At its core, market research is about trying to get reliable answers to key questions. So in the very early stages, your research should cover the fundamentals: “Is there a potential customer base out there?”, “What’s missing in the marketplace?”, “How can I give people what they are looking for?”. Once you are up and running, you start to change tack:“Am I getting it right?”, “How can I continue to compete in light of changing trends?”, “Are there any challenges around the corner?” The questions may change but the fact finding process continues.
So whether you are yet to launch your first product or are perhaps thinking of expanding, research can give you an honest picture of your actual market as well as your potential market. This kind of insight enables you to meet, and hopefully exceed, customer expectations, capitalise on new opportunities, and grow your profits.
So for a small business, what constitutes market research? What should you be asking and where do you find the answers? To give you some direction, it’s worth keeping the following things in mind.
Is your idea viable?
This stage of market research effectively tries to determine whether there is a demonstrable demand for your proposed product or service, and whether you are going to be in a position to carve a niche for yourself within that market.
Carrying out this research can prevent you from making those costly initial mistakes based on any false assumptions; you can start to build realistic projections based on actual data. What’s more, if you are looking to secure a bank loan or some kind of outside investment, incorporating this data into your business plan often boosts your credibility.
Being able to rely on multiple sources of information is instrumental to quality market research: it increases the likelihood that the conclusions you draw will be reliable. Additionally, it’s useful to have access to both primary research, where you ask questions of existing and potential customers yourself, and secondary research, e.g. market data and information already published and usually available online, at the seed stage and throughout.
Before your business launch, reading secondary ‘off the shelf’ research can be a great way to find out about industry trends and spark ideas about a broad direction to take. Take a look at the industry press: for a niche clothing store for example, you might want to check out Drapers Online and Retail Week. From here, you can generally access reports and articles about recent trends, challenges, and customer expectations. Typically there are links to follow to gain access to more specialist reports, either through subscription or a one-off fee.
Trade Associations (The National Federation of Builders, for example) can be useful here, too. As well as providing commentary on what’s happening across the market, there are often resources available geared specifically at those people going it alone, such as pointers on what customers expect in terms of accreditation and on how and where to find new business.
Making it personal
Having gained a ‘top-line’ overview of the market, it’s then a matter of making your investigations directly relevant to you through some primary research. Let’s say you are starting an events management company, for instance; you’ve read up on the latest industry trends and you’ve drawn up a list of possible services you could offer. How might those ideas translate into real life based on your location, customer expectations, and what’s out there already?
You find this out through asking potential customers. Larger businesses have the resources to conduct detailed ‘focus groups’ and perhaps commission outside research. For smaller businesses the approach tends to be naturally smaller in scale, but equally as useful.
It might start by simply putting out a call via social media, outlining your broad offering and inviting contacts to come back with opinions on the features or services they would be interested in. For an events business, it could involve approaching local businesses directly, to see if there is a real need for what you are proposing.
For a new organic baby food business, it could involve arranging to visit a local parent and toddler group to get the lowdown on what mums are looking for, what’s important to them, and how much they are willing to pay.
Especially if you will be selling to businesses, involvement in local networking events can be a good way of getting the perspective from local business owners on what they are looking for — as well as helping you to build up your profile.
Measuring sentiment and spotting opportunities
As your business starts to grow, past and present customers can become your most valuable research asset. Simply by asking them, “How well did we do?” after a transaction can help to let you know if your business is still on track to deliver and meet expectations. You can expand this further by asking the broad question, “How else could we help you?” to help guide your decisions on what further product or service lines to roll out.
How you ask these questions will depend on the nature of your business. If you have a large social following for instance, it might involve asking customers to take part in an online survey. What you are trying to gauge is sentiment: how your business is perceived in the eyes of customers in terms of what it has to offer in light of current trends, and how it fares against your competitors.
Bear in mind that actions often speak louder than words. Not all customers will fill in a comments slip, complete a survey, or give you much in the way of feedback. Consequently, measuring their actions is crucial: the items they order most often, the pages they visit repeatedly on your website, even the number of ‘likes’ or retweets you see after showcasing your latest products via social media. All of this should help to inform your decisions when trying to positively develop and grow your business.
Market research is part of your essential toolbox, helping you to establish a presence, carve a niche, and continue to deliver what customers really want. For more information on all aspects of developing and marketing your business offerings, head on over to our help centre.