How to get started with market research

Sep 6, 2024

20 minutes

Contents

1. What Is market research?
2. How market research supports business growth
3. What to do if you give up market research
4. Steps to conduct market research
5. How to use market research results
6. FAQ

The harsh truth is that 20% of pre-seed in the UK fail within the first year. They may have great ideas and great development teams working on revolutionary functionality. However, is there a real market need for these products? This is the question most often overlooked by young entrepreneurs, and the problems they face are as follows.
Tick the boxes if you're experiencing them:

Limited budget – being able to allocate funds for only part of the decision on which features to include in the MVP;
Uncertainty of requirements – the need to understand which product market fit is better for future users;
Lack of feedback – fear that the product will not take off in the market because nobody likes it.

What if we told you that you could find money, user acceptance, and features that would rock the market, but only if you started by understanding what market research means and why it's important?
Learn how to conduct this crucial stage of the process, and see why it's essential to business success. This guide provides main market research steps, real-life examples and tips to avoid common pitfalls.

What Is market research?

Market research is the process of gathering, analysing, and interpreting data about a market, including information about a product or service’s potential customers and competitors. Understanding how to conduct market research helps businesses make informed decisions, from product development to marketing strategies, ultimately reducing the risk of failure.

Imagine this: you're launching a new app for freelancers. You feel confident, because it's sleek, it's modern, and you just know freelancers are going to love it. After all, freelance work is exploding, right? So you're ready to hit the ground running.

But before you hit the 'Launch' button, let's pause for a moment. What if you took a moment to gather some real data? You could do some surveys, talk directly to freelancers and maybe even check out what your competitors are offering. Sounds like extra work, but bear with me.

Now imagine that the feedback starts coming in. You'd planned to focus on project tracking, but suddenly you're hearing from freelancers that their real pain point is time management – balancing deadlines and keeping everything organized. That's what they struggle with the most.

At this point, you have a choice: you can continue with your original idea, or you can modify your app to meet the new demand. So you pivot. You add time-tracking features and a dashboard to help freelancers manage their deadlines. Now, instead of being just another project tracker, your app addresses their biggest problem head-on.

When launch day comes, it's a hit. And why is that? Because you listened to what the market actually needs, not what you thought it needed. That's why market research is important. It saves you from launching a product that misses the mark and sets you up to win by making informed decisions based on the real needs of your audience.

Definition and goals of market research

To define market research in business, we should understand it as a critical tool that businesses and organizations can use to gather valuable information about their target market and industry. By conducting research, businesses can gain insights into customer needs and behavior, stay competitive, make informed decisions, manage risk, and measure success.

For pre-seed start-ups, market research is essential to ensure that there is real demand for your product idea, thereby minimising the risk of investing in the wrong direction. By conducting it, you'll be able to achieve the following goals:

Identify customer needs – understand what your target audience truly wants or needs from a product or service to ensure your offering solves a real problem;
Understand market trends – stay updated on emerging trends, preferences, and changes in the market to adapt your business strategy accordingly;
Evaluate competitors – analyze competitors’ strengths and weaknesses to identify gaps in the market where you can offer something unique;
Determine product-market fit – ensure your product or service aligns with the demands of your target audience and solves their key pain points;
Target the right audience – identify the specific demographic, geographic, or behavioral groups most likely to use and benefit from your product;
Improve marketing strategies – gather insights on customer preferences and behaviors to refine your marketing messages, platforms, and campaigns for better results;
Test product concepts – validate new product ideas or features with potential customers before investing too much time and resources into development;
Set pricing strategies – use customer and competitor data to determine the best price point that balances customer willingness to pay and profitability;
Assess market demand – estimate how much interest or demand exists for your product to avoid launching something that doesn’t have a strong market potential;
Reduce business risks – minimize the chances of failure by making informed decisions based on data, rather than assumptions, about your market.

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Who does market research and how long it takes

So you understand what market research is, but who is responsible for doing it? Are you going to do it yourself, delegate to a team, or even work with a party-based specialist? The answer depends on both the human resources and the budget you have.

