you have less control over product quality and delivery, putting your brand in a vulnerable position if suppliers slip up.  Ghost commerce  takes it a step further, where the supplier ships items, yet you maintain your brand’s image and handle customer relations.

It’s important to weigh your options when choosing a product sourcing method, and truly evaluate all of them carefully. Before you make a definitive decision, ask yourself the following questions:

Do you want to customize or brand your products? Because wholesale suppliers produce in bulk, it may be hard to tweak selections to match your criteria. As an intermediate option, some suppliers offer white labeling, which allows you to sell ready-made products with your logo and branding. And if you want to personalize products further, explore print on demand . This is a subset of dropshipping that allows you to offer custom designs on a selection of products created to your specifications as orders come in. 

How much capital do you have to invest in inventory ?   If you’re working with limited startup funds, dropshipping can be a more economical route for launching your brand. 

How complex are your warehousing and fulfillment needs?  If you offer recurring subscription shipments, corporate gifting services or bulk order capabilities, you may need to manage logistics yourself to ensure deliveries are accurate and on time. 

How do your competitors source their products?  While you don’t want to outright copy your competitors, research as much as you can about their processes to identify any potential differentiating advantages they have. Do they have exclusive dealer rights to brand-name merchandise you want to stock? Do they offer products sourced exclusively from sustainable suppliers? 

What is your backup plan if one of your suppliers has issues? Nearly four in 10 shoppers  have abandoned online purchases due to items being out of stock, so take proactive steps to avoid disappointing buyers. Find backup sources of widely available wholesale products, and cover contingencies in your contracts with suppliers. 

How will you scale  your business?  Manufacturing or making your own products gives you the greatest amount of control, but they also make it difficult to meet rising demand. You may need to contract with a new factory altogether, hire staff or find other expensive solutions. For a more flexible option, you may want to consider dropshipping or wholesaling. 

What are your audience’s expectations?  Buyers are prioritizing sustainability more and more. In fact, U.S. consumers are reportedly willing to pay an 11% premium  for products with reduced environmental impact. If your customers expect ethically sourced products, include those factors in your sourcing criteria.

05. Write a strong business plan

Document all the research and planning you’ve done up to this point with a formal eCommerce business plan . Not only does a business plan capture your work in a comprehensive and detailed format, but it also provides a touchstone for keeping your day-to-day operations focused on your mission. The strongest business plans keep teams aligned during launch and lay the foundation for attracting the right business partners and investors. 

While the individual components of a business plan can be tailored to your unique priorities, you should include the following elements to be sure the document is relevant and useful: 

Mission, description and unique selling proposition (USP) : Your business plan should outline the reason your company exists, summarize at a high level what it does and identify what sets your brand apart from others. This information helps you stake your claim in the marketplace and guides future decisions about priorities. In particular, it’s critical to flesh out your  unique selling proposition . Your USP guides your product positioning , helps you to stand out from the competition and identifies partners and consumers who share your values. For example, “plastic-negative” water company and Wix merchant  Mananalu  differentiates its products by supporting a larger cause. Mananalu water is packaged in refillable aluminum bottles, which are easier to recycle than plastic. In addition, each time a consumer buys a Mananalu water, the company pledges to remove a plastic bottle from the ocean waste stream. Shoppers can even buy further “plastic offsets” to support the company’s cause. Climate Neutral certification and “1% for the Planet” membership provide third-party credentials attesting to the company’s commitment to sustainability.

Market and SWOT analysis : Summarize your market research and describe your company’s position relative to the competition. Provide an analysis of strengths, weaknesses, opportunities and threats (SWOT) to pinpoint your areas of greatest potential growth. A realistic analysis will help maintain focus not only as you launch, but as you scale and add new offerings. 

Your offering :   Use your previous research and planning to create a detailed description of your products and/or services, product sourcing and pricing strategy. Describe how this offering aligns with your audience’s needs. In addition, describe your plans for customer service and order fulfillment as crucial components of the brand experience.

Marketing  plans : Describe how you plan to introduce your eCommerce business to your target audience, including which digital channels you’ll prioritize and which technologies you’ll rely on to execute marketing tactics.

Financial forecasts : Using your previous research, build a model forecasting expenses, revenues and growth. To ground your projections in reality, use real-life results from competitors or other businesses in your field. Consult trade publications and category experts for growth benchmarks and formulas to incorporate.

Funding sources : Describe how you’ll secure the startup resources you need, whether through your own savings, private equity, crowdfunding or investors. If you’re presenting your plan to potential funding sources, customize the information to explain the rationale behind your request and describe the benefits of funding your business.

06. Set your business name and legal structure

After you put your business plan together, you’ll need to set up the actual legal framework to support your business.

Start by picking a business name that reflects your brand identity and USP. If you need some inspiration, try researching popular search keywords, brainstorming names related to your niche or playing with different spelling variations. Wix’s free business name generator  can provide more ideas. As you narrow the list, check that the names are:

Easy to read, say, spell and remember

Search-friendly

Available as a website domain 

Not being used by another business (in the U.S., individual states maintain registries of businesses you can check)

Once you have your business name figured out, you’ll need a logo. You can create one yourself, work with a graphic designer or try out the Wix logo maker  for free.

Next, you’ll want to choose the right legal structure for your eCommerce company—a key step in starting a business  of any type. Your overarching business structure will define your liabilities, tax status and more.

Consult with legal professionals and accountants to determine whether a sole proprietorship ,  partnership ,  limited liability company (LLC)  or corporation  is right for you. In the U.S., you’ll also need to register your business and apply for a federal employer identification number (EIN) in order to pay taxes, open a business bank account or obtain financing. You can do this through the IRS’s website for free.

07. Choose an eCommerce platform

At this point, you’re ready to bring your brand to life through your own website. 

The first step is to choose the best eCommerce platform  for your needs. There are dozens of website builders on the market, so evaluate your options carefully. To ensure your eCommerce website development  goes smoothly, look for a platform that provides:

Professional aesthetics : Wix offers hundreds of specialized online store templates  you can customize to reflect your brand.

A domain name : You’ll need a domain name  of your own to match your business name.

Enterprise-grade security : Wix offers a secure infrastructure  with 24/7 security monitoring to protect against data breaches.

Top performance : It’s critical to have web hosting  with the capacity to support a speedy, high-performance site  on both mobile and desktop devices, even during peak sales periods.

Built-in analytics : Wix’s analytics dashboard helps you track key metrics, such as website traffic  and generate historical performance reports.

Customizable shopping cart pages : A customizable shopping cart page  will ensure your branding and messaging are consistent throughout the purchase process.

