There are two schools of thought when it comes to the value of market research for business:
“Running a company on market research is like driving while looking in the rear view mirror”
"Running a company without market research is like driving with your eyes closed"
I think the truth lies somewhere in between. While research is designed to minimise business risk – risk can never be eliminated from business development and growth.
Market research helps establish the feasibility of your business concept or new products and services. As small business operators we can't always afford to pay a market research firm. But there are plenty of free and low cost alternatives you can do yourself.
By doing some great research you can find out if your idea is worth pursuing or if there are other better options you had not yet considered. Good market research can also help convert any ‘non-believers’ (or funders) giving you facts to back up your gut instincts.
As an entrepreneur you should learn to love market research as it’s a skill you will need to call on as your business grows and develops. You should never stop learning about your industry, your products, your market and your potential customers. Market research is the cornerstone of your business plan and should provide you with the confidence your business is going to be a winner.
As much as research is vital to feasibility - two words of warning: analysis paralysis. Try not to get so consumed by research it becomes a form of procrastination. You will never have all of the information you desire or require and the market is ever-changing. Be satisfied with having enough information to minimise risk and impress potential partners or funders.
When undertaking research, ensure you always note the specific reference, ie. where you found it. This will help you when you want to review the data in the future and it gives your business plan more credibility. Potential business supporters will want proof your idea has been well researched (and hasn’t all been taken from Wikipedia and Google!).
In developing a market research plan you need to decide:
- What information do you need?
- How will you gather the information?
- In what order you should gather the information?
Research is undertaken for a number of reasons, including:
- To be more informed about your businesses potential and direction
- To prove your USP is real
- To decide on the best way to proceed
- To identify resources required
- To identify gaps in your business or gaps in the market
- To identify improvements
- To identify direct and indirect competitors
- To examine trends
Areas to research
- Product / Service – how unique is your offering?
- Target Market – who are they and what are they looking for? What motivates them to buy?
- Competitors – who are they? How are they different?
- Internal factors – your strengths and weaknesses in relation to the above
- External factors – opportunities and threats that may present themselves in the short to medium term
How to research
Research for your business should combine primary methods (the research you conduct specifically for your business) and secondary (the research conducted by other people or organisations, eg. the Australian Bureau of Statistics). It makes sense to start with secondary findings and then to fill any gaps in your knowledge with specific primary research.
There are pros and cons of each of the methods you can use for market research. Choose the most appropriate method for the information you require.
Before undertaking market research you first need to decide:
- What is the information you need? This can be the number of competitors, size of the market, price of goods and services, cost of transport or just about anything you need to know about.
- Who will you include in your research? (Don’t ask your friends if they don’t represent your target market.)
- When is the best time to do it? Sometimes the time you do your research is important. For example, there is no use trying to count school kids on the weekend!
- Where will you conduct your research? Is there a particular area where you should be looking to gather information?
- How will you conduct your research? What is the best method for the information you want to find out?
You can finding existing (secondary) research via:
- Social media platforms (Facebook, Pinterest, Twitter, Instagram etc.)
- Media (printed, electronic)
- Libraries (reports, statistics, history, journals)
- Australian Bureau of Statistics (ABS)
- Government departments
- Industry journals
- Australian Taxation Office
- Google - alerts, adwords
Primary research options include:
- Focus groups (getting small groups of people to talk about your idea)
- Surveys or questionnaires (this is particularly useful if you want to gather large amounts of information). Design up to 10 questions free from surveymonkey.com
- Observations (mystery shopping, standing out the front of stores, locations)
- Interviews with people in the industry
- Working for someone in the industry
- Other businesses or competitors (direct and indirect)
- Online forums and networks
- Google key words: Key words enable you to get a clear picture of how many people are searching for your product or service online.
Have you had success uncovering gems with your market research? If you need some help with your market research – get in touch.