Market research is carried out by market researchers or analysts, whose job it is to collect, analyse and interpret data to give marketers a clearer picture of their target audience, market trends and the competitive landscape. These experts may work for specialist marketing agencies (agency-side) or directly within companies (client-side), and their insights are critical in shaping business decisions and fine-tuning marketing strategies.

Here's a breakdown of what market researchers typically do:

Data collection and analysis – collecting both quantitative data to provide measurable statistics, and qualitative data, then digging deep into the data to identify patterns and key insights that inform decisions about product development, customer engagement and market positioning;
Reporting – produce comprehensive reports with findings and conclusions, supported by actionable recommendations based on the results;
Client engagement – clarify research objectives, discuss project scope and ensure research is aligned with business objectives.
Project management – monitor timelines, budgets and deliverables to ensure the project stays on track from start to finish;
Trend monitoring – keeping a close eye on market shifts, competitor moves and evolving customer preferences to provide fresh, actionable insights that keep organisations competitive.

The duration of a market research project can vary depending on its scope and complexity. Smaller projects, such as a simple survey, can take a few weeks, while more in-depth research involving interviews, data analysis and competitive intelligence can take several months. On average, a robust market research project should take between 6 and 12 weeks to complete, depending on the specifics of the objectives and methods used.

💷 How much does market research cost in the UK

If you're the owner of a pre-seed startup, it's perfectly normal to be more selective with your spending. Many people mistakenly view market research as an optional step before launching an MVP. But then they face more problems than if they'd allocated part of the budget to it (but we'll talk about that later).

We all want to know the real numbers, so here are some options for conducting research in the UK and the average cost of this stage of the process:

Basic surveys and focus groups – a simpler market research project, such as conducting online surveys or a basic focus group, can cost between £5,000 and £20,000. This typically involves gathering feedback from a small number of participants over a short period of time and includes data analysis. For example, a start-up company seeking customer feedback on a new product might choose this approach;
Comprehensive studies and quantitative research – for more in-depth research would expect to pay £25,000 to £50,000 or more. A company entering a new market may choose this to minimize risk;
Advanced techniques and international research – for companies requiring advanced research techniques such as neuromarketing, ethnography or eye-tracking, costs can rise significantly, often reaching £75,000 or more. This type of research is ideal for brands with very specific objectives or start-ups seeking global reach and nuanced insights into consumer behavior;
Custom research projects – the price of bespoke services tailored to the specific needs of your start-up will depend on the complexity, ranging from £10,000 for a simple one-off project to well over £100,000 for global studies involving advanced analytics.

How to choose the right market research services? Start with the essential features that are needed for your MVP and think about what it is the lack of information you have to build it right.

You can also hire market researchers or analysts as an in-house specialist. In the UK, the average salary for a market research analyst is typically between £25,000 and £32,000 per year, depending on experience. Entry-level analysts can expect to start at around £26,000, while those with more experience or working in London can earn in excess of £41,000. For more senior roles, particularly in large companies or specialized sectors such as finance or pharmaceuticals, salaries can reach up to £52,000 a year. These figures reflect both the demand for data-driven insight and the complexity of modern market research roles.

How market research supports business growth

The importance of market research lies in its ability to guide pre-seed startups towards informed, data-driven decisions. By identifying customer needs early, you ensure that your product or service fits the market demand.

What business started with market research

The question is, what comes first – the idea or the market research? Let us take an example of how Airbnb started. Back in 2007, two broke roommates in San Francisco, Brian Chesky and Joe Gebbia, couldn't afford their rent, so they decided to rent out the air mattresses in their living room to some people attending a design conference. That was the spark, but here's the real genius: they didn't just stop there. They dug deep into the market, talked to people, found out what travelers really wanted – and it wasn't just cheap accommodation, but also a unique, local experience.

But the big problem? Trust. Why would anyone want to stay in someone else's home? Airbnb solved this by adding reviews, secure messaging and profiles, which completely changed the game. They realized that their platform wasn't just for conferences, but could work globally, all year round, and that's how they scaled. Isn't it the best answer to the question: what is market research in business?

