If you are planning to buy a new laptop, would you go to the shop and directly purchase a laptop or consider doing proper research on which model to buy, the suitable price range, and many other factors? Of course, you would research it for a day or two and then go to purchase it. The same is the case when you plan to run a new business. You need to plan and research the strategies to adapt before you jump into the market. And market research tools allow you to understand how people react to your actions. This can often help you to improve and achieve greater results. In this blog, you will know that how to conduct market research.
What is Market Research?
Market Research refers to the process of gathering information about a market within an industry. Your research will help you analyse the market dynamics concerning the product or industry you’re dealing with. No business can sustain itself in the market for a longer time if they haven’t done a proper market analysis before getting into the market.
Once you’re done with market research, you should be able, to sum up, the following:
- Who is my potential customer?
- Who can be my target audience?
- What can be the price range for my products?
- Who are my competitors?
- What are my competitor’s strengths and weaknesses?
Market research can be complex, but it adds a new layer to your business by making you fully aware of it. It can help you avoid risk because you know your market, customers, and product well. No matter if you are willing to establish a small business or a new joint venture, conducting market research always helps!
Running a business because you’re “passionate” about it won’t take you anywhere in the long run. However, doing some “behind-the-scenes” work will! Market research helps you determine whether your plan to deal with this industry will help you retain in this market or not. All your questions will be answered once you’re done with your market research. But the fundamental question in your mind must be, “how to conduct market research for your business?” Well, a market research might not help you answer this question, but this blog definitely will. Let’s dive into it!
How to Conduct Market Research for Your Small Business
1. Know the purpose of your research.
Research without any specific purpose is like a business without a customer. Before taking the plunge, you should be aware of why you want to conduct this research. There may be multiple reasons for it, like reducing risks, knowing your customers better, increasing profitability, and many more but determining whether the purpose is internal or external is what the actual task is.
The research purpose is of two types: Internal and External. Research done to increase the company’s profitability will be an example of internal purpose, and research done to satisfy the stakeholders like customers and investors will be an example of external purpose.
Businesses need to know the purpose of their research because it helps them determine how much data is enough for their research. For example, internal purpose requires fewer data collection than external purpose. Therefore, make sure to know the purpose, whether internal, external, or both, for a smooth and proper understanding of your business.
2. Identify your target customers.
While conducting your analysis, pinpoint your target customers, determine their age, which income category suits your product the best, and many more. Not everyone can be your customer, and that’s why this step is crucial for your market research. Identifying your target customers can help you gain clarity about them on the following aspects:
- Income
- Age
- Taste and preference
- Location
- Ability to spend
Once you segregate your target customers, find out their needs, wants, and frequency at which they change their preferences. Generally, businesses also invest some good time in creating and identifying customer personas and then compile all of those to better understand their customers and retain them in the long run.
3. Know your competitors.
Once you know your customers, it’s time to know your competitors. Knowing who all are standing against you in the market is vital to stand out in the market. You must be aware of what they have to offer, what their price range is, who their customers are, their market position, and more such factors.
To make things easier, list all your competitors and do a SWOT analysis. Outline their strengths, weaknesses, opportunities, and threats to know them better because, as they say, to defeat your enemy, you need to know them well. Once you get done with it, compare your competitors with your business. What does their business has that you don’t? How are they sustaining in the market? What do they do to attract customers? Why would a customer choose you over them?
These questions will give you a reality check on the domains you need to nourish to be the best at your game.
4. Gather data.
Information can make or break your business. It can be your best friend in the long run who will support you at every stage of your business life. While conducting market research, gather as much data as you can. It should be relevant and unbiased.
Gather past information like what were the trends of your industry in the last year? How much was the demand? How much revenue did it generate? In which season did it suffer backlash? Statistical data can also be your biggest ally in making accurate decisions in the long run. Conducting interviews and market surveys is the most beneficial way of gathering relevant information from the market. Thus, it can be an excellent advantage for your business.
5. Ask for customer feedback.
Once your product is out there in the market, your job is still not done. It’s begun now. To know whether the product’s value is equivalent to customer satisfaction, you need to ask for customer feedback. After conducting all the analysis and research, their honest feedback can help you know where you lack.
It helps you determine whether your product is being liked in the market or not, and if not, you can address it by providing measures to it. Businesses can ask for feedback by installing various software and asking customers to rate them through the app after making the purchase.
Therefore, you get the reality check when the rating is done and work on it to do better next time.
6. Analyse your research.
All the finding work is done; it’s time to sit back and analyse what you have done till now. At this stage, you must stop and look at your findings. Outline your research by segregating the competitors, price, and target customers, and put them into different sections. This will not let your mind boggle and prepare a proper document of your research which you can even present to your investors, lenders, and company shareholders.
Before you take the plunge, it’s crucial to analyse your findings because based on these, you will be able to forecast future outcomes related to your business, such as your cash flow, trends, preferences, buying habits of customers, and many more. Therefore, do not go into action without overseeing what you have collected till now and how it can make you reach a better height.
