Market research is a technique used by both potential entrepreneurs and established successful businessmen to collect and analyze useful information about the market in which their business operates. Market research is used to develop effective strategies, calculate the pros and cons of decisions to be made, determine the future business path to take, and much more. To maintain a fairly high competitive edge in your business, expand your skills in market research, starting to read the following article from the first step.
Steps
Part 1 of 4: Planning a Market Research
Step 1. Consider the goal of your research
Market research should be designed to help you and your business become more competitive and productive. If they fail to give your company certain benefits, the efforts made would turn into a waste and, in the end, it would be better to spend the time on something else. Before starting, it is important to define exactly what you want to understand from a market research. It is possible that it leads in unexpected directions - which is not absolutely unfavorable. However, it's not a good idea to start a market research without having at least one or more concrete goals in mind. Here are some types of questions to consider when developing market research:
- Is there a need in the market sector I am addressing that my company can satisfy? First, researching your customers' priorities and spending habits can help you determine if trying to target business on a particular portion of the market is a good idea.
- Do the products and services I propose meet the needs of my customers? Researching how to satisfy customers with your business can help increase the competitiveness of your business.
- Is the price set for the products and services I offer set effectively? Researching competitive practices and large-scale market trends can help ensure that profits are being made as much as possible without hurting business.
Step 2. Develop a plan for gathering information efficiently
Just as it is important to know what research needs to materialize ahead of schedule, it is also important to have an idea of how you can realistically achieve this goal. Again, plans can and should change based on research progress. However, setting a goal without having any idea how to achieve it is never a good move to undertake market research. Here are some questions to consider when conducting a market research program:
- Will I have to find a lot of market data? Analyzing existing 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 independent research? Creating your own data so that it comes from surveys, discussion groups, interviews and much more can say a lot for your company and the market in which it operates, but making these reports takes time and resources that can be spent on other things as well..
Step 3. Be ready to present the results obtained and decide on a course of action
The purpose of market research is to be able to guide the effective decisions of your company. When conducting a market research, unless your company is a sole proprietorship, usually, you will need to share your findings with other people who work within it and who have an action plan in mind. If there are executives, they may agree or disapprove of the action plan, but few will dismiss the trends shown by the resulting data, unless mistakes were made in their collection or in the way the research was conducted. Ask yourself the following questions:
- What do I plan to reveal through my research? Try to have a hypothesis before starting the search. It is easier to draw conclusions from the data if you have already considered them, instead of reacting with total surprise.
- What should I do if my assumptions prove correct? If your research goes the way you think, what implications would this result have for the company?
- What should I do if my assumptions turn out to be wrong? If the results take you by surprise, what should the company do? Are there "back-up plans" to be established in advance in case of alarming results?
Part 2 of 4: Getting Useful Data
Step 1. Use government sources on industry data
With the advent of the information age, it has become easier than ever for business people to access huge amounts of data. However, ensuring that the data accessed is accurate is another story altogether. To be able to draw conclusions from research that reflect the current market situation, it is critically important to start with proven data. A safe channel for obtaining accurate market data is the government. In general, those provided by the government are usually clear, carefully analyzed, and available at low cost or free of charge, making them an ideal choice for newly started businesses.
As an example of the type of government data you might access during a market research, the Bureau of Labor Statistics offers, in addition to quarterly and annual reports, detailed monthly reports covering nonfarm employment. These reports contain information on wages, employment rates and much more. In addition, they can be divided by area (for example, by state, region and metropolitan area), as well as by sector
Step 2. Use data from trade associations
Trade associations are organizations made up of groups of companies with similar activities and interests aimed at collaborative purposes. In addition to engaging in typical lobbying activities, community outreach and advertising, trade associations often also participate in market research. The data from these researches are used to increase competitiveness and increase corporate profits. Some of them are available for free, while others are intended for members only.
The Columbus Chamber of Commerce is an example of a local trade association offering market research data. Annual reports detailing market growth and market trends in Columbus Ohio are available to anyone with an internet connection. The Chamber also handles data requests made specifically by its members
Step 3. Use trade publication data
Many industries have one or more magazines, newspapers or publications dedicated to industry members to keep them updated on news, market trends, set goals for public policy and much more. Many of these publications carry out and publish their own market research for the benefit of industry members. Unprocessed data is available to members from other sectors depending on the level. However, nearly all major trade publications offer, at least, a few selections of online articles that advise on strategies or analyze market trends. They often contain market research.
