What is Small Business Market Research?….and why do you need it?
Small Business Market Research is the gathering of information and tests about the market for your small business. Market Research can help you determine if there is enough demand for your product and service. Market Research is used to discover the needs and wants of your potential and current customers. It can also be used to perform a SWOT analysis and to analyze your 4 P’s of marketing.
There are two types of market research; primary market research and secondary market research. Primary market research is more useful since you get to ask specific questions where in secondary market research you get more general information. Before conducting small business market research you need to determine what specific information you want to find out.
Conducting Small Business Market Research
Primary market research– Primary Market Research is first hand information from customers and potential customers. Primary market research is more expensive and time consuming to perform than secondary market research, however the information it offers can be much more specific and valuable.
- Market Research Surveys– Surveys by phone, mail or in person are used to assess the potential success of a product or service. Surveys are a highly used method of small business market research.
- Market Research Focus Groups– A Focus Group is a group of people (usually 6-10) who gather around to talk about a particular product, service, problems they have and more. A focus group can help you gain valuable insight about potential customers, by discovering their likes, dislikes and problems.
- Market Research Individual Interviews– Instead of conducting a group interview (focus group) you can also conduct individual interviews.
Secondary market research– Information someone else has gathered.
- Reports/ Studies(University studies)
- Local Newspapers and business magazines -many local newspapers and business related magazines offer demographic data.
- Library– In the reference section of the library you will find financial data and statistics. Ask your local librarian for help, they will be happy to assist you in finding the information you need. In the library among the references you will find studies by the U.S Department of Commerce and the U.S. Census Bureau.
- Government Agencies– Your local Bureau of Census publishes the “County and City Data Book” with offers local demographic information. Many state and local offices provide demographic information of the local area.
- Market Research Statistics– There are many websites online that offer statistics for small business market research. Statistics such as Demographics can help you get a sense of population characteristics of your location.
- Trade associations– there is a trade association for just about any industry. There is usually a fee to join but it is an opportunity to network with other professionals in the industry. You will also have access to market research they conducted.
Market Research while Running your Business
Don’t think that once you start your small business, you don’t have to conduct any more market research. Your small business should always be evolving and adapting to the changing markets. Here are some market research techniques to use while running your small business.
- Keep a sales report– Find out what products are hot and what products are not. Certain products may sell more in certain months. Inventory tracking software can help you notice trends.
- Competition– Pay attention to your competition. See what changes they are making. Have they made any changes in recent months or years? Have their products changed? Did they start offering new services? Your competitors may be making changes as a result of the changing market needs.
- Customer Survey– Perform customer surveys to discover what are the customer’s likes and dislikes and how you can improve your business. Be sure not to force customers to fill out a survey. Be sure they know it is optional. You can have a customer suggestion box where customers write their suggestions and put it in the box. You can also find out where your customers are coming from by asking for their zip code when they are about to pay. You may discover that a large percentage of your customers come from a certain area.
- Keep a Caller ID– Find out where your customers are calling from. You may discover that a large concentration of your customers are in a certain area and it may not necessarily be in your area of business. You can then experiment with advertising in those areas.
Small Business Market Research can be an expensive and time consuming task depending on the methods of market research you choose however the information you obtain from it can be very valuable to your business. You can decide to hire a market research firm or do your own market research. If you decide to do it your self you can consider taking a Market Research Class in a local college. This class will help you attain some knowledge of using different market research techniques to effectively collect data.