One more real-life example of companies that used market research to build successful MVPs is Dropbox. Founder Drew Houston realized through market research that people were struggling to share files across devices. The insight was that users wanted a simple, reliable solution. Dropbox's MVP focused on a video demo explaining its core feature: seamless file syncing. The video alone validated the need before the product was built.

And while building the Buffer Joel Gascoigne used market research to discover that people wanted an easier way to schedule social media posts. His MVP was a simple landing page that explained the concept and offered a sign-up form. Once there was enough interest, he built out the core scheduling features.

To test your MVP ideas, get our free guide to turning hypotheses into valuable product market fit features.

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What to do if you give up market research

If a startup owner skips market research, they risk facing several major failures that can seriously hinder growth or lead to business collapse. Here’s a list of potential pitfalls:

Poor Product-Market Fit

You might develop a product or service that doesn’t solve real customer problems or isn’t aligned with their needs, leading to low demand or indifference.

✍ Example: A fitness app startup developed an intense workout program for busy professionals. However, after launching, they realized their target audience preferred quick, low-intensity exercises. Without market research, they missed understanding their customers’ needs and wasted resources building a feature no one wanted.

Targeting the wrong audience

Without research, you could spend time and money targeting people who aren’t interested in your product, missing out on your actual ideal customers.

✍ Example: A meal-kit delivery startup targeted young urban singles, but without research, they didn’t realize most of their sign-ups were from busy families looking for convenience. Their messaging didn’t connect, and they struggled to scale because they didn’t address the needs of the actual users.

Ineffective Marketing Strategy

Misunderstanding your audience’s preferences, behaviors, and motivations can lead to wasted marketing efforts, ineffective messaging, and low engagement.

✍ A beauty tech startup launched an ad campaign on Instagram, thinking that’s where their customers were. After poor results, they discovered through post-launch feedback that their older, tech-savvy audience was more active on Facebook and Pinterest, wasting their ad spend on the wrong platform.

Pricing errors

You could price your product too high, driving customers away, or too low, missing out on potential revenue and positioning yourself as a lower-value option.

✍ A software startup set their prices too high, assuming users would pay for premium features. However, market research would’ve shown that their small business audience was extremely price-sensitive, leading to poor initial sales and a need to rework their pricing model.

Overlooking Competitors

Skipping competitive analysis means you might miss key opportunities or threats from other players in your market, causing your startup to fall behind or seem outdated.

✍ A new e-commerce platform launched without doing competitor research, only to find out that a rival was offering nearly identical features at half the price. They struggled to compete and lost potential customers by not understanding the competitive landscape.

Wasted Resources

Without knowing what features or services customers actually value, you could waste valuable time, money, and effort building unnecessary features that don’t contribute to sales or user satisfaction.

✍ A SaaS company spent months developing a complex reporting tool they thought customers would love. After launching, they found that users barely used it, preferring simpler, streamlined features. Without research, they wasted development time on something with low demand.

Customer Dissatisfaction

If your product isn’t aligned with customer needs, you’ll likely experience negative reviews, low retention, and high churn rates as people leave for better alternatives.

✍ A travel startup skipped user research and launched with a complicated booking interface. Customers found it frustrating and difficult to use, leading to poor reviews and a high drop-off rate. Proper research would’ve shown that ease of use was critical to their audience.

Missed Market Trends

Ignoring market research can lead you to overlook emerging trends and shifts in consumer behavior, making it difficult to adapt and innovate quickly.

✍ A retail startup ignored growing trends toward sustainability and eco-friendly products. By the time they realized it, competitors had already captured the environmentally conscious market, and they were seen as out of touch.

Inaccurate Sales Projections

Without understanding your market’s size or potential demand, you could end up with over-optimistic (or too conservative) sales projections, resulting in cash flow problems.

✍ A subscription box startup predicted high sales based on gut feeling rather than market data. They overstocked inventory and faced cash flow problems when demand didn’t meet expectations, resulting in excess products they couldn’t move.

Failure to Differentiate

You might end up offering a product that looks too similar to existing solutions, making it hard to stand out and attract customers.

