Market research

• 13 November 2007
• Page 1 of 2 : single page

Obviously if you are to succeed in your business, you must get to know your market thoroughly. Market research carried out properly will therefore provide information about your customers, your competitors, your industry, and the problems involved in the marketplace, demographics and the future of the industry

What does market research provide?

Market research will provide the following things:

• Identifying your customers.
• Understanding the strategies that are necessary to increase or retain customers.
• Obtaining information about your industry in general.
• Finding out about your possible competitors.
• Defining your target market by characteristics such as age, gender, economic status, lifestyle and other factors.
• Determining the future of the industry so that you can make calculations as to its feasibility.
• Providing valuable feedback information in order for promotion plans to be put in place that works.
• Giving you an indication of changes that are needed to increase the demand for your products.
• Evaluating the effectiveness of any advertising carried out by you.
• Revealing current and future trends.

Market research helps to provide answers to questions such as:

• Who buys our products?
• What are they willing to pay for it?
• What is the best way of reaching them?
• What changes do they want in our product or service?
• What type of person in the sense of age or gender buys our product?
• Is there sufficient demand for our product to make the business viable?

Where does the research come from?

Information for market research can come from a number of sources, or, if you are looking at doing it yourself, then you can also investigate a number of avenues. If you are not using professional market research firms, then the following options are open to you if you are wishing to carry out research without costing a lot of money:

Go directly to your customers

You can send out questionnaires, carry out telemarketing, or conduct surveys to your customers and potential customers. You can go direct by organising presentations or setting up a seminar and inviting potential customers to attend. This method can be quite costly and time consuming, so it is usually one that a small business with a limited budget will avoid.

Employ young people and students

A lower cost option is to employ students and young people who can carry out surveys, either in shopping malls or on the street, sometimes as part of a project that the university or the college can get involved in. It is good experience for the young people and the payment, though small, is more than welcome. At the same time the business is able to obtain research information at a lower cost.

Discuss with associations

Sometimes the industry that your business is in has a trade or professional association. These associations regularly have information on the market and are happy to give any assistance to their members. They may have already carried out surveys in the past and are also much closer to the ground as far as trends and future opportunities are concerned.

Study at the library 

It is amazing what information your librarian can provide. The public library, especially the reference section, has an enormous amount of information and facts and figures that would save you a lot of cost in using the other options. The Government publishes many guides and directories of various industries and a lot of information can be obtained from that source.

Aims of market research

Some market research may be necessary to determine what goods and services customers are likely to buy and how many buyers are estimated to exist in your area etc. Large companies employ research consultants to carry out this function but many small business operators sometimes find they can't afford the costs involved. However, there are a number of free or low cost ways in which a small business owner can carry out research.

Remember that market research aims to discover the following things:

1. What goods and services people are likely to buy
2. Where, when and how often they are likely to buy
3. What sort of people buy what sort of goods and services
4. How products should look, feel, taste etc
5. How many potential customers exist (in the area in question)
6. How sample groups in that area react to your advertising ideas.

While "do it yourself" market research is much better than none at all, it is often not as effective as research carried out professionally. If you decide to carry out research professionally, make sure that you choose a reputable firm with expertise and credibility in this field.

Understanding consumer behaviour

The most challenging task that the business owner must undertake in preparing marketing strategies is to understand the behaviour of customers and to analyse the market for the business. The market could be the local community, the city, a region, or it could be national or international in scope.

Whatever the size, there are six basic questions that need to be answered in this regard:

1. Why do consumers buy? Why will they buy the products or services?
2. Who buys? Who is the target market? What are the characteristics of consumers who are likely to buy from you?
3. What do they buy? Which products or services do they typically choose? What brands do they prefer? How much discretionary income do they have to use that is above their normal necessities?
4. How do they buy? What are their buying habits? Do they buy because it is convenient or do they buy because it is easily accessible? Do they pay cash, or do they use credit cards?
5. Where do they buy it? Do your customers prefer to buy from mail order, or from retail stores, or from the Internet, or from door-to-door? How far are they prepared to travel to buy?
6. When do they buy? How much is the behaviour of customers affected by seasonal influences? What about the holiday season influence? How does that affect their shopping patterns? What about inflation or recession, or higher interest rates?

Many questions seem difficult, but they must be answered. The key, of course, is to answer these questions and get sensible information without spending a lot of money.

Researching your own product

One of the ways in which research companies produce results is to assemble a representative group of people, (say ten people from the market), and get them to talk about the type of product or service that you are offering, as well as others on the market.

The purpose is to learn more about the attitudes people have, so you can plan better. There is nothing to stop you doing the same, so long as those chosen talk about your product are representative of your customers. Get together fifteen people and quickly interview them separately to see what they have to say. Listen carefully for the following things: