How to Conduct Market Research For Your Small Business
Pro tips small businesses can conduct when learning how to conduct market research to help shape the strategy of their own business.
Small business market research serves multiple purposes. It’s not just about understanding your customers or potential customers, but also about your competition and their products, and your industry as a whole. The better you understand these various components, the better you will be able to shape the strategy of your own business. Here are our tips on how to conduct market research.
What is Market Research?
Market research is the process of gathering and analyzing data about your product and your customer base. It can include research into potential markets and customer bases, and the existing products and companies doing business there. You can also look into the spending habits and needs of your target customer.
The Two Types of Market Research
There are two broad categories of market research: quantitative and qualitative.
Quantitative market research involves anything which is measured and usually involves numbers. For example, if you conducted a survey and found that 33% of your customers were teen boys, that would be quantitative market research data.
Qualitative market research data is usually more unstructured and exploratory. An example of qualitative market research would be to ask prospective customers about their “feelings about your seasonal restaurant menu.” It may also involve things like surveys where customers give specific feedback or opinions.
Which type of market research is better for small businesses? Each is good for different kinds of questions your business may face. You can use a combination of the two to come up with specific, actionable plans for your business.
When should you be using market research? Really, all the time! There’s always more that you can learn about your industry, your competitors, and your customers. You should always be listening and open to feedback. One easy way is to subscribe to industry publications and keep tabs on popular sites or blogs. You might pick up an idea that leads to more formal market research
Market Research Techniques for Your Small Business
As the owner of a small business, you’ll likely be on a tight budget. Many small businesses don’t have the financial resources to hire a full-time marketing employee, so business owners may decide to conduct their own market research for their products or services.
The good news is that are plenty of ways to conduct market research without spending much money. With the following techniques, your biggest expenditure will be time.
Market Research Technique #1: The Survey
Both small and large businesses find that surveys are an efficient and effective way to obtain valuable data for little cost. Samuel Adams shares relevant tips on how to create a high-quality survey:
- Survey takers should have an interest in your product
- Keep survey questions relevant to your objectives
- Short surveys are easier for takers to answer
- SurveyMonkey is a user-friendly way to get started with surveys
- Close-ended questions are easier to analyze
- Open-ended questions can provide detailed feedback
Market Research Technique #2: Focus Groups and Interviews
Focus groups and interviews are a great way to learn more about your existing customers and potential customers. This personal forum allows you to dive deep into what people want to share about your brand and products.
While formal focus groups can be time-consuming and expensive, informal focus groups are a simple way for small business owners to collect their customers’ one-on-one feedback.
For example, in the food and beverage space, the best way to conduct an informal focus group is to provide free products for people to eat or drink while you ask questions.
If you have a brick-and-mortar storefront, you can hold these focus groups before or after the business closes for the day or during slower times of the day. Customers can be rewarded with free products, coupons, or deep discounts in exchange for participating. Be wary of only gathering an audience who are devout fans and won’t have as much actionable, useful feedback to give you. The key is to find people you trust to give you honest feedback on your products so you can improve if need be.
Market Research Technique #3: Competitor Analysis
Understanding your customers is necessary to make them happy, but it’s not enough. You have to understand the competition to make sure you can keep your customers happier than the other folks can.
The first step is to figure out where your competition is succeeding in areas you want to break into. If you’re a dessert manufacturer who wants to sell at Costco, for example, then you can visit the store. Observe how many desserts they are currently carrying and check out the product packaging size, format, and other relevant details. That gives you valuable information you can use to put together a product that draws interest.
For more detailed information on how to perform a more thorough and complete competitive analysis, read: How to Conduct and Prepare a Competitive Analysis.
Market Research Technique #4: Customer Feedback
Finally, one of the most important tactics in learning how to conduct market research is collecting customer feedback. Corporations like Samuel Adams employ customer service reps to handle emails and phone calls to address customer concerns.
The best way for small businesses to collect customer feedback is through surveys, email addresses, or even an “old school” suggestion box. Note that customer feedback tends to be on one end of the spectrum or the other. People tend to want to provide high praise or negative criticism. In other words, take their information seriously, but understand you’re not seeing the experience of the majority, which is probably more middle-of-the-road.
Knowledge is Market Power
Conducting small business market research can help you learn about your customers, your products, and your industry. Get the info you need and you’ll be able to position yourself to serve your customers, beat out the competition, and stay on top of industry trends.