How to Do Market Research: A Guide for Entrepreneurs

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When IKEA first entered the Japanese market in 1974, it had ambitious plans to bring its revolutionary flat-pack furniture concept to Asian consumers. But by 1986, after more than a decade of struggle and mounting losses, IKEA was forced to withdraw from Japan entirely in what became one of its most significant international failures. Why did this happen?

Turns out, there was a lot that the company didn’t know about Japan.

First, Japanese homes were far smaller, making IKEA’s standard furniture sizes impractically large. Japanese consumers also viewed low-cost furniture as inferior. These and a host of other reasons led to the failure of the product in Japan.

IKEA had assumed what worked in Europe would work everywhere. It didn’t.

IKEA eventually re-entered the Japanese market in 2006, but this time, they had studied the Japanese customers deeply and got much better results.

(Source: IKEA Museum - Too Big in Japan)

And it’s not just IKEA, we’ve all been there, convinced our idea is a winner, only to find out customers don’t see it the same way.

That’s why every smart move in business starts with good market research.

What is market research?

Market research is the process of gathering and analyzing information about your target market, that is, the people you want to sell to, so you can make better business or marketing decisions.

When conducting market research, you collect, analyze, and interpret data about your target customers, your competitors and the market environment you operate in.

The goal is to use your findings to make better decisions when it comes to your marketing strategies, product development, pricing, branding, growth decisions, and many more areas in your business.

Why is market research important?

“We must learn what customers really want, not what they say they want or what we think they should want” — Eric Ries

As a business owner, market research should be an integral part of your decision-making process. It is very risky to make decisions solely based on your assumptions as they are more prone to failure. Market research helps you in the following ways:

1. It helps you understand your audience deeply

Without research, you’re just guessing who your customers are and what they need. This is a slippery slope that can lead you to wrong assumptions and lost customers. With research, you can uncover their real problems, motivations, and decision triggers, helping you make smarter business decisions.

2. It reduces risk

Market research saves you from wasting time and money on ideas that won’t work. By testing your product or campaign before launch, you can be sure people actually want what you’re offering.

3. It improves your messaging and marketing

When you understand your audience’s exact language, you can create copy and content that connects emotionally. For instance, when Dove discovered through research that only 2% of women considered themselves beautiful, they shifted their message from “beauty products” to “real beauty.” This made their campaign one of the most successful in history.

4. It reveals opportunities and gaps

By studying competitors and market trends, you can spot what others are missing and fill that gap. This helps you position your product where demand exists but supply or satisfaction is low, the sweet spot of growth.

5. It guides product and business decisions

Research is not limited to marketing alone; it also helps with deciding the design of your product, your positioning in the market, and even something as simple as your customer service strategy.

6. It builds confidence and credibility

When you base your ideas on real data, not your assumptions, you sound (and feel) more confident about your business and the decisions you make. This will be evident when you’re pitching investors or even talking to your team members.

Types of market research

There are two main types of market research you must know: primary and secondary research. Below, we’ll explain the two:

Primary research

Primary research is when you gather new data yourself, collecting the original, firsthand data directly from your target audience, instead of relying on information that already exists. Some examples of primary research are:

Surveys Surveys are just lists of questions you send out to people, usually through tools like Google Forms or Typeform, to get quick opinions or facts. They help you spot patterns fast, like what most people want, how much they’d pay, or what frustrates them most.

Interviews Interviews are one-on-one conversations where you dig deeper. They can be virtual or in-person. You get to ask why people think or behave a certain way, not just what they do. It’s great for hearing real emotions and language straight from your audience.

Observation This is when you quietly watch how people actually behave without interrupting, instead of relying just on what they say. Because people often say one thing but do another, observing helps you catch real habits and blind spots.

Focus groups A focus group is a small group, usually 5–10 people, that you bring together to discuss an idea or an issue. It helps you see different opinions bounce off each other and understand how people react in real time. For instance, if you’re launching an ad campaign, you can gather a few potential customers to watch your new ad and ask what they liked or disliked.

User testing User testing is when you give people your product or its prototype and watch them use it. You want to see what’s easy and where they get stuck, all in real time.

Secondary research

Secondary research is when you use existing information that other people or organizations have already gathered instead of collecting new data yourself. It’s basically learning from what’s already out there to save time and effort. Examples of secondary research are:

Industry reports Industry reports are detailed studies made by research firms or organizations that show what’s happening in a specific industry. They’re super useful when you want to understand where the market is heading or what’s working for others.

Online databases Online databases are websites that collect and organize tons of business information, like statistics or consumer insights in one place. When conducting your research, they save you hours of digging through Google by giving you verified numbers and research in one spot. Examples are Statista, Pew Research, IBISWorld, or Google Scholar. They are great places to start.

Competitors’ websites Checking competitors’ websites is one simple way to do market research. You can learn what works for them, like how they position themselves, what they offer, how they talk to customers, and what kind of content gets engagement. Basically, it helps you see what’s already working and where you can do better.

Government stats Government websites often publish free, trustworthy data about populations, industries, income levels, and consumer behavior. Some examples are U.S. Census Bureau, Australian Bureau of Statistics, Eurostat, or World Bank Data, depending on where you are.

How to conduct market research for your business

1. State your goal

Before you start collecting data or sending out surveys, always ask yourself what exactly you are trying to find out.

One can conduct research for many reasons. If you don’t know what you’re looking for, your research will feel like wandering in circles, lots of activity but no direction. And you’ll end up not knowing if you achieved the purpose of that research or not.

A good goal is specific and actionable and sets the foundation for everything else: who you talk to, what you ask, what methods you use, how you interpret the answers. The clearer your question, the easier every next step becomes.

