- Fantastic Team
- 6min read
- Published: January 8, 2021
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How to Do Market Research Before Starting a Business
Market research is all about understanding who your potential buyers are and what influences their behaviour. Chiefly, what impacts their decision to buy or not to buy.
The value of this kind of activity means that successful market research companies make – and often charge – millions of pounds for their services.
But what if you want to do a little market research for your own small business? What market research methods are there? What are the benefits and limitations of market research?
For a basic overview, here’s where to start:
What Is Market Research?
Market research is the process of gathering data about your customers and potential customers in order to better achieve your goals.
The process itself might involve creating buyer personas, target audience research, analysing consumer behaviour via technology, in-person surveys and many other approaches.
The overall goal is always to better understand your audience so you can determine how successful your products and services are. Or how successful they could or are going to be.
The Importance of Market Research
The benefits of market research mean that it is pretty much a required part of the opening or operating a successful business. Market research can:
1) Boost Your Sales
Knowing your target audience can help you sell your goods or services to them in the most effective way.
Without proper market research, it’s almost impossible to tell whether you could be achieving much greater profits with only small and simple changes to the way you promote your business and what you have to offer.
2) Minimise Your Risks
The obvious example is starting a new business. At this point, almost any decision that a company makes will have lower risks attached if proper market research is done first.
If you don’t have data, what are you basing that decision on? Especially when you are deciding whether or not to make a big investment, good data is vital.
3) Improve Your Customer Interactions
Want to know how your audience prefers to be spoken to? Need to know how you could better adapt your products or services to meet their needs?
Knowing more about your target audience helps you give your customers what they really want.
4) Know Your Reputation
Are you known as a reliable provider? A cheap and cheerful option? A service which your clients sort-of like, but always have the same complaint about?
Without market research, you can never really be sure. With it, you can compare your standing with that of your competitors and see where there could be avenues for you to improve.
5) Grow Your Business
Gain insight into opportunities for expansion and improvement. With informative market research data on your side, you will be able to identify places where you can expand and grow.
What Are the Four Types of Market Research?
here are, roughly speaking, four types of market research:
1) Primary Research
Primary research comes to you first-hand. It might involve measuring customer trends via interviews or small-scale surveys.
Following up, you might explore those trends in more detail. Has an issue been identified? Ask more questions about it specifically.
2) Secondary Research
Secondary research comes to you second-hand. It usually involves looking at publicly available data such as:
- Market statistics
- Industry statistics
- Trend reports
- Your own sales data, including customer retention rates
- Competition analysis
3) Qualitative and Quantitative Research
There is an important – but sometimes easy to overlook – difference between the data you might gather as part of your market research efforts:
- Data which can be quantified has a number you can put on it. How much is your average revenue per sale, for instance?
- Qualitative data is different. The results you get from asking your audience questions is usually qualitative. It’s valuable. But you can’t usually put a figure on it.
How to Do Market Research
There are several steps involved in effective marketing research. You will almost certainly want to:
1) Define Your Goals
Before you get down to work, you need to set your goals for the research you are going to carry out. You might want to know:
- Does your audience want what you have to offer? Is your business offering services designed for families in an area which is largely single professionals? Are you a high price-bracket company trying to sell to a lower-income audience?
- How much competition is there? If you are considering opening a new business in a certain area, is the market already saturated?
- What are your competitors offering? Are there any niches which you could target? Is there anything they do too well to compete with? Or so poorly you have a clear opportunity?
Armed with your goals, you can determine which of the types of market research listed above will be most suitable.
2) Create Marketing Personas
Sometimes called buyer personas, this is an exercise where you imagine a fictional client who embodies all of the key characteristics of your ideal customer.
You might want to consider their age, gender, where they live, what kind of job they might have, do they have any family and what their income level is, as well as what challenges you might be helping them to overcome.
It’s common for some types of business to have multiple marketing personas because of a more diverse audience. If you have multiple personas, you should conduct specific research for each.
3) Look for Other Existing Research
If you have a question about a given market, there’s a chance that someone else may have asked it already.
If your goals can be wholly or partially answered by existing research, your job may be done before you even begin.
4) Conduct Primary Research
This might involve carefully preparing a list of questions for your survey participants, running a questionnaire on social media or any number of first-hand data gathering activities.
Everything should be designed to get you the information you need to answer the questions you posed when you defined your goals.
5) Examine Secondary Sources
Again with a focus on your goals, you can locate and consult government records, publicly available information and your own data.
What Is Market Research in Business?
Businesses conduct market research because it is the only way to learn more about their existing clients, potential new customers and larger audiences if they are planning to open or expand.
The easiest solution, of course, is to have that work done for you:
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- Last update: January 11, 2021
Posted in Advice Hub
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