6 Tips for Conducting Effective Market Research for Small Businesses
If you have a small business or want to start one, conducting marketing research is vital to making informed business decisions. It’s a critical process that involves taking the time to understand your market, customers, and competitors to ensure your business is successful. Let’s take a closer look at how market research can help you make better business plans, develop products, and beat out the competition.
What is Market Research for Small Businesses?
There are two main types of market research strategies:
- Quantitative Research: This research style involves collecting measurable data in the form of numbers, survey responses, and similar statistics. Quantitative data offers the ability to objectively analyze the information collected.
- Qualitative Research: In comparison, this style of research is based on more subjective data gathered in focus groups, interviews, and social media interactions with customers.
Ideally, you should conduct both quantitative and qualitative research for your small business to get a complete understanding of your customer’s needs and the overall market.
Why Small Businesses Need to Conduct Market Research
Small business owners can greatly benefit from proper market research in a variety of ways:
- Reducing your risk: Investing in your business can be risky, whether it’s developing expensive new products or expanding your staff. By completing research and learning more about your customers and competitors, you can reduce your overall risk and make more informed decisions.
- Identify trends: The marketplace is constantly changing, and it’s a good idea to know what types of products or services your customers are looking for today. If you know about current and upcoming trends, you can adjust accordingly.
- Test product viability: Part of conducting market research involves reaching out to your customers to see what they think. If you have a new product or service idea, market research can help you decide if it’s worthwhile.
- Tailor marketing: Completing market research can give you information about what media sources your target audience consumes so you can choose where to advertise in the future.
- Get funding: If you plan on seeking outside investments in the future, conducting market research is a must. It’s far easier to make your case to investors with hard data rather than hunches or speculation.
6 Tips for Conducting Effective Market Research for Small Businesses
It’s not enough just to do market research. To find the best insights, it’s critical to do it correctly.
Define Your Goals
Before you decide to start, take the time to clearly spell out your goals. This includes writing down the questions you want answered when you’ve gathered all your data, which can help streamline the process and give you direction.
Some examples include:
- Who are my customers?
- What is my target demographic?
- How large is my market?
- How much are my customers willing to spend?
- What do my customers need and want?
- Who are my biggest competitors?
- What types of data collection methods will give me these answers?
Create a Budget
Market research can be time-consuming and expensive, especially if you want to have focus groups or conduct extensive studies. However, there are also affordable options, like asking for opinions on free websites such as Quora or Reddit. If you have an email list, a Facebook group, or an Instagram community, you can send out surveys or ask for feedback.
Regardless of the path you take, it’s essential to create a budget ahead of time. Market research is supposed to help you give insight into your customers, not create bad spending habits that might prevent you from hiring key staff or developing new products.
Identify Your Target Customer
Finding out data about your target customer is important. Once you learn things such as how old they are, where they live, and the types of products and services they need, create a buyer persona.
This means creating a detailed profile of your ideal customer. You can even give them a name, hobbies, specific pain points, and an age. After all, millennial marketing will be different from marketing to Gen Z.
Use this persona whenever you think about building something to help your customers. You can use one (or several) buyer personas and ask yourself if you think it’d be a good fit for them. Even better, look for opportunities to find your customer’s unmet needs so you can develop ways to help them.
Research Your Competition
Researching your competition is an excellent way to determine what works with customers. There are likely companies with products and services similar to yours. Once you identify them, do what’s called a SWOT analysis, which stands for strengths, weaknesses, opportunities, and threats.
Look at your competition’s social media profiles, their marketing tactics, how they price their products or services, and their reviews. Use this information to see how you can better serve your customers, whether it’s with more competitive pricing, better customer service, or something else.
Collect Several Types of Data
When you’re completing your research, gather several types of data using multiple data collection methods. Here are some examples of the types of research you can try:
- Primary research: Send out surveys and questionnaires to potential customers or your email list. Keep your results in a spreadsheet. If you’re unsure how to use spreadsheets, this is a great time to learn Excel.
- Secondary research: Look at existing data like academic studies, reports, and online resources. There’s no reason to reinvent the wheel if someone else has already published hard data that can help you.
- Online tools: Install analytics-tracking software, create social media profiles, and conduct keyword research.
- Focus groups: If your budget allows it, set up focus groups to help give you feedback on your products or services.
- Customer feedback: If you already have customers, make sure you solicit their feedback so you have real-time reactions to their experience with your business.
Regularly Update Your Research
Last but not least, regularly update your data. The market changes rapidly, and there are a variety of factors that can impact a business’s success. Once you take the time to conduct market research, make it a point to refresh it periodically. Look to see which products or services are performing best, and regularly read through customer feedback to see where you can improve.
Although running a small business can be challenging, being open to new ideas and staying on top of your industry can go a long way in ensuring you can keep growing your business for many years to come.
Featured Image by Arlington Research on Unsplash