Variety of checkout options : Flexible eCommerce checkout  options should support whichever payment method your customers prefer. Wix Payments  is an integrated payment gateway system that can connect to in-store point-of-sale (POS) registers, too.

A content management system : A content management system  (CMS) should ideally support robust product information and brand-building features such as blogs, how-to articles and buying guides.

Back-office functionality : Look for integrated tools that help automate back-office functions, like bookkeeping and order fulfillment. Wix offers tools for tasks like inventory management , invoice creation  and more.

A reasonable pricing model : Your platform’s pricing model should make sense financially for your business, both now and in the future. As you research, pay close attention to recurring fees and special surcharges so you understand the total cost. With Wix, you can build a website with eCommerce functionality for as little as $27 per month.

Get ready for launch. Sign up  for Wix today.

08. Create your online store

Regardless of which eCommerce platform you choose, it’s important to research the best practices for designing an online store. Knowing how to make a website  includes the following best practices:

Be clear about what you sell : Make it easy for customers to understand your business and products by using consistent design elements and language throughout the site. Avoid jargon-heavy or overly cutesy names for product categories and individual items; use accurate language that matches the search terms your audience enters. Once shoppers are ready to buy, don’t beat around the bush; use clear calls-to-action like “Shop Now” or “Buy Now.” 

Invest in high-quality imagery : A picture is worth a thousand words, and that’s especially true in eCommerce. Buyers can’t physically touch and try products, so photos and videos help convince them to have faith and click “Buy.” High-quality photos that clearly show details and features are essential, while videos demonstrate products in action and can be repurposed for social platforms like TikTok. 

Showcase user-generated content (UGC) : Buyers trust others like them to communicate authentically about products and services, so find ways to spotlight customer reviews, user-submitted photos and social media comments. The same holds true in the B2B world; 86% of businesses  consider verified reviews a critical factor in purchase decisions when deciding vendors.

Embrace mobile : Transactions on mobile devices already account for four in 10 online sales , and an even higher share of product research occurs on smartphones thanks to their “anywhere, anytime” availability. Your eCommerce site shouldn’t just be mobile-compatible. You should assume the majority of interactions with your brand will occur on the go. Make sure that pages load quickly even when wi-fi isn’t available, and that images render clearly on small screens.

09. Manage your eCommerce business finances

Once you’ve launched your eCommerce business, you need the tools to track sales, profit and growth. These eCommerce money management tips  offer best practices to ensure you have adequate cash flow from month to month and can keep your business humming along. 

Three things in particular are worth monitoring closely:

Plan for seasonality : Holidays, annual weather patterns and other cyclical influences can cause your income to spike and dive. For example, in the U.S., the final quarter of the year can account for more than 30%  of annual sales for some categories of retailers. Other cycles might be particular to your industry: if you offer bookkeeping or accounting services online, for example, your peak season might end on April 15, the filing deadline for personal income taxes. Accurate forecasting can help predict when sales will pour in so you can manage cash flow to cover leaner months.

Get a handle on fulfillment costs :   If your eCommerce business involves delivering physical goods, be prepared to spend 15% to 20% of net sales on fulfillment costs . Of course, if you provide a virtual service or a downloadable app or software product, you can avoid these costs altogether. If you use dropshippers to fulfill orders instead, you won’t carry those overhead costs yourself, but the suppliers will likely pass them on to you as part of your fees.

Guard against costly chargebacks and returns :   It’s estimated that 17.6% of all online sales are returned . Add in the cost of reverse logistics—where goods are returned to stock for resale or simply discarded—and you’ll want to prevent returns in the first place. Try to create detailed product pages that include fit and sizing guides, compatibility information and materials. In addition, bolster your customer service content to address common questions before purchase; communicate shipping timeframes so consumers don’t cancel orders in transit if they don’t arrive in time. Finally, set a return policy  you can actually afford.

Read more:   SMB online commerce  for acquiring banks and merchant acquirers.

10. Market your eCommerce business

Launching your online store is an achievement, but by no means can you “set it and forget it.” With so many eCommerce websites available, you need to promote your brand to attract new buyers and create incentives that keep customers coming back.

As you allocate your marketing budget to sell more products online , focus on the digital channels you know your audience uses. Follow these strategies: 

Personalize the shopping experience : Seven in 10 consumers  now expect personalized interactions with companies, and businesses meeting that expectation can boost their marketing return on investment (ROI) anywhere from 10-30%. Seek out tools that enable you to automate eCommerce personalization  in email campaigns, product recommendations and post-purchase promotions. For example, with Wix, you can add a “Best Sellers” or “Related Products” gallery  to your product pages.

Boost word-of-mouth buzz : Encouraging customers to create and share reviews is just the start when it comes to building word-of-mouth advocacy for your brand. Create promotions that reward customers for referring friends and family, and post share-worthy takes and exclusive offers on the social media networks that your customers use most. To further boost visibility on social media, consider working with micro-influencers. These personalities may not have millions of followers, but they have devoted audiences whose interests can align closely with your brand offering.  

Prioritize SEO : More than half of consumers  rely on search engines as their top tool for shopping research, so stay up-to-date on best practices for search engine optimization to give your brand the best possible chance at visibility. Develop rich content, optimize for mobile devices, maximize site speed and earn inbound links to improve your rankings. 

Build loyalty :   While it’s natural to devote attention to finding new customers during launch, you also need a plan for keeping the customers you already have. It’s less expensive to build a loyal following than to continually churn through one-time purchasers, and repeat customers tend to outspend new buyers . Consider creating a loyalty program that rewards buyers with perks and exclusive offers based on how much they spend.

Drive more sales with Wix eCommerce marketing .

How much does it cost to start an eCommerce business?

The cost of starting an eCommerce business depends on many factors, from the type of products you sell to the features you need to power your online store. But when all is said and done, you could spend anywhere from $5,000 to $50,000 .

That range may seem high—in fact, you may wonder if you could drop a zero from the lower end of the scale. Dropshipping can eliminate upfront inventory and fulfillment costs, and platforms such as Wix offer inexpensive eCommerce site hosting plans and design services. But even with this minimalist approach, you still may need to factor in costs for things like marketing, technology and software, legal and administrative fees, and more.

No matter how much startup capital you have at your disposal, it's important to do your research and plan carefully before starting an eCommerce business. This will help you avoid costly mistakes and increase your chances of success. The potential costs to consider include: 

Business formation and licensure : Setting up your business structure and governance, securing any required licenses and filing registration and tax paperwork can add up to several billable hours from legal and accounting professionals. 

Ecommerce platform : The technology behind your eCommerce website is all-important and should support integrated shipping, payments and marketing from one unified dashboard. Depending on the platform, each module may be priced separately, or you may be charged a single annual fee for all-in-one service.

