Why you should do market research
Market research is key to making better business decisions. It can help you answer important questions, such as:
- Is my business idea or new product or service viable? Is there a market for it and what do customers think of it?
- Are my customers satisfied? If not, why not?
- What are the key trends in my market that I should be aware of – and what should I be doing about them?
- Is my advertising or marketing working?
- Will my business model work in a new or different market?
- Who is my competition? What is their customer value proposition and point of difference?
Types of market research
To help you plan, it’s useful to understand the different types of research you can do.
Primary research
Primary research is getting information directly from your customers, non-customers, and competitors – for example, talking to your customers or asking them to take part in surveys. Because it’s directly from the source, it’s usually the most valuable type of research.
Secondary research
Secondary research is using information produced by third parties, like your local Chamber of Commerce, industry organisations, and government bodies like Statistics New Zealand, and New Zealand Trade & Enterprise.
Other ways of getting information about your business and your market include reading newspapers and magazines, searching the internet, watching TV, listening to the radio, and networking with others in your industry.
Research methods
When conducting research, there are two key methods: qualitative and quantitative.
Qualitative research
Qualitative research is used to gain an understanding of people’s underlying reasons, opinions, and motivations. It can tell you what people think about your business, your products, and your services. Common methods include focus groups, face-to-face interviews, and observations.
Quantitative research
Quantitative research is used to collect hard facts (for example, via surveys and polls) and uses measurable data to formulate facts, validate hypotheses, and uncover patterns. The data is structured and statistical.
Cost of market research
Market research doesn’t have to be complicated or expensive – in fact, successful businesspeople often do it instinctively. The main thing is to ensure you’re constantly listening to your customers and to what’s happening in your market, for example:
- Talking informally to or interviewing customers and people in your target market.
- Monitoring comments about your business on social media.
- Running small focus groups – put on some food and drink and invite people to come in and talk about their perceptions of your product or service.
- Running surveys – either online or asking customers to fill out questionnaires when they do business with you.
Don’t overthink it
Whatever method you use, the goal of market research is to be better informed about your customers, competitors, and market – because the better information you have, the better business decisions you can make.
That’s why it’s important you plan your market research efforts carefully and focus on finding the answers to a small number of key questions that will make the most difference to your business.
Marketing information systems
You already get lots of great information every day, simply in the course of doing business. The trick is capturing that information in a way you can use and analyse it. That’s why it’s important to have good internal systems.
For example, you could set up a customer database that captures key information when you deal with customers and suppliers. Then you could analyse your database to find out things like:
- Your average sale value
- Who your most valuable customers are, where they live, and their age
- Your most popular (and least popular) products.
Getting the most out of your market research
Involve your staff
You can improve the effectiveness of your market research by making it part of your everyday business activities. For example:
- Train your staff to ask customer-specific questions, like ‘What other products or services could we stock to meet your needs?’ or ‘Would longer opening hours be valuable to you?’
- Encourage staff to record all interesting snippets and feedback – they’re easy to forget.
- Hold regular marketing meetings where people can share market research, work out how to gather more, and discuss how you could use the information to improve.
- Share responsibility by assigning specific areas to staff members. For example, task a digitally savvy person with conducting internet research, looking at things like competitors’ websites, trends, and developments in your industry.
Don’t reinvent the wheel
Other people may have already researched many of the questions you’re interested in, so use existing research where possible before investing your own time and money. For example, read news and magazine reports related to your industry, and check out government sources and relevant industry organisations.
Take advantage of free digital tools
There’s an amazing amount of information and tools available online that you can use for free to help gain an insight into your existing or new target markets. For example, Google Trends is a great place to find out what’s popular and what people are searching for, and identify potential opportunities.
Meta for Business (formerly Facebook for Business) can provide a host of audience insights, and using your business’ Facebook page can also help you find out a lot about people who are interested in your business by looking at what they post and their responses to your posts, and via questionnaires on your page.
Use the insights to drive your business decisions
There’s no point doing market research if you don’t use the information you get from it in your business planning. At the same time, remember that market research is not infallible. For example, the people you talk to might not be 100% representative of your total market – and new developments (particularly digital ones) can change markets very quickly.
But while market research should be just one of the inputs into your overall plan, it’s a very valuable one. Good market research can give you unique insights that can help you reduce risk, challenge your thinking and grow your business over the long term.
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