What is Market Research for Small Business?
“The definition is: The process of gathering, analysing and interpreting information about a market, about a product or service to be offered for sale in that market and about the past, present and potential customers for the product or service; research into the characteristics, spending habits, location and needs of your business’s target market, the industry as a whole and the particular competitors you face.”
In simplified terms – Market research is a systematic process of collecting, analysing and interpreting information and data.
The information could be about a target market, consumers, competitors or the industry as a whole. This is the foundation of any successful company.
The research has a number of different purposes from identifying a new market or opportunities to launching a new business.
Considering the three recent statistics about consumer behaviour:
This might sound obvious but how deeply do you really understand about where your buyers are conducting their research and what is influencing their decisions? This is where market research comes into play.
Whether you are a newbie or experienced market researcher? This guide will give you a stepping stone for conducting a thorough study of your product, target audience and how you compare in your industry.
Market research helps entrepreneurs make well-informed decisions. It can take the guesswork out of innovation and funnel resources into ideas and projects that hold the most potential.
Businesses at different stages of growth carry out market research for different reasons.
Why is it important for a business to conduct market research?
New business feasibility. If market research indicates there is little or no demand for the product or service – the business is unlikely to succeed.
Identifying and developing potential new markets.
Keeping an eye on marketing trends. Developing new strategies on how to stay ahead or adapting to changes in market conditions.
Testing demand for a new products or features.
Ensuring optimal product placement – how, when and where should a product enter the market and at which point.
Improving and innovating businesses. You can identify issues with certain business aspects such as customer service earlier. This can help companies overcome costly disruptions later.
Boosting the success of promotional campaigns. By tracking customer sentiment and understanding the perception of their brand – businesses can adjust, amend or re-create their branding and marketing strategies.
There are quite a few different types of market research one can conduct in any industry, sector or section especially on how to do marketing research before starting a business.
Below are main different types of market research
For simplicity of this guide we will organise these five types of market research into two main categories that your business can conduct to collect actionable information: Primary market research and Secondary market research.
Primary information is first-hand data gathered from original sources. You can either collect the data yourself or hire someone to do it for you.
The bottom line is that you control the process from start to end. You can use focus groups, online surveys, phone interviews and more to gather fresh details on the challenges your buyers face and the brand awareness behind your company.
Primary research is often more expensive and time-consuming. However it is the best way to get the information that your business needs.
The most popular primary research tools are:
Surveys may be conducted via phone, in person, on paper or using online survey software like Survey Monkey are hugely informative.
It is a list of questions crafted in a way that gives you the best possible insight into how a customer feels about your product or service, your brand and the experience you provide.
It can be as broad or as specific as you want.
These are in-depth interviews, carried out by phone or face-to-face to give you an opportunity to ask more questions.
You can follow-up with an interviewee wherever necessary to obtain satisfactory answers.
A focus group is an organised session with a sized group of people that share some common characteristics. These characteristics include age, location, buying habits, etc.
They will participate in a discussion of a predefined subject led by a moderator.
It is an expensive but effective method of getting feedback on bigger scale upgrades, product features or new products.
This involves watching or video-recording how consumers interact with a product or service in a natural setting.
It may be time-consuming but it has the advantage of providing unbiased research. This is because consumers are not under any pressure and will behave naturally.
Secondary information is information and data that has been gathered by others and is publicly available either online or offline.
This data could be published in newspapers, reports, journals and it is freely available online.
The downside is that everyone has access to this information and you have had no control over the collection methods.
Secondary research is often referred to as desk research. Secondary market research is best suited for gathering broad insights into market trends.
This helps to predict and analyse the current situation in terms of competition.
Three types of secondary research sources that make this process so beneficial:
These will be your first and most accessible layer of material. Being free to find and read – they offer the most bang for your money.
Government reports, statistics and studies offer helpful information on the state of various industries nationwide.
2. Commercial Sources
These are in the form of market reports consisting of industry insight compiled by a research agency like Trade or industry specific journals, magazines, newspapers, television and radio.
Since this information is portable and distributable it costs money to download and obtain the relevant information.
3. Internal Sources
Internal sources deserve more credit for supporting market research. This is the in-house market data of your organisation like academic papers, educational resources, literature reviews, online articles and case studies.
The types of information collected through both primary and secondary sources can be either qualitative or quantitative.
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Qualitative information helps you gain a better understanding of how people feel about certain topics. You can ask them what they think and how/why they make choices that they do.
The best sources to collect qualitative information include in-depth interviews, focus groups, and direct observations.
Quantitative information is statistical data and tends to be more structured. Closed questionnaires and surveys fall under this type of information.
How to Conduct a Market Research for a Business
Conducting thorough market research can help any business grow better and doing it right is absolutely crucial.
Here are the steps on how to do conduct market research for a business.