Products : The upfront cost of your products will vary depending on what you're selling online  and which sourcing method you choose. If you hold inventory, add the overhead expense of storage or warehousing space.

Design, photography and copywriting : As you set up your online store, you may wish to enlist professional help with the website design, product photos and written content. If you’re launching in more than one country, you may need to find translation services to ensure product copy is localized accurately.

Customer service : Responsive service is a must for building your brand’s reputation. Make a plan to personally handle incoming questions and requests or hire staff to ensure adequate coverage.

Logistics : If you want to handle order management yourself versus outsourcing to a dropshipper, you need to invest in packaging, staff to pick and pack orders, and contracts with freight carriers or third-party logistics providers to handle deliveries.

Marketing : Even if you don’t allocate budget to paid advertising, you’ll still need to invest hours into setting up social media accounts and optimizing your website for search engines.

Why start an eCommerce business in 2024?

U.S. eCommerce sales are expected to grow 10.5% year over year in 2024 , so there’s no time like the present to get started. Here are just a few reasons to start an eCommerce business this year:

The barriers to entry are (relatively) low :   While launching an eCommerce business successfully does take some initial investment, it’s far less expensive to build a brand online. In the past, shopping technology was prohibitively expensive and required a professional IT staff to manage.

You can earn a profit (relatively) quickly : While you won’t generate millions overnight, the relatively low startup costs and efficiencies of scale you can access via dropshipping means that you may be operating in the black within a year to 18 months. While the size of your profits depend in large part on your category and your wholesale product costs, relevant, high-quality products and superior service can help justify the higher prices that lead to bigger margins.

You can access rapidly-growing global markets : As much as the U.S. represents a huge eCommerce market, other parts of the world are seeing even more exponential growth—and you can sell to these nascent markets without needing a physical presence or local staff. While China is dominant in terms of eCommerce market size and penetration, countries that are potentially more accessible, such as Canada, Mexico and the U.K., are all top global targets to consider .

You can run your business your way :   As the world discovered during the COVID-19 pandemic, digital businesses can be managed remotely. You can route orders to dropshippers and respond to customer service queries on your own time, anywhere—a stark contrast with traditional retail, which tethers you to a store location and requires staff to serve customers during set hours. 

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Research-Backed Strategies to Boost Your Gym’s Revenue

Candice Landau

6 min. read

Updated April 9, 2024

If you want to own your own gym or fitness center, you’re probably trying to figure out how you’re going to bring in customers, and keep them. If so, you’re on the right track.

As you will shortly see, member retention is key to the success of a fitness center. Luckily for you, there are multiple things you can do to win over your customers.

To help you out, we’ve hacked our way through the forest of general (and generic) ideas to find you only those strategies that have been proven to boost revenue.

• 1. Focus on providing epic customer service

This one almost goes without saying, but we’re going to say it anyway as the statistics in favor of excellent customer service are overwhelming.

According to a 2010 Customer Experience Report  by Harris Interactive/Right Now, great service, delivered time and time again is even more important than competing on price. In fact, it’s defensible against the stiffest competition.

By making customer satisfaction a key performance indicator, you are much more likely to focus on implementing strategies that will foster customer loyalty, and ultimately result in additional referrals to your gym (don’t forget the importance of word of mouth referrals).

While the benefits of good customer service are all encompassing, they’re also big profit drivers—86 percent of consumers will pay more for a better customer experience.

The same is true vice versa. Provide bad customer service and you could lose big time, especially if you don’t address complaints—50 percent of consumers give a brand only one week to respond to a question before they stop doing business with them.

So, go above and beyond and keep your members coming back with epic customer service.

• 2. Get people to attend the gym more often

Did you know that by increasing your customer retention rate just five percent, you can increase profits by 25 to 95 percent?

In the fitness world, it’s no secret that attendance and retention are linked. When members feel they’re not getting value out of their membership, they attend less, and over time stop attending entirely.

This is why it’s important to pay attention to your attendance numbers. If your members stop attending, you’re likely not meeting their expectations. Obviously, there could be many things at play here: there are nicer facilities elsewhere, you don’t offer the right classes, they don’t like your staff or personal trainers, and so on.

Your best bet then is to figure out why people are canceling, or attending less. A great way to do this is to encourage your front desk staff to recognize signs that someone is losing interest and get them to talk to your customers to find out why.

You could also invest in gym attendance software to automate much of your tracking.

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• 3. Set the right hours

While your gym’s own attendance numbers are going to tell you a lot of things, when people are attending (and the number attending each day) is going to tell you a lot about the specific hours you should keep, and even the right times to offer classes.

Attendance patterns at fitness clubs vary, but broadly speaking, peak hours are 6am-8am, 12pm-2pm, and 5pm-7pm. It makes sense when you bring work into the picture—those times encompass “before work,” “lunch break,” and “after work.”

When it comes to the day of the week, attendance is usually highest on Monday, dropping steadily as the week progresses with Sunday attendance lowest of all.

As we’ve previously stated how important attendance is, the more you can find the right hours and get people to attend, the more likely they will be to stick around. In fact, according to a 2001 study by the Fitness Industry Association, the more often people attend initially, the lower the reduction in attendance.

Because attendance patterns are usually established in the first three to six months of membership, consider how you can best encourage people to keep coming back for more. You could do this by focusing on loyalty-building strategies for a time. This includes doing things like keeping members informed, creating a sense of community, and helping them save money.

• 4. Get creative with your marketing

Creativity is the lifeblood of good advertising.

It differentiates a company, it makes seemingly boring products or services seem much less boring, and it has the powerful ability to change how people feel about you, or the services your company offers.

One of the great things about managing a gym is that you have multiple different niches you can target. So, rather than thinking about how to market your business in general, hone in on the specifics and get creative—there are dozens of ideas out there.

For example, you might offer a “summer slimdown” Facebook promotion, or a membership anniversary special, a corporate challenge, a free training day, meal ideas by email, a weight loss challenge and so on. The possibilities are endless.

Remember, your advertising is all about communicating the right message. So, don’t go getting caught up in out-there creative ideas if they’re not relevant.

• 5. Diversify your revenue streams

A great way to spread your risk and increase revenue is to have multiple profit centers—that is, multiple ways to bring in revenue. Why rely on gym memberships alone when other areas could pad your budget?

An additional benefit to multiple profit centers—according to Mike Feinman, Executive Vice President and COO of Gold’s Gym—is that these other revenue streams add value to your membership and often enhance results for those who enjoy them. Of course, you have to do it right or it may well have the opposite effect and decrease your profits.

