Market Research Red Flags: Common Mistakes That Undermine Your Strategy

Lena Baudo
Feb 22
9 min read

Updated: Feb 23

After more than 15 years in market research, I keep seeing the same mistakes come back. They look small at first, but they often end up wasting months of work and large budgets. I'll walk you through the most common red flags I see, why they happen, and what you can do to avoid them.

Understanding market research

Definition and importance

Market research is a detailed analysis of the four elements that constitute your market, which are:

Offer: The product or service you are going to sell.
Demand: The customers who are going to buy your service or product.
Context: The current climate, location, trends, technologies, competitors, legislation, etc.
The way you are going to sell it: Distribution channels and marketing strategy.

This is a key factor in determining your product's viability in the market.

Types of market research

I won't dwell on the different methods of market research, as I will be writing a separate article on this topic, but here is an overview:

Primary research is a custom study designed to understand the needs and behaviors of your target customers. It involves collecting data directly from them through interviews, phone calls, focus groups, or online surveys.
Secondary research is the analysis of data that has already been collected by others. It uses existing sources such as government statistics, industry reports, academic studies, and databases to understand market trends, , and competition.
Qualitative research explores attitudes, emotions, and perceptions. It relies on open discussions such as interviews or focus groups.
Quantitative research measures consumer behaviors and opinions with numbers.
Branding research evaluates how your brand is positioned and remembered.
Customer research gives you information on how people interact with your business and their preferences.
Competitor research analyzes market players and their strategies. You will get information on pricing, offerings, strengths, and weaknesses.
Product research tests the value and usability of your business offering. It guides your decision on features, design, and customer feedback

Depending on your objective, these methods can be conducted simultaneously or independently.

The most common market research red flags

Starting market research without a clear objective

Is the purpose of the study to assess whether you have a place in the US market? Is it to analyze what your product is lacking to be more competitive in the market? To understand your competitors' pricing strategy?

There are countless questions that can be answered by a market research. However, you cannot conduct it without a clear direction, otherwise you will not know where to start and you risk getting lost in the process.

Asking colleagues instead of customers

This is the fastest way to bias your research. Colleagues know your product, they share your culture, and they already speak your company's language. That is the opposite of what you want when you need unbiased customer insights.

Why it matters:

You end up with data that confirms what you already believe.
You miss blind spots because colleagues don't necessarily represent buyer motivations or frustrations.
Decisions based on this kind of input look good internally but can collapse when tested externally.

Confusing market size with market opportunity

Market size represents the total revenue generated by all potential customers in a given market segment. This indicator quantifies all the opportunities available for companies operating in this market. Meanwhile, market opportunities are generally assessed on the basis of three main factors: market size, market growth, and market competitiveness.

It is important not to confuse the two, as a large market size does not necessarily mean that the market opportunity is strong. This type of error is really common.

For example, many customers want to enter the U.S. market because it is a large market: that is true. However, depending on your industry and your budget, this market may not be the right one for your business. Some markets, such as Canada, may be more suitable for your expansion and allow you to gain a foothold in the North American market.

A comprehensive market analysis will provide you with this information.

Copying the same strategy for each new market

I have seen this mistake lead to the failure of expansion or development projects. Keep in mind that a strategy that worked in Europe, for example, and is applied as is in the United States will not work. Assuming that “the market is the same, but bigger” is a bad idea. I can assure you that this is not and never will be the case.

What changes?

Regulations: Industries like healthcare, finance, or even retail operate under very different rules.
Buyer behavior: In some countries, people compare extensively before buying. In others, trust in the brand or recommendation channels matter more.
Competitive analysis: Your European competitor set is not the same as in the U.S. A player you've never heard of may already control the space.

When you don't adapt, you risk wasting your resources. Campaigns fail to generate a response. Sales cycles take longer than expected. Product-market fit, which seemed obvious in one region, suddenly vanishes in another.

Expansion always requires new research!

Ignoring Competitive Market Research

This is one of the biggest red flags I see in product strategy. The reasoning goes like this: “Our competitor offers these five features, so we should offer them too.” This isn't true by definition. In fact, by doing this, you're entering a race to the bottom, where the only difference is price.

Of course, a detailed analysis of your competitors will reveal key features that should not be overlooked and, above all, that are important to your customers. But that doesn't mean copying and pasting, otherwise you'll never lead the way in your market.

When conducting market research, the goal is to focus on what sets you apart and makes your solution/product better than the competition.

Famous companies that failed due to poor market research

Sephora’s cultural blind spot in South Korea

Sephora, a beauty retailer owned by the LVMH group, withdrew from the South Korean market in May 2024 with net losses of $12.76 million and $17.41 million in 2021 and 2022, respectively.

You may wonder how this is possible with the resources this company has. In fact, the answer is quite simple: they replicated their American strategy in South Korea.

Except that South Korea is a completely separate market, mainly because competition is extremely fierce, with retailers such as Olive Young. Over 90 percent of Korean women in their 20s and 30s are members of Olive Young, making it a solid K-beauty platform.

