Market research is a technique used by aspiring and growing entrepreneurs to gather and analyze useful information about the market for their business. Market research is used to develop effective strategies, weigh pros and cons decisions, define business goals for the future, and much more. Maintain your competitiveness by sharpening your market research skills! See the following first step to get started.
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Method 1 of 4: Planning Your Market Research
Step 1. Have the research objective in mind
Market research should be designed to help you and your business become more competitive and profitable. If your market research efforts are not profitable for your company, it will be wasted and your time would be better spent doing something else. Before you start, it's important to properly define what you want to find out through market research. Your research may give you unexpected directions and hasty moves; this is very good. However, it's not a good idea to start market research without at least one or more real goals in mind. Here are some of the types of questions you should consider when designing your market research:
- Is there a need in the market that my company can fill? Doing research on your customers' priorities and spending habits can help you determine if it's a good idea to do business in a particular market in the first place.
- Do my products and services meet the needs of my customers? Doing research on customer satisfaction with your business can help you improve the competitiveness of your business.
- Do I provide affordable prices and services? Doing research on your competitiveness and market trends can help convince you that you are making as much money as possible without hurting your business associates.
Step 2. Develop a plan to collect information efficiently
It's just as important to know "what" you want your research to achieve, it's also important to have an idea of "how" you can realistically achieve your goals. What's more, plans can and do change as research progresses. However, setting goals without having any idea of how to achieve them is never a good idea to do market research. Here are some questions to consider when creating a market research plan:
- Will I need to find broad market data? Analyzing data can help you make decisions about the future of your business, but finding useful and accurate data can be difficult.
- Will I need to do research independently? Generating data from surveys, group discussions, interviews, and more can tell you information about your company and how it's market share, but this project requires time and resources that can also be used for other things.
Step 3. Get ready to present your findings and to decide what action to take
The purpose of market research is to have an effect on the real decisions of the company. When you are doing market research, unless your business is a sole proprietorship, you will usually need to share your findings with others within the company and have a plan of action in mind. If you have a supervisor, they may or may not agree with your plan of action, but there is little chance of disagreeing with the trends your data shows unless you make mistakes in collecting the data or doing your research. Ask yourself the following questions:
- What are my predictions about the research I should disclose? Try to have a hypothesis before you start your research. Drawing conclusions from your data will be easier if you have considered it than if you have not considered it at all.
- What will I do if my assumptions prove to be correct? If your research goes the way you think, what are the consequences for your company?
- What will I do if my assumptions are proven wrong? If the results surprise you, what will the company do? Is there a “back-up plan” in place to deal with surprising results?
Method 2 of 4: Obtaining Useful Data
Step 1. Use government sources of industrial data
With the advent of the information age, it is easier than ever for businesses to access large amounts of data. However, make sure that the data accessed is accurate. In order to be able to draw conclusions from your market research that describes the real state of the market, it is very important to start with reputable data. One of the accurate market data is the government. In general, market data provided by the government is accurate, well-reviewed, and available at either low cost or free, which is a good choice for start-up businesses.
As an example of the type of government data you might want to access during market research, the Bureau of Labor Statistics offers detailed monthly reports on nonfarm employment in addition to quarterly and annual reports. The reports include information on wages, employment levels, and more and can be broken down by area (such as state, region, metropolitan area) and industry
Step 2. Use data from trade associations
A trade association is an association formed by a group of business people with similar activities and interests for collaborative purposes. In addition to engaging in lobbying, public outreach, and advertising activities, trade associations also frequently participate in market research. Data from research is used to increase competitiveness and profitability for the industry. Some data is freely available, while some is only available to members.
The Columbus Chamber of Commerce is an example of a local-level trade association that offers market research data. A detailed annual report on market developments and trends in the Columbus, Ohio market share is available to anyone via internet connection. The Chamber also makes specific requests from its members
Step 3. Use data from trade publications
Many industries have one or more magazines, journals, or publications that are intended to keep industry members up to date with new news, market trends, public policy objectives, and more. Most of the publications conduct and publish their market research for the benefit of industry members. Raw data from market research may be available to non-industry members to varying degrees. However, almost all trading publications will at a minimum offer some selection of online articles offering advice on strategy or analysis of market trends. These articles often incorporate market research.