As you think about adding additional profit centers to the mix, consider what your customers are asking for.

Today, fitness centers offer everything from tanning and personal training, through group fitness, juice bars, massage, and merchandise. In fact, many gyms or fitness centers will even work with local businesses, building partnerships that refer business. If you’d like to broaden your reach or raise awareness but don’t have the extra cash to invest in a juice bar, consider taking this route.

If you do diversify your revenue stream, one of the first things you will need to ensure you have in place is an excellent sales team or at least front desk staff who have been trained on how to upsell your other services. After all, if these new services are not front and center in your marketing or gym, how will your members know they even exist?

What’s next?

Beyond these five pointers, stay abreast of the latest fitness industry trends. This isn’t a revenue-driving strategy per se, but it is a strong recommendation. By keeping up on the latest trends, you give yourself a competitive advantage.

This doesn’t necessarily mean going out to invest in the latest machinery, but it may mean incorporating a different type of class into your group fitness offerings—like Zumba, for example.

In fact, you wouldn’t believe some of the crazy things that have become popular in this industry of late. Paddleboard yoga, anyone?

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Candice Landau is a marketing consultant with a background in web design and copywriting. She specializes in content strategy, copywriting, website design, and digital marketing for a wide-range of clients including digital marketing agencies and nonprofits.

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• Content Marketing

35 Content Marketing Statistics You Should Know

Stay informed with the latest content marketing statistics. Discover how optimized content can elevate your digital marketing efforts.

Content continues to sit atop the list of priorities in most marketing strategies, and there is plenty of evidence to support the reasoning.

Simply put, content marketing is crucial to any digital marketing strategy, whether running a small local business or a large multinational corporation.

After all, content in its many and evolving forms is indisputably the very lifeblood upon which the web and social media are based.

Modern SEO has effectively become optimized content marketing for all intents and purposes.

This is when Google demands and rewards businesses that create content demonstrating experience, expertise, authoritativeness, and trustworthiness (E-E-A-T) for their customers – content that answers all of the questions consumers may have about their services, products, or business in general.

Content marketing involves creating and sharing helpful, relevant, entertaining, and consistent content in various text, image, video, and audio-based formats to the plethora of traditional and online channels available to modern marketers.

The primary focus should be on attracting and retaining a clearly defined audience, with the ultimate goal of driving profitable customer action.

Different types of content can and should be created for each stage of a customer’s journey .

Some content, like blogs or how-to videos, are informative or educational. Meanwhile, other content, like promotional campaign landing pages , gets to the point of enticing prospective customers to buy.

But with so much content being produced and shared every day, it’s important to stay updated on the latest trends and best practices in content marketing to keep pace and understand what strategies may be most effective.

Never has this been more true than in 2024, when we’re in the midst of a content revolution led by generative AI , which some feel represents both an opportunity and a threat to marketers.

To help you keep up, here are 35 content marketing statistics I think you should know:

Content Marketing Usage

How many businesses are leveraging content marketing, and how are they planning to find success?

• According to the Content Marketing Institute (CMI), 73% of B2B marketers, and 70% of B2C marketers use content marketing as part of their overall marketing strategy.
• 97% of marketers surveyed by Semrush achieved success with their content marketing in 2023.
• A B2B Content Marketing Study conducted by CMI found that 40% of B2B marketers have a documented content marketing strategy; 33% have a strategy, but it’s not documented, and 27% have no strategy.
• Half of the surveyed marketers by CMI said they outsource at least one content marketing activity.

Content Marketing Strategy

What strategies are content marketers using or finding to be most effective?

• 83% of marketers believe it’s more effective to create higher quality content less often. (Source: Hubspot)
• In a 2022 Statista Research Study of marketers worldwide, 62% of respondents emphasized the importance of being “always on” for their customers, while 23% viewed content-led communications as the most effective method for personalized targeting efforts.
• With the increased focus on AI-generated search engine results, 31% of B2B marketers say they are sharpening their focus on user intent/answering questions, 27% are creating more thought leadership content, and 22% are creating more conversational content. (Source: CMI)

Types Of Content

Content marketing was synonymous with posting blogs, but the web and content have evolved into audio, video, interactive, and meta formats.

Here are a few stats on how the various types of content are trending and performing.

• Short-form video content, like TikTok and Instagram Reel, is the No. 1 content marketing format, offering the highest return on investment (ROI).
• 43% of marketers reported that original graphics (like infographics and illustrations) were the most effective type of visual content. (Source: Venngage)
• 72% of B2C marketers expected their organization to invest in video marketing in 2022. (Source: Content Marketing Institute – CMI)
• The State of Content Marketing: 2023 Global Report by Semrush reveals that articles containing at least one video tend to attract 70% more organic traffic than those without.
• Interactive content generates 52.6% more engagement compared to static content. On average, buyers spend 8.5 minutes viewing static content items and 13 minutes on interactive content items. (Source: Mediafly)

Content Creation

Creating helpful, unique, engaging content can be one of a marketer’s greatest challenges. However, innovative marketers are looking at generative AI as a tool to help ideate, create, edit, and analyze content quicker and more cost-effectively.

Here are some stats around content creation and just how quickly AI is changing the game.

• Generative AI reached over 100 million users just two months after ChatGPT’s launch. (Source: Search Engine Journal)
• A recent Ahrefs poll found that almost 80% of respondents had already adopted AI tools in their content marketing strategies.
• Marketers who are using AI said it helps most with brainstorming new topics ( 51%) , researching headlines and keywords (45%), and writing drafts (45%). (Source: CMI)
• Further, marketers polled by Hubspot said they save 2.5 hours per day using AI for content.

Content Distribution

It is not simply enough to create and publish content.

For a content strategy to be successful, it must include distributing content via the channels frequented by a business’s target audience.

• Facebook is still the dominant social channel for content distribution, but video-centric channels like YouTube, TikTok, and Instagram are growing the fastest .  (Source: Hubspot)
• B2B marketers reported to CMI that LinkedIn was the most common and top-performing organic social media distribution channel at 84% by a healthy margin. All other channels came in under 30%.
• 80% of B2B marketers who use paid distribution use paid social media advertising. (Source: CMI)

Content Consumption

Once content reaches an audience, it’s important to understand how an audience consumes the content or takes action as a result.

• A 2023 Content Preferences Study by Demand Gen reveals that 62% of B2B buyers prefer practical content like case studies to inform their purchasing decisions, citing “a need for valid sources.”
• The same study also found that buyers tend to rely heavily on content when researching potential business solutions, with 46% reporting that they increased the amount of content they consumed during this time.
• In a recent post, blogger Ryan Robinson reports the average reader spends 37 seconds reading a blog.
• DemandGen’s survey participants also said they rely most on demos ( 62% ) and user reviews (55%) to gain valuable insights into how a solution will meet their needs.