1. Define your buyer persona.
You must first understand who they are before you dive into how customers in your industry are making buying decisions. This is the beginning of your primary market research where buyer personas come in handy.
Buyer personas also referred to as marketing personas are fictional, generalised representations of your ideal customers.
They will help you visualise your audience, streamline your communications and create your strategies.
Some of the essential key characteristics you must include in your buyer persona are:
The idea is to use this persona as a guideline for when you reach and learn about actual customers in your industry.
These resources are designed to help you organise your audience segments, collect the right information, select the right format and so on.
You may find that your business leans itself to more than one persona, which is fine.
You just need to be sure that you are being thoughtful about the specific persona you are optimising for when planning content and campaigns.
The above is an example of a Market Research for Coffee Shop Marketing Persona.
2. Identify and engage those personas.
Now you have your buyer personas. You will need to find a representative sample of your target customers to understand their actual characteristics, challenges and buying habits.
These must include those who have recently made a purchase or purposefully decided not to make one and you can meet with them in a number of ways:
Below are guidelines and tips that will help you get the right participants for your research.
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Choosing Which Buyers to Survey
When choosing whom to engage in conducting market research, always start with the characteristics that apply to your buyer persona.
This may vary for every organisation but below are guidelines that will apply to just about any scenario:
Chase for 10 participants per buyer persona.
We suggest focusing on one persona but if you feel it is necessary to research multiple personas then ensure to recruit a separate sample group for each one.
Select those who have recently interacted with you.
You want to focus on those who have completed an evaluation within the last six months up to a year if you have a longer sales cycle or niche market.
Here you will be asking very detailed questions so it is important that their experience is fresh.
Aim for mixed participants.
You want to recruit people who have purchased your product and also purchased your competitor’s product and a few who decided not to purchase anything at all.
While your own customers will be the easiest to find and recruit nevertheless sourcing information from others will help you develop a balanced view.
3. Engage your market research participants.
Market research firms have panels of people who can conduct a study immediately. Most individual marketers do not have that luxury and that is not necessarily a bad thing.
In fact, the time you will spend recruiting for your study will often lead to better participants.
Here is a simple, effortless recruiting process to guide you:
Extract a customer list that made a recent purchase.
As previously mentioned, this is the easiest set of buyers to recruit.
If you are using a Customer Relationship Management –CRM system you can run a report of deals that closed within the last six months and filter it for the characteristics you are looking for or you can work with your sales team to get a list of appropriate accounts from them.
A simple definition of CRM – Customer relationship management (CRM) is a technology for managing all your company’s relationships and interactions with customers and potential customers.
The goal is simple: Improve business relationships.
Extract customers list that were active in the evaluation but did not make a purchase.
You should get a mix of buyers who either purchased from a competitor or decided not to make a purchase.
Once again use your CRM or whatever system your sales team uses to track deals.
Call for social media participants.
Try reaching out to those that follow you on social media but decided not to buy from you.
There is a chance that some of them will be willing to talk to you and tell you why they decided not to buy your product.
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Get the word out to your co-workers, former colleagues and LinkedIn connections that you are conducting a study.
Even if your direct connections do not qualify, some of them will have a co-worker, friend or family member who may do.
Choose an incentive.
Time is precious so you will need to think about how you will motivate someone to spend 30-45 minutes on your study.
If you are on a tight budget then you could reward your participants by giving them free exclusive access to your content.
Another option would be by sending them a simple handwritten ‘thank you’ note once the study is complete.
4. Prepare your research questions.
Be prepared is the best way to get the most out of your conversations. Always create a discussion list whether it is for a focus group, online survey or a phone interview.
This will ensure you cover the entire top of your mind questions and use your time wisely. This is NOT intended to be a script.
The discussions must be natural and conversational so be daring to go out of order or probe into certain areas as you see fit.
Your discussion list should be in a time allotment outline format and with open-ended questions for each section.
Open ended questions
Yes — open-ended questions are the golden rule of market research. You never want to stray the witness by asking yes/no questions.
That unintentionally leads you with your own hypothesis outcome. Asking open-ended questions also helps to avoid those painful one-word answers.
You can use these as a survey for any in-person interview or as online digital format questions to administer for your target customers.
Below is a general outline for a short survey between 25 – 35 minutes of one B2B buyer – how to do marketing research before starting a business.
Background Information (3 - 5 Minutes)
Ask the buyer to give you a little background information – their title, how long have they been with the company and so on.
Then ask some fun or easy question to warm things up like where they went for their last holidays, favourite restaurant in town, first concert attended, etc.
Remember – you want to get to know your buyers.
You want to capture basic information such as age, location, job title from your contact list, some personal and professional challenges the buyers face which you can only learn by asking.
Here are some other key background questions to ask your target audience:
Awareness (3 - 5 Minutes)
In this section you want to understand how they first realised they had a problem that needed to be solved without getting into whether or not they knew about your brand yet.
