Market research can seem like an intimidatingly large undertaking, especially for a small business. Requiring data crunching, surveying, analysing and forecasting, market research often ends up as a footnote in a busy business owner’s diary.
However, market research isn’t only useful for a small business, it’s necessary. The data and insights you collect will allow you to improve your product, hone your marketing efforts and keep up with the competition. And fortunately, it doesn’t have to be expensive or time-consuming. This article will answer your questions about market research and provide some guidelines on how to do it effectively.
What is market research?
Let’s start with the basics. Market research is the process of collecting and analysing data about your market, competition and consumers. The term can apply to the evaluation of larger macroeconomic and consumer trends, as well as how a group of people react to the packaging of a product, for example.
Market research is generally divided into two categories: primary and secondary. Primary market research is concerned with information you have gathered yourself. It analyses the effectiveness of your marketing efforts (for example, through customer surveys and control groups) and assesses the behaviour of competitors. Secondary market research is based upon data from external sources, like industry reports or academic studies.
How important is market research for small businesses?
Market research is very important for small businesses. Even if you’re a three-person firm, understanding your commercial environment is essential for making effective sales. Firstly, market research is the best way to enhance customer satisfaction. It provides a window into the mind of your customers, helping to improve your offering. Secondly, it allows you to keep abreast of what competitors are doing (Are they offering discounts? Is their store completely online?) Thirdly, it backs up your business decisions with data, rather than guesswork. This is especially important if you’re launching a new product.
In which ways can market research benefit my small business?
Let’s go through a few scenarios in which market research is beneficial for a small business.
- Test the waters for a new product. If you’re starting a business or launching a new product, it’s vital to know if the market is right for it, and – ultimately – if it will be a profitable activity. Market research in the pre-launch stage involves talking to experienced professionals, assessing the competition and analysing demographic data. This information allows you to make a more informed judgement of market conditions.
- Determine what your customers really want. When your business is confident that the market is right, market research can help you to offer the best possible product or service. Large companies with big budgets interview control groups to determine what customers like and want from a product. Small businesses can emulate this by talking to potential customers. A simple way to record responses is to set up a survey using a free tool like Survey Monkey and promote the link on social media.
- Refine your branding & marketing efforts. When it comes to choosing the colours, messages and imagery that form the lifeblood of your brand, it can sometimes feel like a whole lot of guesswork. Market research can give you insights into how potential customers feel about your aesthetic decisions. You can collect data on this by conducting traditional interviews, as well as trying out software that allows you to ‘A/B test’ your website or app.
- Learn from competitors. For small businesses, keeping up with competitors is extremely important. Monitoring their messaging, campaigns and prices is vital to staying competitive. Check out Big Commerce’s excellent article on how to conduct a competitor analysis (they have also built an awesome template you can use).
- Spot an opportunity. A firm grip on consumer trends can give you a real edge over the competition. Powerful consumer trend tools like Think With Google and Facebook Audience Insights can help you to seize an opportunity before someone else does.
How do I conduct market research for my business?
The first step is to identify your goals. Lay out what you want to achieve with your market research. Is it to gain new customers, improve your product or become more competitive? These objectives will shape the questions you ask and the data you collect.
Here are a couple of tips:
- Tap into the data sources around you
Before organising focus groups and feedback sessions, look at the people within your organisation. Your sales or customer service team are a rich source of knowledge. They’ll have insights into how clients react to products, the comments they make and which competitors they mention. Start recording customer responses more systematically by asking staff to note down customer comments.
- Be critical of data found on the internet
While industry reports and statistics can be extremely useful, you should always look at them with a critical eye. The data may be old, superficial or discredited. Always check the publication date, sample size used and region of publication.
- Ask and observe
Telephone surveys, online surveys and focus groups can really help you to improve your product or service. Offer incentives like a discount code or a free cookie to encourage customers to take a short survey. Post your online survey to relevant sub-Reddits or Facebook communities. Make the questionnaire short and simple and you’re sure to get some useful responses.
So there you have it. By outlining your objectives, tapping into the right data sources and using a couple of handy tools, you’re well on your way to conducting some super useful market research. Use your research to keep abreast of the competition, deliver the best possible service to your customers and maintain a firm grip on market conditions. Enjoy!
Clare Gower is part of the content team at Spotcap Australia, whose aim is to support SMEs with tailored finance and help them focus on what really matters — their business.