For example, the ABA Banking Journal offers a wide selection of online articles for free, including articles discussing marketing trends, leadership strategies, and more. The journal also offers links to access industry resources that incorporate market research data
Step 4. Use data from academic institutions
Since market share is so important to the global community, it is natural for it to be a subject in academic studies and research. Many universities and academic institutions (especially business schools) regularly publish research results that are based on market research as a whole or a combination of several market researches. Research is available in academic publications or from the university directly. However, it should be noted that most academic research is protected; so to access it, requires payment of fees, subscription to certain publications, and so on.
For example, Wharton University of Pennsylvania offers free access to a wide variety of market research resources, including academic papers and periodic market reviews
Step 5. Use data from a third source
Since a good understanding of market share can make or break a business, the third-party industry as analysts, companies, and services is increasing specifically to help businesses and entrepreneurs with the complex task of market research. This type of agency offers research expertise to businesses and individuals who need specialized research reports. However, because these types of agencies are set up for profit, accessing the data you need usually costs you money.
Step 6. Don't fall prey to exploitative market research services
Note, due to the complexity of market research, some third-party agencies will try to take advantage of inexperienced businesses by charging high fees for information that can be obtained elsewhere or at no cost. As a general rule, you shouldn't make market research a major expense for your business, as there are many free and inexpensive resources available (which were described above).
For example, MarketResearch.com offers access to data, market research studies, and cost analysis. The price of each report can vary from $100-$200 to $10,000. The website also offers the ability to consult expert analysts and only pay for more specific and detailed reports. However, the usefulness of some of the purchases seems dubious; one report costs $10,000 with a summary of the results (covering the main findings) available for free on other websites
Method 3 of 4: Doing Your Own Research
Step 1. Use available data to determine demand conditions in the market
In general, your business will stand a good chance of success if it can satisfy an unmet market “need”; so you should aim to provide the product or service that the market needs. Economic data from government, academia, and industry (described in detail in the section above) can help you identify the presence or absence of these needs. Basically, you want to identify a market where there are already clients who need and desire to advance your business.
- For example, say that we assume we want to start doing gardening services. If we investigate the wealth of markets and data from local governments, we will find that people in affluent neighborhoods, on average, have good incomes. We can also use government data on water use to estimate the area with the largest percentage of residences owning a park.
- This information can guide us to open shop in affluent urban areas where people live with large gardens, as opposed to areas where people do not have large gardens or do not have the funds to pay for gardening arts specialists. Using market research, we make smart decisions about where to do business.
Step 2. Take a survey
One common, time-tested way of determining the attitude of your business customers is to ask them! Surveys offer market researchers the opportunity to reach a large sample to obtain data from which to make decisions about broad strategies. However, because survey results are relatively impersonal data, it is important to ensure that your survey is designed with easy-to-calculate data so that you can derive meaningful trends from the survey.
- For example, a survey asking customers to write about their experience with your business may not be the most effective option, as it requires reading and analyzing each answer individually to draw meaningful conclusions. A better idea is to ask your customers to fill out ratings for some aspect of your business, such as customer service, pricing, and more. This makes it quicker and easier to identify strengths and weaknesses in addition to getting you to calculate and draw on your data.
- In our landscaping company, for example we will try to survey the first 20 clients by asking each client to fill out a small card about their rating when they pay the bill. In the card, we ask clients to rate them from 1-5 in the categories of quality, price, speed, and customer service. If we get a lot of 4's and 5's in 3 categories but almost 2 and 3's in the final category, training our employees sensitivity can increase customer satisfaction and increase our competitiveness.
Step 3. Have a group discussion
One way to determine how customers react to a proposed strategy is to invite them to participate in group discussions. In group discussions, small groups of customers are gathered in a neutral location, try the product or service, and discuss it. Often, these discussion sessions are observed, recorded, and analyzed later.
In our landscaping company for example, if we wanted to consider selling garden care products as part of our service, we might invite loyal customers to participate in group discussions. In a group discussion, we will ask the field salesperson to show us some garden care products. Then, we will ask their opinion, if any, which one they will buy. We also asked them how the field salespeople served them; is it friendly or condescending?
Step 4. Conduct one-on-one interviews
For more intimate qualitative market research data, one-on-one interviews with customers can be useful. Individual interviews do not provide the broad quantitative data obtained from surveys, but on the contrary they allow you to dig deeper in your search for information. Interviews allow you to find out “why” a particular customer likes your product or service, so they are a good choice for learning how to most effectively market to customers.