For example, ABA Banking Journal offers a large selection of online articles for free, including those about marketing trends, leadership strategies, and much more. The magazine also offers links to industry resources that can incorporate market research data
Step 4. Use data from academic institutions
Because the market is so important to global society, it is naturally the subject of much academic study and research. Many universities, colleges and other academic institutions (in particular, business schools) regularly publish the results of research which, on the one hand, are based on surveys done completely outside of market research, while on the other hand they incorporate the data in some way. coming from market analysis. They are available in academic publications or directly at the university. However, it is worth noting that much of the academic research is usable against a paywall - that is, access requires paying a fee to be paid to download a specific publication.
As an example, Wharton University of Pennsylvania offers free access to a variety of market research resources, including academic publications and periodic market reviews
Step 5. Take advantage of data from third party sources
Since a good knowledge of the market can make or break an entrepreneurial activity, a sector made up of analysts, companies and third-party services has arisen specifically to help companies and entrepreneurs with the complex task of doing market research. These entities offer their research expertise to businesses and individuals who need final and tailor-made reports. However, since they are for profit, access to the necessary data is usually subject to a fee.
Step 6. Don't fall prey to the speculations put in place by some market research services
Note that due to the complexity of a lot of market research, some third-party agencies will try to take advantage of the inexperienced by charging exorbitant fees to provide information that can be found elsewhere or is not worth the price. As a general rule, market research shouldn't be a huge expense to your business, as a wide range of free and inexpensive resources (listed above) are available.
As an example, MarketResearch.com offers paid access to a large amount of market research, study and analytics data. The price for each relationship can vary greatly from as low as $ 100 - $ 200 all the way up to $ 10,000. The site also offers the possibility to consult expert analysts and to pay only for specific excerpts from long detailed reports. However, the usefulness of some of these purchases seems dubious - a report priced at $ 10,000 has its executive summary (including key findings) accessible for free elsewhere online
Part 3 of 4: Doing the Search
Step 1. Use the available data to determine the situation regarding supply and demand within the market you are targeting
In general, your business will have a good chance of success if it can satisfy a "need" that remains unmet in the market - that is, you should aim to provide products or services for which there is a demand. Economic data from government, academic and industry sources (as described in the previous section) can help identify the presence or absence of such needs. In essence, it is advisable to identify the markets in which there is a clientele that has both the means and the desire to favor the business to be started.
- To give an improvised but fitting example in this context, let's say that hypothetically we want to start a gardening service. If we investigate a large chunk of the market and look for data from local government sources, we may find that people living in an affluent part of the city have, on average, some income. We could also go so far as to use public data regarding water use to estimate the areas with the highest percentage of houses with lawns.
- This information could lead us to open a shop in an affluent area of the city, where homes have large gardens, rather than in an area where people typically have neither large gardens nor the money to pay gardeners. Using market research, we made a smart decision on where to do business and where not to.
Step 2. Take surveys
One of the simplest and most proven ways to determine customer attitudes gravitating around your business is to simply ask them! Surveys offer market researchers the ability to reach large samples of people for data to use in making general strategic decisions. However, as surveys involve relatively impersonal data, it is important to ensure that it is designed in a way that easily quantifies the data from which meaningful trends can be derived.
- For example, a survey that simply asks customers to write down their experience with your business will not be the most effective choice, as it requires reading and analyzing every single answer to draw meaningful conclusions. A better idea might be to ask customers to assign a number by which to rate multiple aspects of your business, such as customer service, pricing, and so on. This makes it easier and faster to identify strengths and weaknesses, as well as allowing you to quantify and graph the data obtained.
- In our gardening business example, we might try to survey our top 20 customers, asking each to fill out a short ballot form when they pay the bill. On the sheet, we may ask our customers to rate 1-5 in the categories regarding quality, price, speed and customer service. If we get many 4 and 5 in the first three categories, but especially 2 and 3 in the last one, a little training aimed at improving the attention of our employees in this regard could improve the satisfaction of our customers and increase our loyalty..
Step 3. Organize discussion groups
One way to determine how your customers might react to a proposed strategy is to invite them to join a discussion group. Inside, small groups of customers gather in a neutral place, try out a product or service, and discuss with a representative. Often, the encounters are observed, recorded and subsequently analyzed.
In our garden business example, if we want to consider offering higher-end lawn care products as part of our service, we could invite loyal customers to join a discussion group, receiving them with a speech to induce to buy some of these products. Then, we could ask them if they are likely to buy them and how the sales talk made them feel - were they approachable or condescending?
Step 4. Conduct one-to-one interviews
To gather deeper and more substantive market research data, one-to-one customer interviews can be helpful. While on the one hand the individual interviews do not provide the wide and numerous range of data provided by the surveys, on the other hand they allow you to immerse yourself in a relatively "deep" investigation in search of relevant information. Interviews allow you to understand “why” specific customers like the product or service you offer, so they are the ideal choice to learn how to sell in the most effective way to your customer base.
