Market Research changes the tides in your favor
You have a business plan, but you are unable to predict how much demand your product or service will have and hence find yourself in a state of dilemma. If you back out, you will end up regretting it the rest of your life. If you go ahead, there is an imminent fear of you going bankrupt. The solution lies in market research.
Information is the prime driver of any business. It is futile to start or and even think about sustaining a business in the absence of reliable information. Businesses need information about their customers, an analysis on demand and supply and a clear perception of business trends, to be spot on with their decisions.
Market research, by gathering valuable information about customers, helps build business strategy and accounts largely for business success around the world. Market research attempts to answer certain questions that are crucial for business success, such as:
- Is there a market for your product or service?
- What is market size and scope or potential for growth?
- What are the needs and preferences of your potential customers?
- What is the existing and future competition for your product?
By performing market analysis, small business can develop a niche product, discover a niche market, study competition, and identify pitfalls. Market research helps business create awareness of their niche market and pool in their resources and efforts to target the market segment that is most likely to buy their products or services. It is an indispensable part of a company’s activities, particularly in the case of start-ups. Market research has the potential to pervade and influence business decisions, from gauging the effectiveness of the business plan to creating a sense of stability in times of uncertainty.
Why market research will change the tide in your favor?
- Good market research will help you find whether there will be customers for your product or service. The information will serve as a checkpoint in your business endeavors, and determine the viability of your business plan; and if there will be a ready market to explore.
- When you expect funding, being prepared with all the statistics and research information will help you convince the investors and bank managers
- You will gain useful insights into the customer habits, which will help you focus on the markets that will provide more ROI than others. It will also help develop relationships that can provide long-term benefits.
- By keeping yourself abreast with your competitors’ markets and their prices, you will have a better understanding on how your competitors approach pricing and what price will be right for your product/service.
- By researching on the answers provided by the customers, small business owners can determine whether they need to tweak their package design or add services such as home delivery, etc.
How to do market research?
When you conduct market research, it is important to ask the right questions in the right way to the right kind of people, which allows you to assimilate accurate information. Market research can be done using:
Primary research contains information that is extracted directly from the potential customers. It requires you to prepare for new research by formulating questions about your business that need to be answered. Collection of data is done using surveys, questionnaires, and focus groups. It entails analyzing current market conditions, and studying competition, the demand for a product and effectiveness of current marketing practices. It is conducted through:
- Interviews – conducting face-to-face or telephonic interviews with people you know or don’t know
- Surveys – conducted online or via email
- Questionnaires – conducted online or via email
- Focus groups -creating a small group of potential customers and getting their feedback
Some questions you might want to ask are:
- What are your reasons for purchasing this product or service?
- What do you like/didn’t like about the products or service currently available in the market?
- What do you want to pay for an available product or service?
- What are your suggestions for improvement?
Secondary research is available from indirect sources like online resources from the Internet, data available at libraries, government studies, business magazines, business directories, newspapers, trade journals and competitors literature. The information that can be derived from secondary research are:
SWOT Analysis: The strength, weakness of your product or service and the threats and opportunities the market is likely to present.
Product pricing: Determine the right price for your product or service by studying competitor pricing
Competitors: Information about the kind and size of competition in your area
Collecting the right data from the right source is the most important facet of marketing research. There are two methods of doing this, namely:
Quantitative & Qualitative
Quantitative research is numerical in nature and involves statistical analysis. Quantitative data collection involves use of large sample size and using the same series of questions to all the participants. If you have owned a website for any length of time, you have probably worked on web analytics. Such analytics throw light on very useful information, such as, where you are getting your leads from, the time the visitors spent on a particular page, and which was the specific landing or exit page.
Qualitative method is used to address the problems presented during quantitative data collection. The process entails interviewing and learning about customers’ opinions based on a small sample size.
Common marketing research Pitfalls
Using only secondary research: Good market research is a combination of primary and secondary research. Relying only on published work can prove costly at times.
Surveying only close acquaintances: Interviewing your family members and colleagues can be a convenient option but often misleading. The answers get influenced by their proximity to you. To get a better and true account for your research you need to step out of your comfort zone and ask the real people with real problems.
Losing motivation mid-way through the research: It is easy to lose motivation when confronted with disappointment while collecting data or as complexity of the surveys increase.
Tips for designing your own market research surveys
When your research is not expected to have major implication on your business or the information you need is marginally important, it makes business sense to do your own research. By learning some market research tips, you will be equipped with the tools to develop your own market research plan. Here are ten ideas that can help you along the way to a successful market research survey.
- Determine the objective: Set a goal for your market research. What you want to achieve at the end of the market research activity. This will guide you throughout the course of your market research and help focus your survey on the set goal.
- Look at the information you already have: Organizing and analyzing the available information can give you an indication of the current market position of your product or service.
- Establish the sample size for your research: The sample size and the quality of sample are important because based on the sample you will be taking business decisions. The level of accuracy you want from the survey will determine the sample size you wish to have.
- Make sure your survey points are directed and concise: Devise questions that are close-ended, preferably requiring only ‘ticks’ or ‘Yes’ and ‘No’. Limit the number of open-ended questions as they tend to create disinterest in the participants.
- Use Research tools that are convenient yet fast and accurate: Use surveys that can be conducted with ease and give quick results, as in the case of online surveys.
- Find whether responses can be collected online: If you have a blog or a website, you already have the opportunity to cash in on the target audience. All you have to do is add an online poll on the existing space.
- Collect additional information wherever necessary: Add additional questions as and when you feel that these could be important for your survey. You can do this by doing some indirect or secondary research; by asking your friends and family.
- Organize and analyze research findings: The information collected should be interpreted to determine the choices at your behest. Analyze the information to gain useful insights and trends which will then prove useful while making the final choice.
- Base your decisions on experience: Once you are through analyzing the information, always use your experience to take the decisions rather than rely on intuitive methods.
- Evaluate the results of your decision: Evaluate the results of your decision to determine the success of your survey
The difference between success and failure could be the quality of market research or its complete absence. Your next business idea could be to sell parts and accessories for cars. If you do proper market research, you might find that there is a demand for a part that the bigger stores do not offer. The next thing you know, you will be busy drawing out a business plan.
What is important to you when conducting market research?
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