By investigating your potential customers, studying the current market environment and getting targeted client feedback, you’ll be better equipped to create a marketing plan to achieve your goals. Market research is a vital process for both startups and established businesses. By carefully analyzing the data you accumulate, you’ll be in a better position to prevent unnecessary risks, identify trends and produce the product or service that the market needs or wants.
With the vast amount of data available, it’s important to prioritize your needs to drive the focus of your research. It’s difficult to gather the necessary information without knowing why. Develop a set of questions before you create your market research plan so that your efforts can be directed toward the most helpful data. Consider questions such as:
• Who are your target customers? • Who and where is your main competition? • What are the defining characteristics of your target market? • What is your geographic market? • What potential is out there for you? • Can you meet current needs in the market?
Get the Numbers Down First
A wealth of information is available to small-business owners:
• Census reports show trends that can help existing businesses know where to expand and guide startups toward the most profitable markets. • Economic indicator reports show current spending trends. New businesses may rely on economic indicators to decide which products or services to release first, while established businesses can use the information to shape pricing guidelines. • Employment numbers and statistics help you understand such variables as where your target market lives and shops and where employment is high or low. A new business may use the information to decide on a location, while ongoing enterprises may direct different advertising toward various populations where employment numbers are higher.
Gather the information from public sources such as:
• The U.S. Bureau of Labor Statistics • The U.S. Census Bureau • Trade groups • The U.S. Chamber of Commerce • Business publications • Colleges and universities
Talk to Target Markets Identified Through Research
Primary research complements the information you’ve gathered from public sources. The firsthand accounts about consumer attitudes shape your next marketing steps. Startups may use first-person market research to decide how best to proceed with product or service development based on the responses. Existing companies may rely on firsthand accounts to make internal changes, create a competitive advantage and hone their business practices to solve consumer needs. Investigate the market through:
• Surveys • Focus groups • Secret shoppers • Interviews
Request feedback about how consumers feel about your industry as a whole, what factors contribute to buying decisions, who the primary decision-maker in the family is and what respondents would like to see changed or added to current industry offerings.
Watch for Key Mitigating Factors
While much of the market research you gather is clear and straightforward, you must take into consideration the following factors, which could skew some results and taint your final findings:
• When seeking direct feedback from customers, there is a tendency to incorporate your own bias into the discussion or influence the responses. Understand your perspective and how it affects your questions and analysis. Use a third-party researcher if necessary to eliminate this personal bias. • You may not have a large enough sample of your target market to get an accurate reading. Rely on the census information and other economic indicators to ensure accurate coverage of your target market. • Market research is not an exact science. You have to rely on estimates to make buying decisions and marketing adjustments. Perform follow-up market research on a regular basis to gauge the accuracy of your predictions and tweak your business strategies when necessary.
Linda Ray is an award-winning journalist with more than 20 years reporting experience. She's covered business for newspapers and magazines, including the "Greenville News," "Success Magazine" and "American City Business Journals." Ray holds a journalism degree and teaches writing, career development and an FDIC course called "Money Smart."