Doing your own market research isn't difficult, but it does tend to be time-consuming. If you own a small business, you're probably continually researching your markets informally. Every time you talk to a customer about what they want or chat with a supplier or sales rep, you're conducting market research.
But it's also necessary to conduct more formal market research to keep your business vital and growing. When considering the types and sources of research you need, think of a basic grid.
The Market Research Grid
The market research grid shows the two types of data sources and the three areas of research that are important to any business. You first need to gather information from and about your customers to focus your marketing efforts, maintain and improve your customer service, and guide your efforts in developing new products and services.
Moving to the next column, information gathered about the competition can help you determine what works and what hasn't worked, give you ideas for improving your products and services, and provide insight into how to increase or shift your share of the market.
The environment section of the grid refers to those economic, social, and political forces that shape the business. Gathering information about the environment allows you to stay abreast of and respond to particular trends or events that impact your small business. Whether it's a predicted drop in interest rates or the closure of a local mill, you need to be aware of it and judge the ripple effect on your business, for good or ill.
Secondary data sources comprise market research data that's already been collected by someone else. Phone directories, government publications, and online research sources such as the U.S. Department of Commerce, Statistics Canada, trade journals, and surveys conducted by other companies are all examples of previously gathered information that you can use to analyze your customers, competition, and environment.
Primary sources provide firsthand information. When you survey your customers or question the competition, you're gathering information directly from the source. Although this kind of DIY market research data can be the most costly and time-consuming to gather, it's often the most valuable because it's the most current and specific.
Is the Idea Viable?
The first step in market research is to frame the question or questions to which you want answers. Suppose, for instance, that you already run a successful retail business selling window coverings (blinds, awnings, and drapes). You're wondering about adding a blind and drape cleaning service to your business. So the market research question you're trying to answer would be, "Is a blind and drape cleaning service viable?"
Through monitoring business trends (reading as many online or printed magazine, newspaper, and trade journal articles as possible related to business), you know that consumers are increasingly concerned about recycling and reusing. And you've been watching local businesses find success selling used goods, from computers to vintage clothing. Your monitoring of the environment tells you that people may be more interested in doing something with their old blinds and drapes than buying new ones. You have some important info, but now you need to move to more formal DIY research.
Researching the Competition
For a market research question of this nature, the first area to research is the competition. Let's suppose that there are three other window covering businesses in town. You can visit their websites or call them and ask them if they supply this service. If they do, find out as many details as possible. Just because someone else offers the service, doesn't necessarily mean that you shouldn't; it just means you'll have to carefully consider issues such as market share and positioning.
Researching the Consumer
The bulk of your market research will be consumer based. Start with a survey of your current customers, focused on whether or not they would be interested in such a service. This could be as simple as verbally asking everyone who came into the store, or as formal as a questionnaire that could be handed to customers, posted online on your business website, or emailed to your customer list.
The interactive (and inexpensive) nature of social media makes it an ideal platform for online market research, so you could also try to survey customers via Facebook, LinkedIn, or Twitter. Research can also be obtained indirectly via customer complaints, and there's usually no shortage of those on social media.
As you proceed, your research needs to become more specific. Your first market research survey might be as simple as, "Would you be interested in a drape and blind cleaning service?" But if indications are positive, you need to know a lot more than just whether customers are interested.
For example, you might ask how many times a year the survey respondent would use such a service, or how much they would be willing to pay to have their drapes cleaned. Generally, the more detailed and specific the information you gather, the more useful it will be for making a decision.
Getting the Most out of Your Research
When you're doing your own market research, there are some things you should keep in mind.
Your information will only be as good as your market research sample.
Be careful when selecting your market research sample group. To get useful market research data, your sample group needs to be relevant to and representative of your target population. In the blind and drapes research, you moved from asking customers in the store to questioning randomly selected members of your targeted population. That's because just asking people in the store isn't good enough. Some of them will say, "Yes," just because they like you or don't want to offend you. Informal market research is always tainted to a degree by the relationships of the people involved.
Design your survey or market research questionnaire carefully.
Make sure that it's focused specifically on the information you need to know, and that you haven't included any questions that may offend anyone. Many people are put off by questions that ask them how much money they earn, for instance. If you offend or confuse them, they won't bother to fill out your market research survey.
Keep your survey or market research questionnaire fairly short.
If possible, your market research survey or questionnaire should all fit on one page. Some people are intimidated by long forms; others see them as just too much of an imposition on their time.
Always provide some opportunity for detailed answers.
Not everyone will take advantage of it, but some will, and sometimes these written-in comments are the most valuable of all.
Work out your market research recording techniques first.
Telephone market research surveys are popular, but how are you going to record what the respondents say? If you're orally interviewing someone, will you record them or take notes? The purpose of market research is to gather and analyze the data, so you've got to have a system of recording the data worked out in advance.
Set the criteria for the information beforehand.
Market research is a process that may be shut down or redirected at any time. If, for instance, when talking to your customers about your blinds and drapes idea, no one expressed any interest in a cleaning service, the exercise would be over. But what if 10 customers expressed an interest? Or 32?
Before you ask your customers anything, have the market research process clear in your mind. How many customers would have to express an interest in the service to make it worth your while to continue research? Set the market research criteria beforehand, as in, "at least 50% of customers need to show an interest in a blind and drape cleaning service before we move to the next stage of market research."
The amount of DIY market research you do is limited only by your time and your budget. If you manage to amass a lot of data from your market research, you might want to consider using a marketing information system to help you crunch the data and generate meaningful analyses. In any case, market research is necessary at all stages of a business's life if you want continued success. It's the only way to stay in touch with your customers and what they want.