2. Define your target market

Once you know what you want to learn, you need to know who to learn it from. Your target market is simply the group of people who are most likely to buy from you or whose problems you’re trying to solve. You need to have a clear picture of who they are to accurately identify and reach out to them.

You can define them by:

• Demographics: age, gender, income, location

• Psychographics: values, motivations, lifestyle

• Behaviors: how they shop, what tools they use, what frustrates them

• Needs/pain points: what problems they’re trying to solve

When you understand your audience this deeply, your research process becomes easier.

3. Choose your research method

Once you know what you’re looking for and who you’re researching, choose a method to gather your information. There are two main kinds of research, primary and secondary, and most good research exercises blend both.

Primary research is when you collect fresh data yourself. Secondary research, on the other hand, uses information that already exists. For most entrepreneurs, a good approach is to start wide with secondary research to understand your market, then narrow it down with primary research to uncover specific insights about your audience.

Choose the appropriate method for each question and scenario. If you need quick feedback, run a survey. If you want deeper stories, schedule a few interviews with a few customers. If you want to understand behavior, watch real people use your product through user testing or observation. Each method helps you see your audience from a different angle and together, they paint a complete picture.

4. Collect your data

Now that you know your goal, audience, and research method you’ll use, it’s time to gather your data.

If you’re doing primary research, this could mean creating a simple Google Form or interviewing five potential customers on Zoom and then documenting their answers.

If it’s secondary research, you might explore Statista, Pew Research, or your competitors’ blogs to spot patterns or gaps and note them down.

The key here is quality over quantity. Ten honest, detailed responses from the right people can teach you more than a hundred vague survey replies from the wrong audience. You don’t want to spend hours writing down responses that won’t help you answer your questions/reach your goal.

5. Analyze the data

Collecting data is one thing, making sense of it is another. Don’t just stare at the spreadsheet full of answers. Start looking for answers in it, in the form of patterns or even gaps. What keeps coming up? What frustrates people most? What do they love about your competitors that you’re missing?

Record your findings. Then, translate those into action, maybe it’s tweaking your product or changing your messaging.

Remember, research is only as valuable as what you do with it. Insights mean nothing if they don’t guide your next move. This step is necessary because your goal isn’t just to gather information, it’s to make smarter, more confident decisions that push your business forward.

When to conduct market research

Market research isn’t a one-time thing you do at the start of your business, it’s something you revisit at key moments to guide smarter decisions. Here are the times you really need it:

• Before launching a new business or product

• When entering a new market or location

• Before a rebrand or major marketing campaign

• When sales are slowing down

• Before setting your pricing strategy

• When planning new features or improvements

• When competitors are growing faster

• Regularly, even when things are going well. Because markets evolve. Checking in with your audience keeps you aligned with what they need right now, not what they needed last year.

Common mistakes entrepreneurs make when conducting market research

Many entrepreneurs do market research, but still end up with misleading insights or bad decisions because of how they do it. Here are the most common mistakes entrepreneurs make with market research:

1. Starting with assumptions, not questions

Some entrepreneurs begin research with their minds made up. They have a fixed idea like “People definitely want this,” instead of asking if they’ll really want it. So their research becomes a search for confirmation rather than discovery.

2. Asking leading or biased questions

Many surveys and interviews unintentionally lead people to certain answers. When you ask biased questions, you get biased answers. Instead, ask neutral questions about the problem, like “What do you currently use to save time?” or “What’s your biggest struggle when managing your tasks?”

3. Talking to the wrong people

Aspiring entrepreneurs often ask friends, family, or random online followers for feedback. And while those people might be supportive, they’re not their actual target audience. So, they end up with insights that they can’t apply to their business. Instead of asking friends, identify your real audience, the people who experience the problem you’re solving, and talk to them specifically.

4. Using small or unrepresentative samples

Talking to just 5 or 10 people isn’t automatically research if your sample doesn’t represent your real market, i.e, their age, habits, income, size, etc. If so, your data will mislead you.

5. Focusing only on what people say, not what they do

People often say what sounds nice or is socially acceptable, not what they actually do. Entrepreneurs who take every word literally can end up designing for “ideal” customers that don’t exist. That’s why observation is one of the best ways to conduct market research.

6. Ignoring competitors

Many founders make the mistake of focusing only on customer feedback and forgetting to study their competitors. By ignoring competition, you might end up reinventing something that already exists, or miss why a competitor’s version works better.

7. Treating research as a one-time task

Some entrepreneurs do market research once, usually before launch, and never revisit it. But markets evolve, your customers’ preferences shift, and what worked last year might flop today. That’s why it’s important to conduct market research at intervals.

8. Collecting data without interpretation

Gathering tons of data isn’t helpful if you don’t know what it means. If you focus on collecting data alone, you often end up overwhelmed by numbers but unclear about what to do next. After gathering insights, summarize the key takeaways you got from them. This is what you actually need from the research, not the numbers.

9. Ignoring negative feedback

Some entrepreneurs only hear what they want to hear; they dismiss criticism as “outliers.” That’s how you end up launching a product that nobody wants. When conducting research, you’re not only looking for positive reviews and opportunities, but you also want to listen hardest to the uncomfortable information, they’re often the most valuable.

10. Gathering data but never using it

Many entrepreneurs collect great insights but never act on them. Data only becomes valuable when it guides your decisions, not when it sits forgotten in a spreadsheet.

Conclusion

At its core, market research is about understanding your people, aka, your customers. The more you listen and learn, the less you’ll waste time chasing ideas that don’t work and the more confident you’ll be in every business decision you make.

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