Market research might sound like a big-business luxury, especially if you service a limited local area. However, market research is a valuable growth tool for businesses of every size.
Why Market Research Helps
It doesn't matter whether you own a start-up, an existing business or if you're planning an expansion. Market research needs to be a regular part of your duties if you want to do the following.
- Understand your customer base: For start-ups, market research is essential to understanding who your customers might be and whether enough demand exists to sustain your business idea. Existing businesses need to keep an eye on evolving demographics and customer tastes.
- Keep your business model relevant: The old ways are not necessarily the best ways. Understand changing market preferences and adjust as needed to better meet today's customer needs.
- Create SMART goals for growth: Your business goals should be SMART -- specific, measurable, attainable, realistic and timely. However, it's hard to set a realistic market- penetration goal if you don't know where your business currently stands. You can't make meaningful goals unless you have a point of reference from which to measure your success.
3 Ways to Conduct Low-cost Market Research
While you could certainly devote a considerable amount of your budget to market research, entrepreneurs and small businesses don't have to spend tons of money.
1. Conduct a survey or gather a focus group
The best way to get to know your customers (or potential customers) is to talk to your customers. Surveys and focus groups are two of the most common ways to obtain customer feedback.
For surveys, you could send a questionnaire to existing customers or sample those who meet your target demographics. Be aware that creating surveys is something of an art. If you're unsure about how to write an effective survey, it may be worth spending a little money on a marketing consultant. At the very least, circulate your questions to trusted family and friends for feedback before sending the survey to your customers.
Focus groups typically have 6-10 participants, and you should limit the meeting to no more than 90 minutes. Although there are fewer participants, you have more opportunity for in-depth feedback. Use a focus group to get consumer opinions on price points, advertising campaigns and service features.
2. Tap into student talent
If you have a college or university nearby that offers an MBA program, you may be able to take advantage of low-cost market research compliments of the school. Some professors look for real-world learning opportunities for their students. Talk to marketing professors to see if students can help perform market research on behalf of your business. There may be a fee involved, but it is likely significantly less than what you would pay a professional marketing firm.
3. Know your competition
You can learn a lot from the competition. Visit their store, count the customers and track their social media sites. Are they a success? If so, can the market sustain your business and theirs? Or do they have a critical flaw that you can capitalize on to increase your sales?
Other sources of low-cost market research include data and statistical analyses available from the government, local chambers of commerce and associations.
As you conduct market research, be sure you listen not only to the positive feedback about your business or idea but also to those who are critical. The only thing worse than no market research is misleading market research that comes from hearing only what you want to hear.
Maryalene LaPonsie has been writing professionally for more than a decade on topics including education, insurance and personal finance. She holds a Bachelor's Degree in Political Science from Western Michigan University.
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