Market research is an essential step for any business attempting to start up, open a new location or launch a new product. Data and analysis can go a long way toward putting your best foot forward on a new business venture, so gathering as much information as you can is recommended. You can conduct market research for several purposes, such as seeing how your target demographic would respond to your product, adding it to your pitch for a small business loan or even finding your key demographic.
Market research can be a costly and time-consuming undertaking. Larger companies have their own marketing departments to launch studies, or they may hire an outside firm for such projects. For small businesses, hiring a marketing firm for research is often not in the financial cards, as campaigns can cost tens of thousands of dollars.
Fortunately, there's a way to do this research on your own. If you're willing to put in the time, there are plenty of free and inexpensive tools to help you do your own market research, which is always worth it.
Online surveys are a great way to field a consumer's thoughts and opinions. It's common for businesses to ask their customers to fill out a survey to rate the level of customer service they received. Many stores and restaurants print instructions on how to access the survey on the customer's receipt. Surveys can be used to accomplish research projects as well. There are two main ways to go.
Services like Google Surveys, Samplify and AYTM allow you to send your survey to a pool of panelists who are part of their network. These panelists are opt-in survey takers who will give you honest answers. You pick the demographics you're targeting from a variety of factors. You can work with these services to create a research campaign to fit your budget, which will affect how many questions you want on your survey and how long you want it to run for.
The second option is cheaper and optimal if you already have a pool of customers you can send a survey to. You can create your own survey for free with programs like SurveyMonkey and Google Forms. These are great to use if you have your customers' email addresses. You can also inform them of the survey in person at your store or restaurant. Incentivize them to participate in the survey by entering them into a contest or offering a discount for their next visit. Keep the survey short and simple to avoid wasting the customer's time.
If you want to know what demographics work best for you, ask simple qualifiers such as age, gender, income level, education and occupation to get a picture of your average customer. For fielding interest in a new product or location, ask for opinions on similar products and where they like to shop or eat. It never hurts to ask direct questions like "would you be interested in a product that does …" or "would you eat at a restaurant located at …"
A third and final option is an in-person interview you conduct on your own at your business or anywhere else.
"Grab an iPad or a clipboard, go to where your target customer lives, works or plays, and actually talk to your customer directly," said Ryan Redding, owner of DP Marketing Services. "Ask them questions about how they feel about their current options. Learn about what they experience when they buy from your competitors. The trick here is to carefully think through the questions in advance so that you don't accidentally lead your prospect down a disingenuous path. But, assuming that it's handled well, you'll be rewarded with valuable intel, and potentially a few preorders.”
Focus groups are a tried-and-true method to conduct marketing research. Much like surveys, this helps you get thoughts and opinions directly from the consumer. Marketing firms often organize focus groups, but you can also do this; just be aware that some form of compensation is usually needed to recruit people to participate in the focus group session, which can last for more than an hour. Compensation can come in the form of a free meal, free products or discounts. The compensation should reflect the amount of the participants' time you take. You can recruit people at your business by putting up flyers or directly asking them. You can also recruit online through your social media spaces or email newsletters.
Once you have a time, location and enough participants (10 to 20), come prepared with plenty of questions, both quantitative and open-ended. Usually, people who are willing to participate in a focus group are ready and willing to give valuable feedback. When doing market research for a new product, ask open-ended questions about how the consumer's life could be improved with the product, if at all. Getting a discussion going can reveal a lot about your demographic and what they're looking for.
Keyword research and SEO
Thanks to the internet and search engines, you can incorporate consumers' browsing habits into your research. SEO tools allow you to get a peek into what people are searching for. Tools like Google AdWords and WordStream can generate performance reports on certain keywords and related searches. [Read related article: 6 Stages of Keyword Research Startups Need to Follow]
You can narrow down your keyword search to a geographical area, such as the city, state, or region where your business or future business is located. You can view lists of keywords your target demographic searches for, compiling the most popular terms in your area. You can see what demand there is for certain products or services. For example, you could discover terms like "iPhone repair near Denver" or "outdoor cafe in downtown San Francisco" and see how well rated they are. If you're deciding on a location for your business, compare searches in different areas and see which one is most searched for. The top search is a good indicator of where the demand is highest and where your business may be more successful.
Looking into your business's market means looking at not just your potential customers, but also your competitors. There are several ways to do this, but you should start by compiling as much information about them as possible.
"Find your competitors online – their websites, social media, advertisement channels, etc.," said digital marketing specialist Galin Kolev of Fantastic Services. "Look at the quality and quantity of their products/services portfolio, prices, area coverage, brand reputation, customer reviews. If you think you can beat them and earn your share of the market, then go for it."
What has and hasn't worked for your competition is valuable information. In a way, it's like they've done the market research for you. This allows you to set yourself apart from your competition and develop what you can do better.
Seeking outside help to conduct market research can prove valuable, but it's not necessary if you're aware of the techniques and tools that allow you to do it on your own. Hard data, as well as the subjective thoughts of your clientele, will supplement your business plan and help you make improvements to an upcoming product or open a location in an area where demand is highest.