✍ A health tech company launched a wearable device that monitored basic fitness metrics. Unfortunately, they didn’t realize that most competitors offered the same features, leaving them struggling to stand out in a crowded market. Market research would’ve shown them the need for a unique selling point.

That’s why startups should incorporate market research into their early-stage strategy to minimize risks, maximize opportunities and ensure long-term success.

Do you have any fears or doubts? Book a consultation with us to clear up any concerns.

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Steps to conduct market research

Conducting market research involves several steps to gain a deeper understanding of your market. Here’s a simplified guide on how to conduct market research:

Define your goals: start by outlining what you aim to achieve through the research. Are you trying to identify potential customers or understand competitors better?

Select research methods: choose from primary and secondary research methods:

Primary research: this involves directly collecting data from your target audience through:

Surveys: simple questionnaires can give insights into customer preferences and buying habits;
Interviews: one-on-one discussions with potential customers provide deeper qualitative insights;
Focus groups: collect feedback from a selected group of people to understand their opinions and reactions to your product.

Secondary research: use existing data like industry reports, competitor websites, or government statistics to build an understanding of your market.

Collect data: depending on the chosen methods, gather information that answers your key questions about customer needs, preferences, and behaviors.

Analyze the results: use analytical tools to interpret the data. Identify trends, pain points, and opportunities that will help shape your business strategies.

Apply findings: use the research findings to make informed decisions about product development, marketing strategies, and overall business planning.

If you want to explore this topic further, check out our articles on Primary Hypothesis Testing and Secondary Research, which take a closer look at the workflow of this process and the results it brings to your MVP.

How to use market research results

Once you have all the market research materials carefully organized into folders and tabs, this is the starting point for MVP development and go-to-market strategy. Here the main step to follow:

Confirm the problem. Review research findings to validate that the problem your MVP solves is a real pain point for your target audience. Adjust if needed.
Narrow your target audience. Use the data to refine your customer persona – age, location, behaviors –s you know exactly who your MVP should serve.
Prioritize core features. Based on customer feedback, rank features by importance. Focus on building the must-haves for your MVP.
Align with product-market fit. Check that your MVP directly addresses the pain points identified in the research. Make tweaks if it doesn’t.
Build a customer-centric roadmap. Create a development plan that focuses on solving the most critical problems for your target audience first.
Fine-tune your messaging. Develop marketing messages that emphasize the key benefits your research shows customers care about. Position your MVP clearly.
Identify the best launch channels. Research will tell you where your audience spends time. Whether social media, forums, or direct outreach, plan your MVP launch in those channels.
Plan for Feedback. Set up surveys or feedback forms post-launch to gather real-time insights. Use this feedback loop for iterations and improvements.

FAQ

If you want to explore this topic further, check out our articles on Primary Hypothesis Testing and Secondary Research, which take a closer look at the workflow of this process and the results it brings to your MVP.

When should I conduct market research?

Ideally, you should conduct market research before launching your product or service. However, it’s also beneficial during product development, after launch, or when entering new markets to ensure you’re staying in tune with customer needs.

How much does market research cost?

Costs can vary widely depending on the scope and methods used. For startups, there are affordable options like online surveys and competitive analysis. Larger-scale research, like professional focus groups, may cost more but can yield deeper insights.

Can I do market research myself?

Absolutely! There are plenty of free or low-cost tools available, such as Google Forms for surveys or Hotjar for user behavior analysis. But without specialist skills and the involvement of experts, market research can take longer than you had planned. However, if you need more complex insights, working with a research agency can help you dive deeper.

What happens if I skip market research?

Skipping market research is risky. You might end up launching a product that doesn’t resonate with your target audience, waste resources on ineffective marketing strategies, or miss key opportunities that competitors are taking advantage of. Market research helps minimize these risks.

What are the steps to conduct market research?

Market research typically involves several steps:

Define your objective: Know what questions you want answered.
Collect data: Use methods like surveys, interviews, and competitive analysis.
Analyze the data: Look for patterns, customer pain points, and opportunities.
Apply insights: Adjust your product, marketing, or strategy based on the data.

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