Content Marketing Performance

One of the primary reasons content marketing has taken off is its ability to be measured, optimized, and tied to a return on investment.

• B2C marketers reported to CMI that the top three goals content marketing helps them to achieve are creating brand awareness, building trust, and educating their target audience.
• 87% of B2B marketers surveyed use content marketing successfully to generate leads.
• 56% of marketers who leverage blogging say it’s an effective tactic, and 10% say it generates the greatest return on investment (ROI).
• 94% of marketers said personalization boosts sales.

Content Marketing Budgets

Budget changes and the willingness to invest in specific marketing strategies are good indicators of how popular and effective these strategies are at a macro level.

The following stats certainly seem to indicate marketers have bought into the value of content.

• 61% of B2C marketers said their 2022 content marketing budget would exceed their 2021 budget.
• 22% of B2B marketers said they spent 50% or more of their total marketing budget on content marketing. Furthermore, 43% saw their content marketing budgets grow from 2020 to 2021, and 66% expected them to grow again in 2022.

Content Challenges

All forms of marketing come with challenges related to time, resources, expertise, and competition.

Recognizing and addressing these challenges head-on with well-thought-out strategies is the best way to overcome them and realize success.

• Top 3 content challenges included “attracting quality leads with content” ( 45% ), “creating more content faster” (38%), and “generating content ideas” (35%). (Source: Semrush’s The State of Content Marketing: 2023 Global Report)
• 44% of marketers polled for CMI’s 2022 B2B report highlighted the challenge of creating the right content for multi-level roles as their top concern. This replaced internal communication as the top challenge from the previous year.
• Changes to SEO/search algorithms ( 64% ), changes to social media algorithms (53%), and data management/analytics (48%) are also among the top concerns for B2C marketers.
• 47% of people are seeking downtime from internet-enabled devices due to digital fatigue.
• While generative AI has noted benefits, it also presents challenges for some marketers who fear it may replace them. In Hubspot’s study, 23% said they felt we should avoid using generative AI.
• Another challenge with AI is how quickly it has come onto the scene without giving organizations time to provide training or to create policies and procedures for its appropriate and legal use. According to CMI, when asked if their organizations have guidelines for using generative AI tools, 31% of marketers said yes, 61% said no, and 8% were unsure.

Time To Get Started

As you can clearly see and perhaps have already realized, content marketing can be a highly effective and cost-efficient way to generate leads, build brand awareness, and drive sales. Content, in its many formats, powers virtually all online interactions.

Generative AI is effectively helping to solve some of the time and resource challenges by acting as a turbo-powered marketing assistant, while also raising a few procedural concerns.

However, the demand for content remains strong.

Those willing to put in the work of building a documented content strategy and executing it – by producing, optimizing, distributing, and monitoring high-value, relevant, customer-centric content, with the help of AI or not – can reap significant business rewards.

More resources:

• 6 Ways To Humanize Your Content In The AI Era
• Interactive Content: 10 Types To Engage Your Audience
• B2B Lead Generation: Create Content That Converts

Featured Image: Deemak Daksina/Shutterstock 

Jeff has been helping organizations manage, measure and optimize their Web presences for over 20 years. He has deep knowledge ...

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How to Start a Car Detailing Business

T he car detailing business is a great fit for many entrepreneurs. That’s because you can start up at a level of investment that you can afford, and grow.

The car detailing business operations are changing in two main ways:

• Increasingly, the customer base is seeking a “greener” option. Many people are no longer comfortable with the amount of water needed to wash a typical vehicle, which is about 38 gallons. They want a waterless wash.
• The mobile car detailing business is increasing, with a growing demand for detailing services at a customer’s home or place of employment, instead of a physical location.

What is car detailing?

Car detailing businesses do much more than wash and wax. A car detailing company will also vacuum the interior, as well as clean and polish surfaces such as the dashboard, vents, instrument, and trim.

The work typically also includes window cleaning, inside and outside, as well as cleaning floor mats and tires.

The Auto Detailing Industry in 2023

The successful car detailing business will adapt to its customer base. In 2022, small business owners fed a $14.7 billion industry. In the US, there are about 62,000 auto detailing companies and industry leaders estimate a 4% growth.

A successful business will adapt to the increasing demand for mobile detailing performed at home or place of employment washing. Auto detailing can be among the top garage based business ideas , or you could even travel to your clients directly. Also, as people feel the pinch of challenging economic times, discretionary spending decreases. Having a vehicle detailed is classified as discretionary spending.

Why You Should Start a Car Detailing Business

Will auto detailing be a successful business for you? See if these reasons fit you as a business owner:

• You excel at customer service.
• You are good at selling, especially upselling.
• You love vehicles.
• It’s a competitive business, and there is no or little competition from other local businesses.
• You would take pride in the results of Before and After.
• You can handle physical labor.

You’ll need a car detailing business plan that includes how you’ll start, how you’ll cover startup costs, and whether you’ll run a mobile business or business with a physical location – or a mix of both.

1. Get Training and Experience

There are training institutions that you can attend to get a car detailing license and/or auto detailing certification. You can find these centers via the international detailing association. Or, you can opt for on-the-job training. If you choose to buy a car wash franchise , training will be provided.

2. Do Your Research

Do market research. Will your potential customers prefer mobile detailing businesses? If you opt for brick-and-mortar, is your location convenient for people who will drop off their own car? In other words, who is your target market?

3. Create a Business Plan

Every new business should have a business plan. Don’t let this project daunt you. You’ll need a mission statement, which describes the goals of your company. An executive summary will describe your business model, which is how you’ll operate.

Another part of your plan is a description of your business finances – how you plan to fund your start and how you plan to grow. Do you have or do you plan to add business partners?

You’ll need a business plan as part of your submission package if you seek financing, along with documents regarding your business bank accounts.

4. Fund Your Business

Don’t overextend, remember you can start with very little investment capital instead of getting a start with a business loan. Many entrepreneurs start a car detailing venture by working part-time, after their regular jobs, with a garage-based business.

If your personal finances are top notch you may be able to obtain a small business funding loan. You can also establish credit accounts with vendors who supply cleaning products.

5. Gather Your Tools

There is basic equipment you’ll need as part of your start-up costs, whether you’re washing with water or waterless, at a fixed location or mobile detailing setup. Supplying, and resupplying, should be part of your thorough business plan as an ongoing expense. However, auto detailing is among the top low tech business ideas , so you shouldn’t need many expenses devices.

