Market research is the process of collecting and analyzing information about a business’s market, consumers, and competitors.
It’s highly recommended to conduct market research before starting any business/venture since blindly operating your business in a market you know nothing about will cost you dearly at some point in your business life.
The same goes for existing businesses who wish to expand their reach in other markets or simply increase their profits in the current one.
Market research helps you to understand the behavior and buying pattern of your customers and makes you aware of the ever changing market trends.
Conducting market research regularly will help your business maintain its competitive edge and take the right decisions based on the information gathered in order to increase sales and profits.
In addition, market research is essential to create a business plan.
Yes, market research is important for all business regardless of their size or structure. As I said earlier, operating your business in a market you know nothing about will cost you dearly in the long-run.
There are two types; Primary research and Secondary research.
Primary research works by communicating with customers directly via face-to-face interviews, phone interviews, email campaigns, online surveys, focus groups and etc. You can even use your own sales records to gather information.
Write down all the questions that come to your mind and have your customers answer them. Different people have different opinions so expect a fair amount of negative feedback as well.
At the end, look at what the majority have said and take your decisions based on that.
Face-to-face interviews: This is where you directly approach potential customers and get their opinion about your business and its products/services.
If you are serious about staying one step ahead of your competitors, start talking to potential customers directly in real life. Most entrepreneurs (including myself) skip this part since it’s awkward enough to talk to strangers in public, let alone interview them.
But trust me, face-to-face interviews allow you to tap into the mindset of your customers and know what they like, dislike, their reason for buying similar products/services and etc. After all, real life conversations are much more interactive than online chats.
In addition, having face-to-face interviews with different people will help you get an idea of who your target market is, how the pricing should be implemented and what decisions should be made or reversed.
Phone interviews: You can use this method two different ways. You can either contact potential customers and interview them, or you can pose as a customer and call your competitors to grasp their pricing and etc.
That’s unethical? Welcome to the business world.
Email campaigns: You can easily purchase a list of emails of potential customers for a cheap price and start interviewing them. Keep in mind that if you were able to get a list of emails for such a cheap price, many other businesses might have already done the same.
So most of the people who use those emails may have already been heavily spammed by businesses and chances are, they now use a different email address. However, there are some legit email list selling companies as well. You just need to find the right one.
Online surveys: You can create professional looking electronic surveys using services such as SurveyMonkey and Wufoo. Share the survey form on social media and embed it on your business website if you have one.
Focus groups: Select 5-10 people who you consider as ideal customers for your business and have a group discussion with them, of course a moderator should be involved to take notes of each person’s response to a given question.
For starters, try to find answers for the following questions when conducting primary research.
Back in the day, the most efficient way of conducting primary research was through telephone calls but nowadays people will just hang up on you since it’s considered annoying.
In my opinion, the best place to conduct research is social media since you can connect with people in a more modern and formal way.
If your business has a website, use Google Analytics to see what the users searched for in Google which ultimately led them to your website. This way you can easily track down the likes, dislikes and buying patterns of your target market.
My point is, make sure you stick to the new trends when doing your research. Don’t annoy customers, be cool and stay cool.
Since conducting primary research can be expensive and time taking, you may be tempted to just interview your friends and family instead of going out and talking to real potential customers. But this is just not the right way to do it.
No matter how many times you convince them to give their 100% honest opinion, they will surely hold back their real thoughts at least a little, fearing that you might get depressed or stressed out. So make sure you do your research the right way.
Remember that your opinion doesn’t matter. Only the opinions of your customers matter. If they are looking forward to purchase stuff online, create a website. You can hire a team of freelance web developers from Freelancer or Upwork to get the job done for a low cost.
Be serious about your business and always put your customers ahead of you.
Learn to be flexible. Don’t be too arrogant and optimistic. Whenever you see room for improvement, go for it.
You conduct secondary research by gathering and analyzing the information which have already been collected and published online by similar businesses in your industry.
The best sources to gather information during secondary research are; government reports and studies, blogs, magazines, newspapers, TV, and Radio.
You can also rely on the information found in your local libraries and google search results.
Secondary research will give you an overview of your market and potential customers, however, the information you find may not be as targeted as the information you collected from primary research.
You can grasp the following by conducting secondary research.
Sometimes the information you collect here may even be outdated or just plain wrong. Yes, Google recommends search results which are rich in content but at the end of the day, it’s just a system.
It doesn’t know what information is true and what is not. So don’t solely rely on secondary research.
Figured out who your target market is? Can you explain it in one sentence? Great!
You can further analyze your market and its growth by looking at similar businesses who are doing better than you. Look for businesses which meet the following conditions.
Yes, there are many companies that sell detailed reports and statistics for businesses in any industry. They will even conduct a customized market research based on the questions you have. However, this is a very expensive process.
These companies have spent a lot of time, manpower and technology gathering all that information so they won’t just hand it over to you for a cheap price.
I recommend you to do your own market research. It’s your business so why pay another business to do work for you when you can do it for a much cheaper price yourself.
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Using the information collected from your market research, you can identify your business’s Strengths, Weaknesses, Opportunities and Threats.
Strengths and weaknesses are the things which a business has control over such as competitive prices, and poor financial management.
However, a business has no control over opportunities and threats such as positive trends in market growth and the possibility of natural disasters.
Is the industry big enough to make good profit? How many estimated monthly sales are your competitors getting? Which countries have the most sales for similar products/services?
Time to find answers for all these questions. Don’t worry, it’s actually pretty easy. When we want to purchase or look up something online, what do we do? We Google it up right?
I recommend SEMrush because it has a “forever free” package (With many limitations to go along with it). Sign up and type in the product/service name to see how many people search for it on a monthly basis.
If there are only a few customers who would buy your products/services, you will either have to start selling to them frequently or sell at a very high price in order to expect any profit from your business.
It’s better to know these things before you start investing your precious time and money on your business. It will save you a lot of regression.
Now, the only thing left is to document the information you gathered for further analysis by your co-workers and potential investors. Different businesses document their research in different ways. Some do it formally and some do it informally.
If you are not planning to reach out to investors for external funds, you can just distribute the research informally among your co-workers.
In most cases, you capital is limited so you have to focus on saving as little money as you can. Here are some tips to prevent you from spending unnecessary money in market research.