Is there interest in the product or service you hope to sell? Is the market completely saturated? Is your product different enough? How will you stand out?
These are all great questions that any new business owner needs to consider. Conducting market research can give you insight into these questions and let you know if you're on the right — or wrong — track.
Market research helps you understand the reason why consumers will or won't buy your product. It provides information on consumer behavior, including how cultural, societal and personal factors influence that behavior.
All of this information is vital to the future success of your business. So, how do you conduct market research?
Discover Key Market Research Questions
Before you start your research project, you need to identify the questions you’re trying to answer. We have a few basics to get you started:
- Who are my customers? Identify age, occupation, income, lifestyle, education and more depending on the type of product you have.
- What do they currently buy? Identify their buying habits as it relates to your product or service. Some characteristics to understand is how much they buy, their favored suppliers, popular features they prefer and the price they are willing to pay for your product or service.
- Why do they buy? This one is a little subjective and can be challenging to determine because you have to really get into your customers' heads. Answers will vary based on the type of product or service and how it gets used.
- What will make them buy from my business? Secondary research (gathering information from blog posts, surveys, reports, metrics, etc.) may be useful to answer this question. There is a ton of information available about markets, sales figures and consumer buying motivations.
Develop Your Market Research Plan
Now that you have a few key questions in mind, it’s time to build the research plan. Here are a few techniques used to conduct research:
- Interview prospects and customers. Going straight to the source with an interview can often provide the best feedback. Typical methods include focus groups or one-on-one interviews. Since you know who your target audience is, be sure to select these people to interview.
- Conduct a survey. There are many different tools you can use to develop and execute a survey, one of the most popular being SurveyMonkey. Tip: keep surveys relatively short in length, around 5-10 minutes. Otherwise you could end up with many abandoned surveys.
- Run user tests. Consider running user tests on your website. It’s cost-effective and can provide a lot of insight on how your customers or prospects behave or respond to a product or service.
This demand forecasting process can often lead to the realization that you may have a similar product as a competitor, or that your product/service isn’t really solving the problem you may have thought it was.
Learning these things will help you enhance your product and may actually spark something you may not have thought about otherwise.
Conduct Competitive Research
Part of performing market research is spending time understanding what your industry and market look like from a competitor's standpoint. When looking at comparable businesses, try the following steps:
- Research businesses of relative size and in the same location/area. If you're a web-based business, this could mean comparing globally.
- Identify who your competitors are. A quick Google search could help you determine who in the area, or who online, is selling a similar product or service.
- Obtain as much information about your competitors as you can. For example:
- Customer experience
- Intellectual property (this is extra important if your product or service is very similar)
- Risks (competitor's strengths or advantages)
- Opportunities (what your competitors are doing poorly, or an area where you can stand out)
- Distribution (areas they cover)
- Evaluate their strategies. What are their strengths and weaknesses relative to your business?
While market research is a very important step in the success of your business, it doesn’t have to be expensive. Determine what you need to know about your market, and prioritize the results based on that.
There are many less-expensive research alternatives, such as online surveys, reports, and blogs, that will help you gain the information you need without the cost of hiring a consultant or professional market researcher.
In the meantime, if you’re looking for additional advice on starting your small business, turn to Incfile. We can help you incorporate your business, research your naming options and provide valuable advice to set you up for success.