Sephora's second mistake was not taking into account the shopping habits of their target audience, for whom being able to browse in a store without being disturbed is essential. Their established competitor understood this twenty years ago, and in the early 2000s, Olive Young deliberately stopped pitching its products: In stores, employees greet shoppers and then hang back. They let customers test products, compare brands, and linger without pressure. Staff members do not approach unless a shopper asks for help.

The company calls it “half-response” service.

Dove: A packaging design that consumers truly disliked

In 2017, Dove launched a limited edition range of soap bottles in the UK designed to suit every body shape, and the internet was left perplexed at the time.

Created by the Ogilvy London agency, the “Real Beauty Bottles” series is a limited edition of six different shower gel bottles that illustrate the diversity of body types. The problem? People either hated this campaign or laughed at it, thanks to the meme treatment it received on Twitter (now X).

One writer of the Marketing Week, said “Finding my fat bum on the shelf doesn't really motivate me that much to purchase. It puts me off. It feels embarrassing. Will the checkout person say: ‘Oh, you went for that one? I would have seen you as that rounder one.’”

You see here, a survey on its consumers' opinions regarding the new packaging concept, the company would have avoided losing money on product development, advertising campaigns, marketing, etc.

Amazon Fire Phone: A failed pricing strategy

In 2014, 7 years after the launch of the first iPhone and 6 years Android, the smartphone market was already mature and highly competitive. Still, Amazon launched the Amazon Fire Phone at $199 on contract, positioning it against high-end leaders such as Apple and Samsung.

The device offered limited differentiation and was available exclusively through AT&T, which further limited its adoption. Sales were weak, and within weeks, Amazon reduced the price with a special offer at $0.99. The rapid collapse in prices damaged the company's credibility and Amazon was left with $83 million worth of unsold Fire phones.

The company could have mitigated this problem by conducting price sensitivity tests. The van Westendorp pricing model, in which four questions are asked of survey participants, can be used in this case:

At what price do you consider the product/service so cheap that you question its quality?
At what price do you consider the product/service to be a good deal?
At what price does the product/service start to seem expensive to you?
At what price do you consider the product/service to be too expensive?

This model is so effective that over the past 30 years, it has become one of the most popular and widely used pricing strategy techniques in the market research industry.

How can you avoid conducting ineffective market research?

Start with a clear strategic objective

As I said, this step is your starting point, so don't hesitate to ask for help even at this stage. When working with my clients, I sometimes define the objective with them after several discussions about the company's short-, medium-, and long-term goals.

In any case, you need to define the specific decision that your research should inform: pricing, positioning, target segment, or market entry.

Formulate it as a question. And one point that should not be overlooked is to validate these objectives with the stakeholders (GMT, shareholders if necessary, product/marketing team, etc.) before starting the study.

Validate assumptions with data

Be careful with assumptions that are not based on concrete data.

Make sure to list your core assumptions about the market, the customer, and your product. Turn each one into a testable hypothesis and gather evidence through customer interviews, surveys, competitive benchmark, and behavioral data.

Prioritize signals of real purchase intent over opinions, and be ready to adjust your strategy if the data contradicts your initial beliefs.

Get an unbiased opinion

This goes hand in hand with the previous rule. I can only advise against conducting a study yourself. You might say that's logical, since I've been conducting market research for 15 years, but I once met a small business that didn't want to invest in market research: as a result, they launched their go-to-market strategy based on their own opinions and lost nearly $100,000, so they came back to me, now understanding the value of research... But this company could have saved that money.

All this to say that a neutral perspective will help you identify blind spots and prevents confirmation bias from shaping conclusions.

When to conduct market research?

For an international expansion

Before entering a new country to understand local demand, competition, and cultural differences.

When developing a new product

Before launch to validate real customer needs, pricing tolerance, and differentiation. Early research reduces the risk of building something the market does not value.

Before a fundraising

To provide credible data on market size, growth potential, and competitive positioning. Strong research strengthens your narrative and investor confidence.

Regularly for assessing competition

Markets evolve quickly. Ongoing research helps uncover competitor moves, pricing changes, and shifts in customer expectations.

How Starts Consulting carries out market research

Starts Consulting's team always begins with a review of your strategy. As I mentioned, we first clarify the business decision at stake, then design a structured research approach tailored to your market and objective.

We combine secondary market information with targeted primary research to validate assumptions, assess competition, and measure actual demand. Our goal is not to produce a report, but to provide clear, actionable recommendations that will directly influence your positioning, pricing, and marketing strategy.

FAQ - Market research

How long does market research take?

It depends on the scope, but a focused study can take 2 weeks, while international or complex analyses may take 1 to 3 months.

Can market research predict success?

It cannot guarantee success, but it significantly reduces uncertainty by testing assumptions before major investments.

How do you know if your market research is reliable?

Reliable research uses clear objectives, representative samples, unbiased questions, and cross validation between multiple data sources.

Conclusion

Market research is not about filling reports with charts or running surveys for the sake of it. It is about challenging assumptions and avoiding shortcuts. The red flags above are easy to spot, but they survive because they save time in the short term. But every shortcut has a cost: Failed launches, wasted budgets, and missed opportunities.