How To Complete Market Research for Small Businesses
Market research often helps small businesses learn more about their target customers and competitors. It may also assist them with better understanding their position within a market. Small business professionals who want to enter a new market or improve upon their business strategies may benefit from learning about market research. In this article, we discuss what market research is, how to complete market research for a small business, why it's important for small businesses and tips for completing your own research.
What is market research?
Market research is the process of learning about competitor behavior, consumer behavior patterns, economic trends and general market climates. This process usually involves gathering information on competitors and their prices, receiving feedback from customers about products and services and learning about the demand for certain products. Many small businesses perform research to analyze the feasibility of a business idea or a new product, the general environment of unfamiliar markets and the chance they may earn funding. Market research may also help them create a business plan.
Market research typically helps small businesses learn about the following things:
Demographic information: This involves learning about a target market's consumers, such as their buying habits, interests, age, gender or wealth.
Demand: This involves analyzing buyers' desire for your products or services.
Market size: This involves the number of people in the market that may be interested in your products or services.
Economic indicators: This involves information about potential customers, such as their income level and employment rate.
Location: This involves the general location of potential customers and how far or in which markets your products may appear.
Market saturation: This involves the number of competitors and similar options already established in the market from which customers may choose.
Pricing: This involves the price range that customers typically pay for these products, their spending habits and competitors' prices.
Trends: This involves current trends within small businesses, best practices and business standards.
How to complete market research for a small business
Here's a list of tips that may help small business owners and employees perform market research in their respective industries:
1. Identify business goals
Before completing any research, write down primary business goals and the results you want to gain after completing research. Consider the information you want to learn and how you may use it to the company's advantage. You may identify challenges the company currently experiences. Make sure you create specific goals so you may find specific solutions to issues and questions while researching.
2. Choose and experiment with different types of research
Using different research formats often helps businesses find information using different methods and sources. The main two types of research include primary and secondary research. Primary research typically involves any research that you complete yourself. This also typically includes two more methods of research, including qualitative and quantitative research. Qualitative research typically yields information about customer wants and opinions. This may include conducting interviews, focus groups and observations. Quantitative research typically yields information involving statistical data or analysis and may include surveys, questionnaires and one-on-one interviews.
Secondary research typically involves gathering information from existing studies, organizations and other resources. These resources may include newspapers, educational institutions and government or industry organizations. Small businesses often use secondary research to learn about customer information through sources such as census data. Secondary research also often provides a more expansive view of an industry or market. If you use secondary research, make sure you use updated sources so you gather current information about the market.
3. Create buyer personas
If you want to conduct primary research, creating a buyer persona first often helps businesses define their audiences and understand potential customers' buying habits and characteristics. This may help business owners and employees seek those people during the research process. Buyer personas are theoretical representations of the intended or preferred customer for a business. These personas often create a general guide for interacting with real customers through developing strategies and communications. Consider these elements when creating a buyer persona:
Companies may also target more than one type of customer. In this case, consider making multiple buyer personas. Make sure to perform research with each group separately since different buyers may have different goals and characteristics. You may also consider using a similar tone and general approach when interacting with different sample groups so they all receive equal treatment.
4. Identify market segments
Market segments are groups of individuals within a market that match specific demographics, behavior or priorities. Identifying market segments typically assists small businesses with finding samples of customers they may interview and conduct research. The ideal sample customer is someone who recently purchased something or chose not to buy the product. They also typically match the business's buyer persona. If you approach sample customers, consider asking them to complete surveys or participate in focus groups or phone interviews.
5. Research competitors
Researching competitors often helps businesses with conducting their secondary research. Consider identifying all the potential competitors in the market and how they compete against each other. Learn about their unique qualities and why some customers prefer one company over another. You may also inquire about their marketing techniques and identify gaps within the industry that a new business may fill. Investigate their market share, market reach, product range and customers' satisfaction.
6. Analyze research results and create a report
Consider creating a market research report to help you organize your results, summarize the research and highlights specific useful information. It may also provide a document from which company employees may reference at a later time. Analyze the data and compare the results to the goals you created before completing the research. Draw conclusions and consider making a list of actions that address some of the challenges or results the research provided. The company may complete these actions in the future.
When organizing the report, consider using these elements in the document:
Executive summary: Provide an overall view or summary of the research and your findings.
Background: Explain the context for the research, such as the original goals of the research and what methods you used when collecting your data.
Buyer personas: Summarize your buyer personas and why these personas specifically benefit the company.
Competitor analysis: Review key information points about competitors such as trends and potential market gaps you may fill.
Customer feedback: Summarize the most important customer trends, opinions and needs, such as product requests or customer service suggestions.
Recommendations and action items: Reveal recommended actions, plans and information that might assist the design or a business and marketing plan.
Read more: How To Analyze Market Research in 6 Steps
Why is market research important for small businesses?
Market research is important for small businesses because it helps companies understand their customer base, competition and general industry environment. Here's a list of other reasons why market research is valuable to small businesses:
Creating more effective marketing materials
Identifying niches within a market that you may target in the future
Identifying new business opportunities
Building customer loyalty
Learning about early industry trends before they become popular
Selecting distribution channels
Determining which products or services generate more revenue
Understanding competitor strategies
Entering a market at an optimal time
Preparing for business expansion
Tips for completing small business market research
Consider this list of tips when completing your own market research within an industry:
Review information on the internet. Blogs, reviews, videos, social media posts and forum posts may help small businesses learn about potential customers' opinions about a product.
Consider doing some pre-tests. You may benefit from doing some test interviews or surveys with a team member before using actual customers because it may help you polish your questions or alter your approach. It may also ensure that customers understand the questions and the company receives useful information.
Keep interactions short. Consider keeping questionnaires and interviews short so customers may continue with their day. This often shows people that you respect their time.
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