To continue with the example of the gardening company, let's say that our company is trying to design a short advertisement that will be sent on local TV. Interviewing a few dozen customers can help us decide which aspects of our service to focus on to make the ad. For example, if most of our respondents say they hire gardeners because they don't have the time to take care of their lawns on their own, we could come up with a message that focuses on the time-saving potential of the service being offered. For example, “Feeling sick of wasting your entire weekend walking through the weeds? Leave it to us! "(And so on)
Step 5. Test the product / service
Companies considering launching a new product or service often let potential customers try it out for free in order to solve any problems before producing and placing it on the market. Presenting the test to a segment of customers can help determine if your plans for offering a new product or service need further testing.
Again using our example on the gardening company, let's say that we are thinking of offering a new service with which to plant flowers after having created the garden for the customer. We may let a couple of "trial" customers choose to have the option to receive this service for free as long as they discuss it with us later. If we see that they appreciate the free service, but would never have paid for it, we could reconsider introducing this new program to the market
Part 4 of 4: Analyzing the Results
Step 1. Answer the initial question that led you to search
In the initial stages of market research, goals are set. The questions you try to answer usually focus on your company's strategy - for example, whether or not it should make a certain investment, whether a certain marketing decision is a good idea, and so on. The primary goal of your market research should be to answer this question. Because the objectives of market research projects vary so much, the information needed to provide a satisfactory answer for each question will also vary. Generally, based on the data collected, we look for trends that indicate that a certain course of action is better than others.
Let's go back to our example of the gardening company in which we are trying to understand if it is a good idea to offer a service for planting flowers in our standard lawn care package. Let's say we collected data from government sources which revealed that the majority of our clientele are wealthy enough to afford the extra cost of the flowers, but a survey we conducted revealed that very few were actually interested in paying for the service. In this case, we should probably conclude that it is not a good idea to bet on this business. It should be modified or even abolished altogether
Step 2. Run the SWOT analysis
SWOT is the English acronym for strengths, weaknesses, opportunities and threats. Market research is commonly used to determine these aspects. If possible, data obtained from a market research project can be used to assess the health of society as a whole, highlighting its strengths and weaknesses, and so on, which do not necessarily represent the goal of the initial research.
Let's say, for example, that in trying to determine whether our flower planting service was a wise idea or not, we found that a significant number of our test participants liked the look of the flowers, but didn't have the resources or the practical knowledge to take care of once planted. We could classify this as an opportunity for our business - if over time we start the service, we could try to include gardening tools as part of the package or as a potential speech for upselling
Step 3. Find new market targets
In simple terms, a target market is the group (or groups) of people to whom a business promotes, advertises and, finally, tries to sell its products or services. Data from market research projects that reveal that certain types of people react positively to your business can be used to focus your limited business resources on these specific people, increasing competitiveness and profitability.
For example, in our example of planting flowers, let's say that although the majority of respondents reported that they would not pay for the service if the opportunity arose, most older people reacted favorably to the idea. If supported by further research, this could lead to targeting our target specifically on a target market made up of older people - for example, advertising at bingo halls
Step 4. Identify additional research topics
Market research often generates additional market research. Once you have answered an urgent question, new questions may arise or old questions may remain unanswered. Both may require further research or different methodological approaches to obtain satisfactory answers. If the initial market research results are promising, you may be allowed to carry out further projects after submitting the results.
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In the example of the gardening company, our research has led us to the conclusion that within our current market, offering a service for planting flowers is not necessarily a wise idea. However, some questions remain that can turn into good arguments for further research. Below are some questions along with some ideas on how to resolve the issues they raise:
- Does the service for planting flowers in itself attract little customers or is there a problem that lies in the use of specific flowers? We could research the answer by using floral arrangements that alternate in our product tests.
- Is there a certain part of the market that is more receptive to our flower planting service than others? We could research the answer by cross-checking previous search results with demographics (age, income, marital status, gender, etc.).
- Are people more enthusiastic about the flower planting service if it is included in the basic service package at a slightly higher price or if it is offered as a separate option? We could research the answer by carrying out two distinct product tests (one with service included, one as a separate option).
Advice
- If you make decisions that will cost you a lot of money if you make a mistake, try to get a professional market research consultant. Receive offers from a few.
- You can ask college students to research through a class project. Contact the professor who teaches marketing subjects and ask if they have such a program planned. You may have to pay a small fee, but it will be less than with a professional research company.
- If you don't have a lot of resources, first look for the free reports and reports available online. Also look for those published by your industry association or in trade magazines (magazines for professional hairdressers, plumbers, manufacturers of plastic toys, etc.).
- Sometimes there is more than one target market. Finding new markets is a great way to expand your business.
