Market research seeks to help you identify the possibilities in the current market. You will be able to make predictions from the market research analysis and hence better able to satisfy the needs of your customers.
Market research is critical to the success of any business. You need market research information to market your product successfully. Normally, it involves gathering information from your targeted market, which will be further analysed; information need to be collected, sorted, analysed and interpreted.
So the first thing is to collect that information. Usually this is done through questionnaires. Carefully consider before you design questionnaires. Think of the following:
- Objectives – Consider what questions you want answered.
- Numbers – How many questionnaires do you want completed?
- Target persons – Who do you want to answer questions or fill out questionnaires?
- Nature of questions – When you structure your questions, be careful not to over-simplify.
- Method of research – Decide on the method of research, will it be by telephone or will you be conducting face-to-face interviews?
- Types of questions – Whether it will require yes or no answers, choice responses, a scale of rating or even a combination of two or all three.
TYPES OF MARKET RESEARCH
There are two types of Market Research that you could undertake, Primary and Secondary researches.
When you undertake a primary research, you are creating new data for yourself. Therefore, you are getting information directly from your target market. This will help you to ‘identify and anticipate’ customer’s needs.
Primary research is good in that you can design your research questions or test to answer specific questions about your product and get feedback. The information is of course up-to-date and the market research you conduct is information that is confidential to you only, not your competitors.
Suggested questions to explore:
- Do customers see a need for your product in the market?
- Would they be willing to try your product?
- What do they think of the competition?
- How would they rate the current offer of product available to them?
- What factors would contribute to them trying or not trying your product?
- What do they see as a reasonable price for the product?
- Would they recommend it to others?
- What do they like about current products?
- What don’t they like about current products?
- What preferences or needs do they have that current products do not satisfy?
These are just some suggestions but you would of course tailor your questions to your particular type of business, ask the critical questions you need answered.
Getting out there and asking questions is often termed ‘field research’. We will now look at the various methods of field research.
Face-to-face interviews – Here you would ask people on the street questions. You could pull on your slacks and go out there and get it done yourself, especially if cost is a big factor for you. You could also enlist the aid of neighbourhood kids; you would not have to pay much in this case, plus they would appreciate the pocket money. If you are planning on a bigger venture, which may involve sampling different markets, then enlist the services of a market research agency.
Questionnaires – Prepare questionnaires and mail or issue them allowing individuals to fill them out and you collect them when finished.
Telephone interviews – This is where you call individuals at random, ask questions and record responses. It is advisable that you do not make questionnaires too long or you will probably have more phones slammed in your ear than completed responses.
Focus group/consumer panel – You will probably use this method only if you are introducing a new product to the market. Here a small group of people are asked detailed questions about a product after close examination.
Online survey – This is becoming a very popular way of gathering primary data. It is more cost effective than other methods and information can also be gathered quickly.
The main disadvantage to performing primary research is that it can be costly if you pay others or an agency to assist in the information gathering. Also, some people do not like to stand and answer series of questions. With that in mind, keep it short. Sometimes you might need to have it a little longer to satisfy your criteria, but always be mindful of the negatives when designing your questionnaire.
This is the use of information that had previously been gathered and compiled by other entities. Gathering data in this manner is usually less expensive than primary research. Therefore, you should first explore this option when you decide to do your research.
Where to look for secondary data
Search local libraries for information gathered about your industry of choice. Trade association publications, periodicals, information provided by government agencies and also search online.
When gathering secondary data ensure that information is not outdated, check the year when research was conducted, information that is too outdated may be useless. You also have to bear in mind that information might not be as valid since the circumstances in which they were conducted might have been different and as such sought to answer different questions than those you need answered. The methods of measurement might also have been different.
As a potential small business owner you might want to buy into the pessimistic view that small business owners have about market research, that it is costly, irrelevant, only for big businesses and is complex. It does not have to be costly, as you would have realised from reading above; it can be as complex or as simple as you want it to be and certainly, it is not irrelevant. Market research can aid you in assessing your suitability to a market. Even freelancers have to know what is happening in their market. Ensure that you do some market research before venturing into the market place, it will help to correctly assess and analyse your position.
- Visit and observe other businesses that are operating in the industry you wish to enter.
- Get statistical information on the industry such as import, export, price ranges, industry sales and industry market shares.
- Determine the potential of your product – will it have longevity or will it be more of a fad?
To help you in identifying opportunities and threats, monitor what is happening with your competitors and their marketing strategies, economic changes, population changes, new laws and other legal developments and the local economic situation.