Every great business idea has risks, but data and insights can help you make smarter decisions.
Market research is key when you want to introduce a new product or service, make changes to an existing one or expand your product or service into a new market. It can also be helpful when you’re experiencing a decline in sales and want to figure out why.
Market research gives you a realistic view of whether or not your idea is viable, and it helps you execute more efficient data-driven strategies.
If you’re wondering how to do market research, know that the process involves collecting and analyzing data. It’s vital because your business learns what the market wants, what types of people are drawn to a particular product or service and how much opportunity there is depending on the market size.
By conducting market research, you’ll be better able to:
- Determine your target market.
- Learn the pain points of that target market and what makes it tick.
- Make smarter marketing decisions and avoid wasting time.
Use this guide on how to conduct market research to get started for your small business.
What’s the Difference Between Market Research and Marketing Research?
Small business market research and small business marketing research often overlap, but they’re not interchangeable. Both market research and marketing research relies on gathering information by asking questions. There are a couple of key differences, though.
- Market research focuses on a specific market for your product or service and should be included in a business plan. It involves collecting data about target customers, competitors and your industry.
- Marketing research is broader. Marketing research techniques involve collecting data about marketing aspects related to your product or service, like price and modes of distribution. The marketing decisions made are informed by data gathered in market research.
The process for how to do marketing research is similar to how to perform market research, but for this post, we’ll focus on the latter and how it informs marketing techniques.
1. Identify the Objective
Before you begin market research, you’ll want to have a goal or problem you want to address in mind. Some examples might be:
- Why is there a need for my product or service?
- What are the notable characteristics of my customers?
- What events prompt my target customers to buy?
- Why do sales of my product or service decrease at certain times of the year?
- How much are customers willing to pay for my product or service?
What you want to discover from your market research will inform the methodology, sample and questions you’ll ask.
2. Determine Data Collection
There are a few ways you can collect data to address your problem or goal. One way is to use existing sources, like the free ones the U.S. Small Business Administration (SBA) recommends, such as the Bureau of Labor Statistics and U.S. Census Bureau. Sources like these offer general demographic info or broad trends.
You can also use existing research reports related to your industry and target market. You can find these online. Some companies will publish their research for free via web PR sites, while other industry reports may charge a fee for viewing. You can also look into your industry trade associations, which likely have research available for free.
The benefit of using business data from existing sources like these is that it can give you a good general idea of your target market. However, you won’t be able to get specific or highly relevant info. That’s where primary source small business market research comes in.
Primary Sources for Conducting Market Research
To get more granular, you can go directly to customers. You can use insights you see from existing sources and use those to pinpoint better primary sources. Some ways to collect data include:
- Surveys, which you can conduct using free tools like Google Forms or Survey Monkey
- Focus groups
- Telephone calls
- In-depth interviews
For all these methods, you could hire a market research company to help, or you could spend the time and money to do them yourself. If you’re not in business yet, you’ll want to interview people who are similar to your target customers, like those of a competitor. Look at customers of businesses that are:
- Similar in size to yours
- Serving customers in the same geographic area, or if you’re exclusively online, focus on an e-commerce business
- A relatively similar age to your business
If you’re already in business and are launching something new, you can interview existing customers for insights.
Small business owners can also glean helpful insights from existing online sources. For example, if you have a website, you can use Google Analytics to see website visitor trends.
If you have a Facebook page, you can look at page insights to see the ages and locations of your visitors.
Your email marketing tool can also show you data that displays who your most engaged subscribers are. Use insights like these to hone in on the right people to collect data from in your market research business efforts.
3. Gather and Analyze Data
Whatever issue you’re trying to address in your research, you should aim to gather as much data as possible with every interaction. That means, before a survey respondent dives into an online questionnaire with pre-populated choices, ask for background demographic information so you can match up responses with backgrounds. Do the same with in-person interactions.
The information you gather will inform how your data is analyzed. For example, if you use a questionnaire that is emailed out, you can use quantitative analysis and graphs to convey the percentages of respondents who answered questions similarly.
If you’re conducting an in-depth focus group, you’ll want to record answers and use qualitative analysis to identify common insights. Quantitative analysis is focused on the numbers, while qualitative analysis is focused on the why and how of customer behavior.
Often, both types of analyses are helpful to include in every type of market research program you conduct. Even if you’re using a questionnaire with suggested answer choices, you should still allow for fill-in-the-blank feedback on every question. Once you gather quantitative data, you should be able to draw broader conclusions. If you’re talking with customers via interviews or focus groups, you’ll likely be able to glean out common issues your market is facing.
One common tool used to analyze small business market research is a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. You can use this analysis to map out trends you’ve identified when conducting market research.
4. Next Steps After Market Research for Small Business
Keep track of market research by creating summary reports. These help you track your progress and identify trends in research. Include:
- Your goals with the market research.
- A snapshot of the characteristics of the sample you interviewed.
- A summary with key points you learned in the analysis.
- Recommendations and next steps.
After your initial market research, you may have insights you can apply right away. You might discover that a new target audience is actually not viable for your product or service, or that expansion into a certain area doesn’t make sense. You may be faced with new questions that require more research before making a decision. You may learn about a new opportunity that might be worth exploring.
The key is to never stop researching. What you find out in one round of market research will likely lead to more questions, the answers to which will help you keep refining your business. While some market research methods can get expensive, you can always use free methods like email surveys or Twitter polls to keep a pulse on your customers.
Want more tips like these? Visit our sales and marketing blog.