If you’re using water, you’ll need a pressure washer. If not, you’ll need a waterless wash product.

You’ll need a buffer, microfiber towels, buckets, sponges and assorted products such as leather cleaner. You’ll need detailing brushes of various sizes, metal polish and tire cleaner.

6. Keep It Legal

Most small businesses need to obtain business insurance and a local business operating license. To get your business licensed legally, you may have to do so at both the state and local government authority levels. If you’re not confident about doing this, hire a business attorney.

Choose your business structure, which will most likely be a limited liability company or LLC to protect your personal assets from your business entity.

Since you’ll be paying the federal business tax you’ll need a federal business tax id. You’ll also need to collect sales tax. As with many new business ventures, you should consult a tax professional to make sure you don’t make mistakes with your taxes.

You’ll need general liability business insurance and commercial vehicle insurance if you’re operating a mobile business.

7. Open a Business Bank Account

When you open your business bank account you should also get a business credit card, which you can link to the account. It’s just a good idea to keep your business accounts separate from your personal accounts, even if you’re working part-time.

8. Manage Your Finances

Most new business ventures need the services of a professional accountant, especially at start up.

9. Hire a Team

Most businesses in auto detailing start with a sole proprietor, and hire employees as needed to support growth in new customers. When you hire you’ll need to add worker’s compensation insurance.

10. Market Your Services

You’ll need a website and a social media presence. Part of your thought-out marketing strategy should include reaching out to current and past customers, possibly adding special enticement to keep or restore their business. You can offer senior discounts. Try for contracts, such as car rental companies or car dealers.

11. Open Your Business

Schedule your grand opening and make announcements with local media, as well as on your website and social media accounts.

More Tips for Starting a Successful Auto Detailing Business

Launching a successful business takes a continual hustle to grow. Read these 10 tips for starting and growing a business , then check out a few tips specific to auto detailers below:

• Join your local Chamber of Commerce, where you can network with other business owners.
• Strive to create partnerships, which is a foundation for a modern business. For example, local vehicle repair shops can give customers your business card.
• Further your education by learning how to protect vehicle finishes with specialized services such as graphene or ceramic coating.
• Offer more than vehicle detailing – add boats, motorcycles, and RVs.

What materials do you need to start a car detailing business?

You’ll need soap or foam wash, wax, microfiber towels, car buffer tools, detailing brushes, metal polish and tire cleaner.

How much does it cost to start a mobile detailing business?

The needed materials don’t change much whether you’re at a set location or operating mobile. At a basic level, it will cost at least $10,000 to stock the materials. Before you work with someone’s vehicle, you need a minimum business liability insurance and your business should be registered.

If you’re going to make money with your car – such as traveling to mobile appointments or picking up and delivering a customer’s vehicle – you’ll need commercial vehicle insurance. You should be able to find an umbrella policy, called a Business Owners Policy or BOP, to cover your needed insurance.

Is starting a car detailing business difficult?

As small business ideas go, this is a winner. Although competition can be strong, startup costs can be low at the entry-level.

The hardest part of starting a car detailing business may be the decision on whether to operate from a permanent location or go mobile. You can opt for a mix – by picking up and delivering customer vehicles to your permanent location.

Is a car detailing business profitable?

Having a vehicle detailed is viewed as “discretionary” spending. In other words, when economic times are challenging, your customers may opt to stop paying to have their vehicles professionally cleaned.

Still, your material cost is low and the profit market is good. The cost for a minimal cleaning, such as washing and waxing, doing windows, vacuum the interior, ranges from about $65 for small vehicles and up to $160 for larger vehicles.

According to industry leaders, more than 2/3s of customers are concerned about sustainability. Help your vehicle detailing business to be the top choice by opting for green solutions.

Someone starting the car detailing business on a part-time basis can expect to earn about $100 per vehicle. Full-scale sole proprietor car detailing business owners can expect to earn from $30,000 to $60,000 as a start up. Of course, that depends on whether or not a mobile vehicle or permanent location is already owned, or must be leased.

Image: Envato Elements

Money latest: American Express announces two big changes to credit card

Two changes to British Airways credit cards - which help customers collect Avios points towards flights - are coming. Read about this and the rest of today's consumer and personal finance news in the Money blog, and tell us your thoughts on any of the stories we cover in the form below.

Friday 12 April 2024 20:30, UK

• UK economy grows slightly for second month in a row
• American Express announces two big changes to British Airways credit cards
• How your neighbour's garden could wipe up to £57,000 from your house price
• At what age do you reach peak earnings?
• Prescription costs are rising - here's how to beat the hike
• Authentic or Greek-style? Your guide to getting healthier yoghurt for less
• 'WTF is going on with the price of olive oil?'
• Could I build a home gym for less than my gym membership?
• Basically...  Tax codes
• Cheap Eats : Great British Menu legend shares ultimate toastie recipe

Ask a question or make a comment

UK lenders have seen a rise in defaults on mortgages and credit cards - with the trend expected to continue in the coming months, according to a survey.

A poll of banks and building societies by the Bank of England reveals lenders reported higher default rates on secured loans and unsecured lending in the three months to the end of February.

The rates for mortgages, credit cards and other loans, as well as loans to small to medium businesses, are all expected to rise in the next quarter.

The BoE carries out the survey every quarter as part of its role to maintain financial stability.

It also revealed increased demand for borrowing, with this also expected to climb during the three months to the end of May.

Karim Haji, global and UK head of financial services at KPMG, said the latest BoE data suggests "a more positive economic outlook hasn't fed through to household finances yet".

"Defaults across all unsecured lending increasing over the same three-month period indicates many people are still struggling to meet their day-to-day costs. Lenders will need to be vigilant and continue to offer support for borrowers in the interim," he said.

By  Sarah Taaffe-Maguire , business reporter

Poor software and bias toward making only small, sequential changes is one of the reasons economic forecasters at the Bank of England failed to predict and prepare for the cost of living crisis, brought about by high inflation, according to a "once in a generation" review.

The review announced last year was undertaken by the former head of the US central bank, known as the Fed, and said the quality of the Bank's economic expectations "deteriorated significantly in the past few years" due to out of date software and "excessive incrementalism".

Though the "unusually large forecasting errors" were said to be "probably inevitable", according to the review, conducted by Dr Ben Bernanke.

The problem was not unique to the Bank, rather something all central banks and private forecasters suffered from, it said.

Read the full story here...

After the UK airports with the worst delays were revealed earlier today (see post at 1.15pm), we've been looking at your rights.

If you're unlucky enough to get stuck at an airport due to a flight delay, you may wonder if you're entitled to any compensation.