In our landscaping company for example, say that our company is trying to design a short advertisement and broadcast on local TV. Interviewing a number of customers can help us decide which aspects of our service to focus on in our advertising. For example, if most of our customers say they are hiring landscapers because they don't have the time to care for their gardens, we will create an advertisement that focuses on the potential time savings of our services. For example "Tired of spending the "weekend" clearing the weeds in the garden? Let them do it for you!" (and others)
Step 5. Test the product/service
Companies considering implementing a new product or service often let potential customers try out the product or service for free so that they can address the issue before selling it. Giving customers the freedom to test can help you determine whether your plans to offer a new product or service require further review.
In our landscaping company for example, say that we are considering a new service offering wherein we plant flowers in a customer's garden after doing our landscaping. We may “test” the customer's choice to have the opportunity to receive the service free of charge under certain conditions which they discuss with us afterwards. If we find that customers value free service but never pay for it, we might reconsider selling this new program
Method 4 of 4: Analyze Your Results
Step 1. Answer the original question that caused you to do your research
At the beginning of the market research process, you define the research objectives. There are several questions related to your business strategy that you must answer; for example, whether or not you are pursuing an investment, whether a particular marketing decision is a good idea or not, and so on. The main goal of your market research should be to answer this question. Because the objectives of market research vary widely, exact information is needed to provide satisfactory answers for each of these variations. Usually, you look for trend predictions through your data which implies that certain actions are far better off than others.
Let's go back in our gardening arts company for example we are trying to decide if it is a good idea to offer a flower planting service with garden care packages. Say that we collect government data showing that the majority of people in our market share have sufficient funds for the additional costs of caring for flowers, but survey results show that few are actually interested in paying for this service. In this case, we might conclude that it is not a good idea to pursue this endeavor. We may want to modify our idea or even change it
Step 2. Perform a SWOT analysis
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. A common use in market research is to determine these aspects in business. If this is the case, the data obtained from the market research project can be used to assess the overall health of the company by looking at strengths, weaknesses, and others that do not meet the objectives of the initial research.
For example, let's say that we are trying to determine whether our flower planting service is a reasonable idea or not, we found that a number of participants in our test said that they enjoyed looking at flowers but had no knowledge of how to care for them after planting. We may classify it as an “opportunity” for our business; if we implement a flower planting service, we may try to include garden equipment as part of a potential package or sale
Step 3. Find a new target market
In simple terms, a target market is a group of individuals who get a promotion, advertise a business, and ultimately try to sell that product or service to that group. Data from market research projects show that certain individuals who react favorably to your business can be used to focus your business resources on specific people, maximizing competitiveness and profitability.
For example, in our flower planting, say that although the majority of respondents reported that they would not pay if given the opportunity, most “older” individuals reacted positively to the idea. If supported by further research, this will lead our business to a specific target, namely the older market share; for example by advertising on local bingo halls
Step 4. Identify the next research topic
Market research often gives birth to other market research. After you answer a question, new questions may appear or old questions may remain unanswered. This requires further research or a different methodological approach to obtain a satisfactory answer. If the results of the initial market research are promising, you may be able to obtain permission for a later project after presenting your findings.
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In our gardening arts company for example, our research has led to the conclusion that offering flower planting services in today's market is not a good idea. However, some questions can be good topics for further research. Additional research questions are listed below, with ideas for how to solve them:
- Is the flower planting service itself unattractive to the customer, or is there a problem with the particular flower used? We might research this by using another flower arrangement to test our product.
- Are there certain market segments that are more receptive to flower planting services than others? We may research by re-checking the results of previous research with demographic data from correspondents (age, income, marital status, gender, etc.).
- Would individuals be more enthusiastic about flower planting services if we package them with basic services and increase prices, rather than offering them in separate options? We might research this by testing two different products (one with service involved, one with separate options).
Tips
- If you make a decision that will cost you a lot of money if you go wrong, use a professional market research consultant. Get offers from several consultants.
- If you don't have much of a budget, look for reports that are freely accessible and available on the internet. Also look for reports published by industry associations or traded magazines (magazines for professional hairstylists, plumbers, or plastic toy manufacturers, etc.)
- You may be able to get local university students to do research as a class assignment. Call the professor who teaches a marketing research class and ask them if they have a particular program. You may pay a smaller fee, but it will be less than a professional research firm.
- Sometimes there is more than one market destination. Finding new markets is a great way to expand your business.