7. Understanding Customers:
Small businesses can use market research to better understand their customers. Businesses can gain insights into their customers’ preferences and behavior by conducting market research. This can help them develop products and services that meet their customers’ requirements. This results in customer loyalty and satisfaction, which are essential to long-term success.
A small clothing shop could do market research to find out what their customers like, their favourite colours, fabrics, and their preferred styles. This information could be used to create a clothing line that appeals to their customers and increase the chances of repeat business.
8. Identifying Opportunities
Small businesses can also use market research to find new ways to expand their customer base, enter new markets, or introduce new products and services. Research can help businesses identify market gaps or unmet customer requirements, which could lead to new business opportunities.
A small bakery might conduct market research to find trends in their local market. For instance, it could identify increased demand for vegan or gluten-free baked goods. This information could be used by the bakery to create new products to meet these needs, increasing its revenue and attracting new customers.
9. Competitive Analysis
Small businesses can use market research to understand the strengths and weaknesses of their competitors, as well as their pricing strategies, marketing tactics and customer service. This knowledge can help businesses differentiate themselves from their competition and create unique selling propositions.
A small restaurant might conduct market research to understand the pricing and customer reviews of their competitors. This information could help the restaurant create a menu that is different from its competitors, and offer promotions that are appealing to their target customers. This will increase customer loyalty.
10. Marketing Strategy:
Small businesses can gain insights from market research that will help them to improve their marketing strategies. Small businesses can create effective marketing campaigns that retain and attract customers by understanding their preferences and behaviours.
A small online retailer might conduct market research to understand the preferences and online behavior of their customers for advertising. This information could be used to create targeted advertising campaigns that reach the right customers at the right place and time, increasing conversion rates.
11. Risk Mitigation:
Market research is also a great way for small businesses to identify potential problems before they become major risks. Research can help businesses identify potential problems with products or services before they are launched. This allows them to fix the problem and avoid negative customer feedback.
Small businesses need to conduct market research in order to remain competitive, innovate, grow, and stay relevant. Businesses can increase their chances of success by understanding their customers and identifying new opportunities.
12. Implement your research.
All the seeds have been sowed, now it’s time to eat the fruit. Your daunting task is put to rest, and it’s time to implement the action. Refrain from letting the extensive research go in vain by not figuring out the loopholes you’ve got to work on. If the research was for an internal purpose, figure out through your findings how you can improve your business functions through it.
If the research was for an external purpose, figure out whether you will be able to make your customers happy and how you can satisfy them to the greatest extent possible.
Seek answers like how you will be able to defeat your competitors. How will you draw your customer’s attention? What are more ways to sustain in the market? Research implementation is not a one-time process but is needed to be done now and then to create space for yourself in the market.
Types of Market Research for your business
Businesses of any size should use market research to gain critical insights that will help them make strategic decisions and improve their business performance. Let’s look at some of the market research options available to businesses in order to gain valuable insight into their target audience, industry trends, and competitors.
Primary Research
Primary research is the collection of new data directly from the target audience. This type of research can be customized to suit the needs of the business and is done specifically for a project or objective. These are some examples of primary research methods:
a. Surveys:
A survey is a popular way to do primary research. It asks a series of questions that are designed to collect information from a representative sample of the target audience. There are many ways to conduct surveys.
b. Focus Groups:
These are primary research methods that bring together a small number of people to discuss a product, topic, or service. A moderator leads the group and asks questions. Focus groups can be held in person or online.
c. Interviews:
These are another form of primary research. An interviewer asks questions to an individual or group of people to collect information. Interviews can take place in person, by phone, or via video conference.
d. Observational Studies:
This involves studying the behavior of the target audience in order to collect information. This can be done either in person or via video recordings.
Secondary Research
Secondary research is the collection and analysis of existing data, such as market reports, government publications, academic journals, and industry associations. Although this type of research can be less costly and take less time than primary research, it is not always tailored to the needs of the company. These are some examples of secondary research methods:
a. Desk Research:
This involves gathering information from publications such as articles, books, and reports.
b. Online Research:
This involves finding information online from blogs, websites, and social media.
c. Database Research:
This involves gathering data from commercial databases, such as market reports or industry analysis.
d. Competitive intelligence:
This is the process of gathering information about competitors on the market, such as their products, pricing, and marketing strategies.
Both primary and secondary research have their advantages and disadvantages. Businesses can choose which method is best for them based on their budget, time and objectives. Businesses can learn more about their target audience by conducting market research. This will allow them to make informed decisions that will help them grow and succeed over the long-term.
Conclusion
You can run a business without doing market research, but to sustain in the market without doing it, is next to impossible. Market research helps you know your business, your competitors, and the market you are dealing with better. It lets you keep a close eye on your business by performing necessary steps and taking relevant actions. This can be a complex and daunting process, but your business will thank you later by bringing on fruitful results.