The good news is you may be - in certain circumstances.

First, it's important to know what flights are covered by consumer law. These are: 

• Any flight leaving a UK airport
• Flights operated by a UK/EU airline arriving at a UK airport
• Flights operated by a UK airline only arriving at an EU airport

When will I be entitled to help? 

You'll qualify for support if a short-haul flight under 932 miles (1,500km) is pushed back by two hours. 

This rises to three hours for journeys up to 2,175 miles (3,500km).

For long-haul flights going any further than this, four hours or longer counts as a significant delay.

What support will I get?

Under UK law, airlines must give passengers who are affected by a delay of at least two hours:

• A reasonable amount of food and drink (usually provided in the form of vouchers)
• Refunds for the cost of two free phone calls, faxes or emails
• Accommodation for passengers stranded overnight (usually in a nearby hotel)
• Transport to a hotel - or their home

Will I get compensation?

Usually, airlines have to provide compensation if a person's flight arrives more than three hours late.

The exception to this is when there are air traffic control problems or extreme weather, as these issues aren't their fault.

If you agree to travel on a later flight, the airline is no longer obliged to offer food, drink or accommodation while you wait.

Thankfully, you are entitled to a full refund if you decide to abandon your journey after five hours of delays.

The length of your flight affects how much you are entitled to:

• Short-haul flight - £220
• Medium-haul flight - £350
• Long-haul flight - £520 if the flight arrived more than four hours late, £260 for a delay of between three to four hours

What if I'm about to travel?

Transfer passengers who end up missing a connecting flight because their first plane was delayed are entitled to a service back to their original departure point.

But things get a little more complicated for passengers on package holidays - especially if they decide not to travel on a delayed outbound flight.

The CAA's guidance says: "You may lose your holiday too, so we recommend you contact your package organiser or the airline for further information.

"If you still want to travel then your airline must get you to your destination. You might have to be patient while they rearrange transport and rebook passengers, but the law says they must get you there."

What if my flight is cancelled? 

You're entitled to a refund or replacement flight if yours is cancelled. Your rights to assistance are the same as if your flight is delayed.

If the reason for the cancellation was within the airline's control, and it was made with no more than 14 days' notice, then depending on the timings of the new flight offered you could also be entitled to compensation.

You'll be able to claim £110 and £520 depending on the length of the route and timings of the new flight.

Drivers are still feeling the strain of rising insurance premiums - but there are signs of a slowdown, according to one index.

New figures from insights firm Consumer Intelligence suggest the average quoted price of car insurance rose by 56.4% in the year to February.

This was the third-highest annual increase since its records began in 2012 - but in slightly better news for motorists, it marked a lower annual rise than the 67.2% recorded in November.

And there was only a slight rise of 0.5% when looking at the three months to February - the lowest quarterly increased since November 2021.

Drivers most commonly received a quote between £500 and £749 in February, Consumer Intelligence said. It analysed the average of the five cheapest offers from price comparison websites.

Max Thompson, the firm's insurance insight manager, said big insurance brands made "competitive movements" to reduce premiums at the start of the year.

"However, some of this was unwound in February indicating it may have been more of a tactical move than a long-term trend," he added.

Jonathan Fong, manager of general insurance policy at the Association of British Insurers, said insurers were "aware of the financial challenges customers are facing" and were working to keep prices affordable.

"Our motor premium tracker is the only collection based on the price customers pay for their policy, rather than quotes, and shows that the average motor premium increased by 25% last year to £543.

"This was largely driven by above inflation increases in the cost of repairs, thefts and replacement cars."

The Abu Dhabi-backed vehicle that had been on the brink of buying The Daily Telegraph is in detailed talks with Whitehall officials about the structure of an onward sale of the newspaper. 

Sky News has learnt that RedBird IMI is negotiating with the Department for Culture, Media and Sport about whether it can convert a call option which constitutes the right to take ownership of the Telegraph and Spectator into shares in the assets prior to their purchase by a new owner.

Read the exclusive story by our City editor Mark Kleinman ...

The telecoms entrepreneur who turned Daisy Group into one of the industry's most successful private companies is closing in on the latest in a string of significant takeover deals.

Matthew Riley, Daisy's chairman, has orchestrated a £215m deal to acquire 4Com , a provider of cloud communications services to more than 17,000 corporate customers, Sky News understands.

City sources said the deal was expected to be signed within days and was likely to hand 4Com founder Daron Hutt a windfall worth more than £100m.

Read the full story here ...

The Financial Conduct Authority has told motor finance firms they need to put funds aside as it continues a probe into the sector.

The City regulator also said many firms are "struggling to promptly provide the data we need" for the investigation.

A review was launched by the FCA earlier this year into whether people could be owed compensation for being charged too much for car loans, following a high number of complaints on historic agreements.

American Express has announced two major changes to its British Airways credit cards which help customers collect Avios points towards flights.

From November, the amount that BA Amex and BA Amex Premium Plus card holders will need to spend every year to get "two-for-one" companion vouchers will rise to £15,000.

That's a £3,000 rise in the minimum annual spend for Amex customers and £5,000 for Amex Premium Plus.

The companion vouchers mean customers can grab a second seat for someone travelling on the same flight, or a 50% discount on the Avios price of a solo flight.

That's not the only change, however, as American Express is also hiking the annual fee for its Amex Premium Plus card from £250 to £300 - an inflation-busting 20% increase.

The fee increase applies from today for new applicants. Existing cardholders will be hit with the rise for renewals from 1 August onwards.

Meanwhile, the US bank said the qualifying spend for companion vouchers will start from 1 November regardless of when membership is renewed.

That means some current customers may need to race to hit the lower minimum spend by 31 October.

American Express told consumer champion Which? that it occasionally makes changes to cardholders' account terms. A spokesperson said the companion voucher "remains an industry-leading credit card benefit", while both cards "continue to provide great value for customers".

Greece has announced a scheme to give "free" holidays to tourists affected by the wildfires that ravaged Rhodes last summer.

More than 20,000 tourists and locals were forced to flee homes and seaside hotels after blazes fanned by strong winds broke out on the island and burned for days in July 2023.

Greek Prime Minister Kyriakos Mitsotakis vowed  last year to offer a one-week free holiday in Rhodes to those whose holidays were cut short.

The country's government has now officially launched the "Rodos Week" scheme, which offers an e-voucher of between €300 and €500 compensation for a week's stay.

The general secretary of Greece's tourism ministry  told  The Guardian that it has been a "very complicated process not least, I think, because we’re the first country in the world to do this".

The amount holidaymakers can claim depends on the rank of the hotel they were originally staying in.

E-vouchers can be claimed during two phases: between now and May 31, and from 10 October to 11 November.

Only those who stayed in hotels are eligible for the scheme, the government said, with Airbnb accommodation excluded.

Yannis Papavasiliou, head of the island's union of hoteliers, said there has been good take up already with over 5,000 holidaymakers enrolling, according to The Guardian.

The airport where you're likely to face the longest delays has been revealed as one of the UK's biggest.

London Gatwick replaced Birmingham to top the list for 2023, with its departures nearly 27 minutes behind schedule, according to Civil Aviation Authority (CAA) data.

The West Sussex airport, the second-busiest in the UK behind Heathrow, was hit by air traffic control shortages across Europe last year and also had similar problems in its control tower.

In a statement, Gatwick said it was "working closely with our airline partners to improve on-time performance".

"The majority of cancellations are caused by poor weather, airspace constraints across Europe and inefficient third party ground operations," it said.

Luton airport followed with an average delay of almost 23 minutes, while Manchester took third place at nearly 22 minutes.

In contrast, holidaymakers flying from Belfast City (George Best) had the best experience, with the typical delay there just 12-and-a-half minutes in 2023.

Across all airports, the average delay was almost 20 minutes and 42 seconds - though this fell from 23 minutes and 12 seconds the previous year amid a boom in travel after the pandemic.

CAA director Tim Johnson said the aviation sector needed to "focus on resilience" before summer comes to "keep passenger disruption to a minimum".

All scheduled and chartered departures from UK airports with at least 1,000 outbound flights were included in the analysis, with cancellations excluded.

Naomi Leach, deputy editor of Which? Travel, said the latest figures point to "millions of passengers" experiencing "unacceptably long hold-ups last year".

"This cannot be allowed to become the new normal."

But the Airport Operators Association argued that data doesn't show "any of the context around operating in a global environment".

"Airports work extremely hard to minimise delays while providing a positive, safe and secure experience for passengers," it said.

We've all heard consumer advice that's repeated so often it almost becomes cliché. So, every Friday the Money team will get to the bottom of a different "fact" and decide whether it's a myth or must.

This week it is...

'You can't get a mortgage with a bad credit rating'

Just how important is keeping on top of your credit score when it comes to buying a home?

For this one, we've got the help of  Emma Steeley , chief executive at borrowing platform Aro. 

"The honest answer is that a bad credit rating can stop you from getting a mortgage, and a poor rating can throw some serious hurdles in your path," Emma says. 

"Despite this, it's not the end of the road if your credit rating isn't as rosy as you'd like it to be."

What counts as a bad credit score?

"In the worst-case scenario, this will likely mean you've defaulted on or missed payments, and debt has been escalated to the stage where legal action has been initiated," Emma says. 

An applicant left with a credit score below 325 is considered "poor" or even "very poor" by Equifax. 

A game of risk for lenders

Before we talk about what your credit score will do to an offer rate, it's important to understand the impact that the loan-to-value (LTV) ratio can have on this too, as it heavily influences the interest rate offered by lenders.

Your LTV ratio is used by lenders to decide how risky it is to lend you the money to buy your home. It compares how much of the property you will own - ie, how much deposit you can put down in relation to the property’s value - to how much they will need to lend to you to make up the difference.

"The lower your LTV ratio, the better the mortgage rate you're likely to be offered - the higher the LTV, the higher the risk for the lender," Emma says. 

"A higher credit score can help mitigate the impact of a high LTV, potentially resulting in a more favourable interest rate."

What to do if you have a poor credit score

The obvious answer here is to try to improve your credit score, by building your file with credit builder loans and/or secured cards.

"While the options may be limited and less favourable for those with 'poor' credit scores, they do exist," Emma says. 

Those are usually longer or more expensive deals, however. 

The good news is most lenders don't solely use credit scores as a measure of creditworthiness. 

"Best practice will see lenders using a blended scorecard, that overlays behavioural data and back book financial performance with credit data to get a much more accurate assessment of an individual's payback ability," Emma says. 

However, for people with a "very poor" rating (below 226, according to Equifax), the number of offers you are likely to receive shrinks to almost zero.

Myth or must?

It's undeniable that a good credit score gives you more flexibility when it comes to getting a mortgage. 

"Importantly, credit scores can be improved," Emma says. 

"Those who take a proactive approach to managing their finances and understand how to rebuild their credit score will find themselves presented with a wider array of loan options."

A good credit score is a money must. 

Messy neighbours can slash tens of thousands of pounds off the value of your home, according to new research.

A survey of estate agents by Churchill Home Insurance found that more than four in five (82%) believe it's important for homeowners to chat to their neighbours about their poorly maintained property before putting the house on the market.

Some 22% said an overgrown garden is likely to have the biggest impact, while 20% said rubbish or junk in the driveway or front garden could affect the cost.

Overflowing gutters (20%), several cars parked on or around the property (19%) and garden ornaments and statues (18%) also cut the value of neighbouring homes, estate agents said.

The research also revealed that some sellers deliberately time viewings to make their houses seem more attractive, avoiding issues next door such as loud music or pets - or even avoiding the neighbours altogether.

Sarah Khan, head of Churchill home insurance, said: "First impressions count when it comes to selling homes, with the sale price often negatively impacted when the neighbouring property looks scruffy.

"Investing a few hundred pounds in a gardener to tidy up next door's front garden could pay huge dividends when it comes to selling your home, a win-win for both you and your neighbour." 

What do estate agents say? 

We spoke to people in the industry about the risk of having messy neighbours when it comes to moving - and what their advice is for those seeking to avoid any effect on their sale.

James Stevenson, south and south west area director at Foxtons,  agrees it can make the process more difficult.

"Gardens that are unkept or full of clutter, pavements and frontages that have fallen into disrepair or where your neighbours are showing little care for their property are all a negative flag for buyers," he said.

"Additionally, any disruption that has become a neighbourly dispute must be declared to prospective buyers, so it's always better to have a great relationship with your neighbours and try to resolve any existing issues amicably."

Messy neighbours are "frustrating" at any time, but become a "more pressing issue" when it comes to putting a home up for sale, says  Sarah Cull, senior associate director Strutt & Parker Salisbury.

"Before you get your own gardening shears out, the first step should always be to try to have a frank conversation with your neighbour - you can even explain that you're looking to sell and you want to give prospective buyers the best first impression possible."

If a friendly chat doesn't do the job, Sarah suggests heading to a local garden centre to pick up some screening.

"Where the neighbour's garden is considered a nuisance - for example there's lots of rubbish which could attract pests, or weeds are damaging groundwork - then you can report it to your local council," she added.

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