Do you understand what market research does and why every business should do it?
Most small business owners do not perform market research, because they think it is expensive and only big business can afford it. However, market research is an important growth tool for start-ups and any business, regardless of size.
Market research is a must for most successful businesses. Successful businesses understand it isn’t a one shot deal either. They do it continually as part of their marketing strategy.
Market research provides vital information about market trends, your target market, and other factors that can increase your sales.
Here are 3 main reasons why every business owner should take time to research the market:
#1. Market research compares your business to your competitors and measures market penetration.
All businesses need to know their main competitors, but especially start-ups if they want to enter a niche. When you find out as much as you can about the competition, you can create pertinent local marketing strategies and outperform the competition.
Studying your competitor’s marketing activities and performance can shape your online and offline marketing and help you establish realistic business goals.
#2. Market research can help you measure change.
Market research can help you answer these fundamental questions.
(1) Have the needs of your clients changed and does your business model still suit them?
(2) Are there better ways to serve them, or products and services you could easily implement to complement your offerings?
Business changes constantly, and if you do not stay in sync with your clients you will lose them.
This knowledge is essential, especially for start-ups competing against more established companies. Existing businesses need to understand their evolving demographics, how it affects customer behaviour, and what you should offer in response.
#3. Market research identifies needs.
The most important aspect of market research is it identifies the problems of potential clients and their level of interest. This information is vital, because there’s no point investing your time and energy in something no one wants. Relevant data shows you whether there’s sufficient interest to justify your business model.
Collecting Market Data Affordably
Market research comes in many forms, but not all suit every business. A few of the tools available to you include:
- focus groups and
- statistical analysis, among others
If you’re considering a third-party market research firm, have a clear idea of what you want to accomplish first. These methods are available to you if you want to do it yourself and reduce your costs.
1. Ask your customers for feedback when they buy or use your service.
Actively seek feedback from your clients at least once a year. If you have a brick and mortar business, you can put a suggestion box in the waiting room. If you want to seek information electronically, you can design a survey and send it to your customers via email.
In my business, I use Survey Monkey (www.surveymonkey.com). It is very affordable and reliable. It doesn’t take long to design an effective survey to collect the information you need.
2. Approach a college or university with an MBA program for low-cost market research opportunities.
Many college and university students look for real-world cases to use during their studies. They learn new skills, and you benefit from the low-cost, accurate data reviewed by professors.
3. Collect statistical data from government sources, your local Chamber of Commerce, and other associations.
Many organizations collect data for various reasons. A government census can provide you with valuable data on the people in your area if you operate a local business. Your local Chamber of Commerce collects business data which can help you measure your competition. You can valuable data in the most unusual places. Charities, sports associations, and banks often post community reports that can aid you.
4. Spy on the competition.
Visit your competitors’ stores, check their social media presence, monitor their website and collect their most searched keywords. Discover what works best for them, instead of reinventing the wheel.
Qualitative or Quantitative Market Research?
Two main methods exist to collect data – qualitative and quantitative. Generally, you’ll base your decision on whether you want to collect information from a large or small group.
Qualitative research focuses on gathering detail-rich data from a small sample.
Visits, interviews with open-ended questions and focus groups are typical instruments used in qualitative market research. The key to conducting qualitative research is to ask open-ended questions, where participants provide details about their preferences, their expectations, their habits, values, and so on.
Quantitative research focuses on collecting very concrete and comparable data, from a large sample of people.
You can use interviews to conduct quantitative research, but you must use very concrete questions. For instance, you might ask participants to provide yes/no or agree/disagree answers.
A typical survey question used in quantitative research might be, ‘How much would you be willing to pay for product XXX?’
Market research provides important data which can help you define your audience. However, it is important you do not make sweeping generalizations.
The data you collect will probably provide you with statistics regarding demographic markers such as age, gender and income. This data will give you a general idea of your typical customer, but don’t presume all your customers fall within these parameters.
You may discover a particular type of person within your frequent customers, but you do not want to alienate other customers. To truly understand the nuances of your target audience, we’ll delve deeper into this subject later, define the meaning of the data, and discuss how it can help your business.