Carrying out market research is a lot easier than you think. If you don’t have the budget to commission a market research firm, invest your time instead and do it yourself.
If you’re starting a new business
If you’re new to owning a business, some basic questions might be:
- Is market demand big enough and is it growing or declining?
- How many competitors will we face and where are they situated?
- Where should we locate our business?
Finding out about your target market
To find the answers to these questions, try some of the following suggestions:
- Search sites such as the U.S. Census Bureau for quick and easy access to facts about business, including demographic information by state.
- Explore the internet to find information on the industry you’re entering and to identify your competitors.
- Visit libraries and read print and online magazines, trade journals and other publications. They’ll give you a picture of your industry and where it may be headed.
- Approach your industry or professional association and the nearest Chamber of Commerce for useful data.
- Find valuable data and information on sites such as the U.S. Small Business Administration (SBA) website and locate an SBA District Office, SCORE chapter, Small Biz Development Center or Women’s Biz Center in your area with the SBA’s local assistance tool.
Utilize some proven research techniques
Once you have a general picture of your industry area, you can drill down for more detail. Some ideas for collecting research include:
- Using small focus groups of five to ten potential customers to assess demand and any possible improvements for your products or service.
- Ask a sample group consumers if they sound interested in your products or services.
- Review your competitors’ websites for evidence of successful selling, product and service range, and pricing levels.
- Investigate any industry-standard pricing range (if relevant) for your type of products or services.
Complete this homework before you commit to starting your business. Combine the evidence to decide whether you could make enough profit to justify the risk.
If you can’t bring your products or services to market at a price the market will pay, you may need to make some modifications or source cheaper supplies.
If you’re already in business
Continue market research once you’re up and running, as it’s vital to sustaining your success. You don’t want to be left behind or miss opportunities. Research leads to more informed insights that turn into better decision making.
Create a feedback system
You can’t hope to improve your products and services unless you know what customers really think about them. Consider what kind of information you need and then design simple systems to retrieve this information.
For example, daily business dealings can enable you to capture customer details in a database that will improve your marketing. Besides contact details, find out the following:
- Who your best customers are, so you can concentrate on them and finding more like them.
- Where they live, so you can target specific suburbs or areas.
- How much they spend, so you can offer them loyalty programs or discounts.
- What they did and didn’t buy, so you can identify your core products and sell them complementary products.
- How often they purchased, so you can offer refills or replacements at the appropriate time.
Train your staff to gather information
Explaining the importance of ongoing market research to your staff will help to gain their cooperation. Their feedback from customer contacts can become an important part of your market research.
Encourage them to ask customers questions such as:
Can you suggest ways we could improve our products or services?
What other products or services could we stock to meet your needs?
Would longer opening hours be beneficial to you?
Ask staff to keep a record of interesting snippets and feedback from customers so this information isn’t forgotten.
Hold regular meetings to discuss how the feedback could be used to improve your business. Make them aware of any business changes or improvements you do put in place and be sure to give recognition to individuals for smart ideas, or for research gathered.
Existing customers are an important source of new ideas, but unhappy customers who leave can often be the most fruitful source of business improvements. Make a point of contacting them to find out why they left and ask them what changes you need to make to win them back as a customer.
Being aware of future opportunities and threats
Another important function of market research is spotting both new opportunities and possible threats. Opportunities could be new trends in your industry such as better processes that could put you ahead of the pack.
Threats might be disruptive technology that will make one of your products or services obsolete. Or a threat could be a major new competitor heading your way.
Assign staff members to specific market research. For example, a person with strong computer skills might focus on data searching by browsing competitors’ websites or spotting international industry trends on the web.
Remember to budget for your research plans
Remember to budget for market research. When you’re starting a business, you’ll need to put in some extensive effort in this area. After start-up, set your budget by considering how important market research is to the continued health and growth of your business, and what resources you’ll need to get the right information.
