Any established business understands the importance of market research. Going into business without it is a little bit like jumping out of a plane without a parachute – you’re kind of just hoping for the best.
As a small business, it is important to know your customer base and market positioning. Undertaking market research of your existing customers as well as potential customers can help identify exactly what people are looking for when it comes to your product or service. This is crucial for resource optimisation and efficiency. Market research provides invaluable information helping to focus your resources in specific areas. In a small business, there is not usually a lot of room to move and identify what areas of your business resonate with your customers and where to improve.
Essentially, there are two types of market research you can conduct: qualitative and quantitative research. Both provide different insights and have varied benefits. As a small business, you may not have the resources to conduct large scale market research like big companies with unlimited budgets in research and development. However, there are some low-cost market research strategies available that can give you the insights you need to gain a competitive edge.
About to open up shop? Here are some critical questions you should be asking yourself
before taking the plunge. And you better believe they revolve around understanding your market too.
Primary vs. Secondary Research
Types of research are also fundamentally broken down into two different categories: primary and secondary. In business, these refer to how direct your sources are. If you are speaking to customers directly and collecting information first-hand from them, you are conducting primary research. This is often conducted through surveys, focus groups, interviews, observations, and other methods. Secondary research, on the other hand, is the process of making use of information that already exists from your target market – usually online. This is sometimes called desk research. In our modern and digital world, a lot of information already exists on the internet – wise business owners will take advantage of this free and easy-to-access data. Overall, most businesses will use a combination of both methods to ensure they have a diverse and rich collection of data that can be used to build a business that is ready to enter the market on a strong footing.
Qualitative vs. Quantitative Market Research
Looking further, on top of primary and secondary sources, information collection methods can be divided into quantitative and qualitative. Quantitative data is represented in numbers or amounts (think statistics). Number figures can represent certain values, which are tallied and presented in a graph or table to show a visual representation of the data. Rather than tallies, numbers or figures, qualitative data collects rich and meaningful descriptions and experiences from participants – think words and quotes that can’t be allotted into simple values (and therefore can’t be easily graphed). Let’s have a deeper look at how these types of data can be collected in a real-world setting.
This is by far the easiest and quickest way to collect data; however, the data isn’t as rich and meaningful as qualitative data. One benefit of quantitative methods is that a lot of quantitative data can be collected and processed with technology and programs like excel that can display it appropriately and format it into figures. This allows for easy-to-understand research and comparisons in trends in the data.
Collecting quantitative data is most easily achieved through surveys
that can be conducted via:
- Online forms
- Social media
This research should be conducted prior to releasing anything new, whether that be a new product, a new business, or a new brand logo (or similar). Many free and easy-to-use online tools can help you create surveys that can be shared to the right audience – remember to use an incentive for customers to complete the survey to get more engagement. Google Forms and Survey Monkey are great tools that have ready-made question formats (from multiple choice, to checkboxes, to sliding scales, and more) so that you can make your survey exactly the way you want it.
This data is much more insightful, however, much harder to decipher and visualise. Through qualitative data, you get a better understanding of your customers, their opinions, needs, and wants. Sometimes it can be a struggle to collect this type of data – customers are busy and typically don’t like spending too long answering questions. Much like quantitative methods, qualitative methods include surveys – however, you also have the possibility of hosting focus groups and interviews. This does take time and effort. A lot of larger companies will outsource research companies to undertake the work for them and then examine the data collected. For smaller business owners, it’s time to get creative.
While getting qualitative information on request is difficult, finding opinions and views on various topics online is relatively easy. Thankfully, these days, people rarely shy away from expressing their thoughts in public formats. For rich qualitative data, you need only check your (or your competitors’) social media comments, reviews pages, and discussion forums. You can also take some time to conduct real-life observations at your place of business or those of a similar concept.
Now that we’ve run through simple ways of obtaining quantitative and qualitative data through primary and secondary methods, let’s look at how to put this into practice for your market research.
Market research is best conducted when you have a clear idea of what you’re looking for and the purpose of the research. Otherwise, you will waste a lot of time, money and energy gathering information you may not need. Therefore, you should start by setting an objective for your market research. Here are some questions you can ask yourself.
- What are you trying to achieve by doing your market research?
- Are you conducting product research?
- Are you discovering a new audience?
- Are you determining your current audiences’ opinion of your brand/ product?
- Are you finding out what you can improve on?
Also, decipher what avenues you can use to collect the data and if you need to think about going down alternative routes, such as paying for specific market reports online. You can also determine whether you have access to customer information and platforms that can be utilised for surveys. Ask yourself:
- Do you have social media?
- Do you have Google analytics?
- Is there a system you have where you can access customers email addresses (can they subscribe)?
StrategiesBusinesses that continue to succeed are businesses that know their audience well, understand the opportunities and constraints within their market, and know that things can change any day and are ready to adapt to these changes. Market research is not a one-time thing – continuous monitoring is the best way to forecast changes and avoid being blindsided by a tumultuous market. So, here are some strategies for small businesses to use in conducting market research.
Conduct Regular Audience Research: Use the internet to discover what your audience is interested in. What do they value? What is their budget? How do they interact with your product? There is an abundance of case studies and academic research available online that covers consumer behaviour and purchase habits across a lot of industries. You just need to spend the time identifying the relevant information for you. Competitor and industry research can also be helpful areas to conduct research on. Also, as mentioned, social media can be a gold mine for customer opinions and views.
Keep All Your Data: Keep a log of your customers and any information they provide you. You can analyse this data to give you insight into what your customers like, their average spend, geographical location and more. This can be used to inform future sales or products on offer from you. This data can also be used to obtain further data, through surveys and questionnaires.
Social Media Polls: If you have a strong social media following, especially if your audience are heavy social media users, this can be a great avenue for collecting data. The new features of Instagram, Facebook, and Twitter mean you can create polls to determine what people like. Instagram provides a dual poll (two options) where you select one or the other response. So, if – for example – you are in the stages of creating a new product but aren’t sure what colours your users would prefer, you can post a picture of the colour palettes together and ask which your audience prefers. This is also a great way to interact with customers as they will love seeing a brand involving them in decision-making processes. It’s simple yet effective! Facebook and Twitter have their own similar polling options where more responses are accepted.
Email/ Mail/ Online Surveys: If you need a little more in-depth information, you should endeavour to create a survey for people to complete. This could be a quantitative or qualitative survey that will provide you with much more relevant and insightful information about how customers perceive your business and what their expectations are. Identify people that are willing to complete your surveys. Maybe provide them with an incentive (10% off, a chance to win a voucher, a free gift, etc.) if they complete your survey.
We live in the perfect time for conducting market research. There were once times where you would have no choice but to hire professionals; now customers leave trails of data around like breadcrumbs. It’s just a matter of dusting them up.
Market research continues to be a critical component of running a successful small business, and as the market continues to grow and adapt, will continue to be an important stage of operating a business. Use the above tips in conducting your own market research, and where you need help with financial research and management, bookkeeping and accounting services, seek help from Shoebox Books.
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