Consideration (8 - 10 Minutes)
Here you want to get very specific about how and where the buyer researched potential solutions.
Try to intercept to ask more detailed questions.
If they do not come up organically, ask about search engines, visited websites sighted website, people consulted and so on.
Investigate with some of the following questions:
Decision (8 - 10 Minutes)
Here you want to understand what influenced the buyer, if they made any comparison, how they short listed their vendors and what factors influenced the buyers’ ultimate decision.
Closing (3 – 5 minutes)
Finally you want to wrap up and understand what could have been better for the buyer.
5. Listing primary competitors.
Comprehending your competitors is secondary market research. Keep in mind competition is not always as simple as Company A vs Company B.
Sometimes a division of a company might compete with your main product or service even though that company’s brand might put more effort in another area.
For example Apple is known for its laptops and mobile devices but Apple Music competes with Spotify which does not sell hardware – over its music streaming service.
From a content point of view you might compete with a YouTube channel, a blog or similar publication for inbound visitors even though their products do not overlap with yours.
A toothpaste developer, for example, might compete with main magazines like Women’s Health, Health or Prevention magazine on certain aspects.
On the other hand these magazines might compete with a toothpaste developer like Colgate on certain blog topics related to nutrition even though these magazines do not actually sell any oral care products.
Identifying Industry Competitors
To determine which industry or industries you will be pursuing, you need to identify competitors whose products or services will overlap with yours.
Start with high-level industry sectors like education, construction, media & entertainment, food service, healthcare, retail, financial services, telecommunications and agriculture.
The list goes on and on. Try to find an industry term that you identify with and utilise it to create a list of companies that belong to that industry.
You can start building your list in any of the following ways:
Review industry quadrant on G2 Crowd.
In certain industries this will be your first step in secondary market research.
G2 Crowd aggregates user ratings and social data to create quadrants where you can see companies plotted as contenders, leaders, niche and high performers in their respective industries.
G2 Crowd specialises in digital content, IT services, HR, e-commerce and related business services.
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Download market report.
On Forrester’s website you can select “Latest Research” from the navigation menu bar and browse Forrester’s latest material using a variety of criteria to narrow your search.
These reports are a great treasure to save onto your computer.
Using social media searches.
If you use the search bar correctly social networks makes a great company directory.
For example – on LinkedIn – select the search bar and enter the name of the industry you are going to pursue.
Under – More – select Companies to narrow your results to those businesses that include that or a similar industry term on their LinkedIn profile.
Identifying Content Competitors
Your best friends in this area of secondary market research are the search engines.
To find the online publications with which you compete take the generic industry term you identified above and close in with more specific industry terms your company identifies with.
For example a catering business might generally be a food service company. You must also consider it in event catering, cake catering, baked goods and more.
Once you have completed the above, get ready to do the following:
Use Search Engines
Google it – Do not underestimate which websites come up when you run a search on Google for the industry terms that describe your company.
You might find a mix of product developers, magazines, blogs and more.
Compare the results against your buyer persona – You created your buyer persona during the primary research stage earlier in this article.
Use it to examine how likely a publication you found through Google could steal website traffic from you.
Research and Repeat
If the content of the website seems like the stuff your buyer persona would want to see then it is a potential competitor and should be added to your list of competitors.
Look for repetition in the website domains that have come up. Examine the first, two or three page results for each search you conducted.
These websites are clearly respected for the content they create in your industry and should be carefully watched as you build your own library of web pages, reports, videos and blog posts.
6. Summarise your findings.
Are you feeling overpowered by the notes you have taken? We suggest looking for common themes that will help you tell a story and create a list of action items.
To make it easier try using your favourite presentation software to make a report. This will make it easier to add in quotes, diagrams or call clips.
Feel free to add your personal inclination but to create a clear summary using the following outline:
Background. Your goals and why you conducted this study.
Participants. Who did you talk to? Create a table to help you break groups down by persona and customer or prospect.
Executive Summary. What were the intriguing things you learned? What do you plan to do about it?
Awareness. Describe the common triggers that lead someone to enter into an evaluation. Note: Quotes can be very powerful.
Consideration. Provide the main themes you uncovered and the detailed sources -buyers used when conducting their evaluation.
Decision. Portray the picture of how a decision was made by including people at the centre of influence and any product features or information that can make or break a deal.
Action Plan. Your analysis will uncover a few campaigns you can run to get your brand in front of buyers earlier and/or more effectively. Provide your list of priorities, a timeline and the impact it will have on your business.
Wrapping Up - Begin Conducting Market Research
Conducting market research can be an eye-opening experience. Completing the study may likely to uncover new channels and messaging tips to help improve your interactions and you will be able to add market research as a skill to your resume.
Hope you are enjoying and learning a lot with abundance of information about:-
Market Research for Small Business – What is & How to do