Market research is the gathering of relevant information about the market and customers. Data is then analyzed to forecast future market trends. Statistical and historical data can also be used to determine market size, market need and market competition.
Market research serves as an important part of a successful business plan. It is a directional guide for a company, illustrating which markets are profitable to invest in, which locations have the highest traffic; market research allows for strategic and accurate business planning.
With this in mind, it’s essential for a company to execute market research and gain knowledge about the competitors, customers, and current market condition before entering a market. But to what extent of market research is enough? Obviously, the answer resides in the nature of the business, what areas of the market will the business be involved in. For example, extensive research about both global and local markets would be very important for international companies. Moreover, it’s best to gather all relevant information that could possibly hinder the operations of a business.
As a small business, the costs of hiring a marketing firm could be pricey, but this doesn’t translate into mission impossible for a small business to research the market. Here are a few useful tips in gathering market data on your own.
1) Using secondary sources
A number of useful sources can be used to accumulate data. Sources such as stats Canada, trade journals, telephone books, government publications, or surveys from other companies can be very useful in collecting reliable data.
2) Using primary sources
Once an abundant amount of secondary data is collected, and a deeper amount of understanding is established about the market, primary data should be collected. This means collecting information from consumers or suppliers; anyone who is directly affiliated with the success of the business. Try to gain insight as to why customers purchase from your business than competitors, or vice versa. Figuring out how your services/products differ from other competitors can give you an idea as to which areas of your business are performing well and which areas need improvement.
3) Create surveys and collect data
a) Determine what it is you want to achieve from the survey.
b) Determine the channels you find most appropriate to reach participants. The channel chosen should be the one that your target participants have the easiest and frequent access to. For instance, if you’re aiming to survey a 25 year old, heavy internet user, it would be more effective to use e-mail surveys as opposed to surveys in the mail.
c) Create a user-friendly survey, encouraging comments and written answers because they’re the most insightful. Also avoid asking direct questions because it gives an opportunity for participants to take advantage of the survey, and answer deceivingly. The best survey is one that evaluates the value of one item versus another.
d) Increase response levels by offering incentives such as rewards in return for completing the survey.
Whether how big or small a business may be, conducting market research and gaining further knowledge about the market will give a company immense guidance and create an opportunity to gain competitive advantage in the market.