A major reason small businesses fail is because they lack an understanding of their market. Early on, you need to find out as much as possible about your target customers (who they are and what they want), your competition, and your industry as a whole. This means conducting market research.
How to Conduct Market Research
The market research process is long and detailed, involving several steps.
Step 1: Define Your Reason for Conducting Market Research
The first step in the marketing research process is to decide why you are performing the research at all. There are many possible reasons, including to:
- Discover opportunities for your business
- Identify and mitigate potential risks
- Avoid problems in the future
- Analyze what is working well and where you could make improvements
What you choose should relate to your main business goals. It will also impact what kind of research you conduct.
Step 2: Examine the Whole Market
Whatever the aim of your market research, you should look at the state of your entire industry, such as what kind of growth it has seen over the past few years and what lies ahead.
In addition, you should gather information about individual companies — particularly your top competitors. It’s important to look at all your competitors, even if some of them are much larger businesses than your own. Considering more than just other small businesses is important for your long-term strategy.
Find out what these businesses are offering, where they operate, their strengths and weaknesses, and who makes up their target audience (it may differ from your own). Consider why a customer may choose a competitor instead of you and what opportunities you are currently missing that you could take advantage of.
Step 3: Learn About Your Customers
Your target audience should never be everyone, even if you’re offering products that have a wide appeal. Use your market research to reveal key characteristics of your customers. Once you have this information, you can explore your customers’ motivations, preferences, dislikes, and other information that will shape your strategy moving forward.
Step 4: Analyze Your Research
Once you’ve collected all the information you need, you’ll need to analyze what it means. Exactly what kinds of insights you’re looking for will depend on the goals for your market research, but they may include:
- The size of the market and your expected share
- Your current and potential customers
- The projected growth for your industry
- Customer buying behaviors
- Your cash flow and profit projections
- Who your top competitors are
Step 5: Find Ways to Apply Your Market Research
You will put a large amount of time and effort into market research; the last thing you want is for all that to go to waste. Instead of saving your market research to use at a later date, think of how you could utilize it now. Some of the research may influence your largest projects, but you should also look for ways to adapt smaller, everyday processes. After all, any improvements you make can have a major impact on your business.
Furthermore, if you keep your market research to use later, the information may become outdated. Use it now to start testing new ideas and you’ll be able to make continuous improvements.
Types of Market Research
Now that you know how to conduct market research, it’s time to consider what type of information to gather.
Primary and Secondary Research
Anything you collect first hand is primary research, whereas information you find from another source is secondary research. Let’s consider some of the most commonly-used options.
The most popular type of primary research of all is a market research survey. A survey can feature closed questions (where users select one or more answers from a set of responses) or open-ended questions (where respondents are free to give any answer they choose. In either case, it is relatively easy to analyze the responses.
Another common option is interviews. Instead of sending users a set of questions, you have a conversation. Both face-to-face and online interviews are ideal for the chance to read the body language of participants when you ask questions. Plus, you have the opportunity to follow through with additional questions when you receive interesting answers.
The third type of primary research to consider is observations. This involves providing a user who fits your ideal customer profile with a prototype of your offering. Then, you watch how the user interacts with the product or service. Ideally, you’ll combine the observation with an interview or survey to hear how the user found the experience.
One last type of primary research is a focus group. Many people think of focus groups as being almost synonymous with market research. In fact, this is one of the more riskier choices for small businesses. It is expensive to hire a professional focus group moderator, but trying to run a focus group yourself puts you at risk for problems that could jeopardize the data. For instance, one person could end up influencing the other participants or the untrained moderator may unconsciously bias the results.
In terms of secondary research, the most common sources are articles, white papers, videos, and infographics. All these are useful for understanding the market as a whole, but they are especially valuable for showing you what your competitors are doing. You can also find useful statistics and other data about your industry.
Qualitative and Quantitative Research
In addition, market research can be either qualitative or quantitative. Qualitative research is anything you cannot measure numerically — it is subjective information you need to interpret. Quantitative research comes in the form of statistics and tells you facts.
Surveys and interviews often contribute to qualitative research, particularly if you use open-ended questions that allow respondents to express how they feel. This kind of market research can be useful for indicating why customers may choose you over another brand.
If you already have a website and social media accounts, you already have access to a wealth of quantitative data in the form of web and social media analytics. This is much more useful than learning about your audience than any kind of secondary research. However, secondary quantitative data is still critical for learning about your industry as a whole.
Market Research Tools
To gather a variety of information — primary and secondary, qualitative and quantitative — you’ll need to employ a variety of methods. Market research tools make this part of the process possible. There are many to choose from; the best for you will depend on what exactly you’re trying to find out.
A top option for web analytics has to be Google Analytics. It provides you with a wealth of data about how users are interacting with your website. Plus, it’s suitable for complete beginners to web analytics and it has advanced capabilities, allowing you to run specific tests.
Google Keyword Planner is useful for much more than research for SEO and PPC ads — it can also provide valuable insights into what your target audience is thinking about. For instance, you can find out what consumers are looking for in products and services or what is trending in your industry.
Another great tool from Google is Marketer’s Almanac. It is particularly useful if you want to know more about consumers’ behavior at a particular time of year, such as during a certain season or over the holidays.
There’s a good chance you’ve used SurveyMonkey before, as it’s the favorite survey tool with all types of organizations. The advantage of this is customers will feel confident their data is safe and anonymized when they fill out a survey you send them. In addition, the tool is highly customizable, intuitive, and inexpensive.
If you’re willing to invest in your market research, a top solution is Questback. The company offers a number of customer experience products as well as market research solutions that examine the market as a whole. You can receive a demo tailored to your needs to try out software before you decide to buy.
The global measurement and data analytics firm Nielsen has a solution called Segmentation. Its aim is to tell you who your most valuable customers are by creating segments for your business. You can receive a customized solution just for your business.
For financial information about your industry, use BizStats. It is the source of all the business statistics you could want — and all are available for free.
Seeking Support with the Market Research Process
If you’ve never done market research before, all this likely sounds a bit overwhelming. It will take time to put a system into place to conduct primary research, search for secondary research, and then assess your findings. Plus, market research is an ongoing process — you always need to be gathering new data to ensure you’re working with up-to-date information.
A better option than struggling alone is to outsource the market research process to a virtual assistant from MYVA360. Our VAs can find out whatever information you need and will create reports of their findings that you can apply to your strategy. Best of all, you can start right away by claiming your free trial.