Small business owners have a lot to do already. It’s hard to make time for market research as well, especially when you first have to learn how to do it.
However, if you don’t do market research, you miss out on important benefits such as:
- Identifying new niches interested in your company’s products or services
- Getting ideas for new products or services based on pain points uncovered by your research
- Creating more effective advertising campaigns
- Reducing the risk of bad positioning
- Getting early insight into industry trends.
In short, market research allows you to get into the minds of your customers, and that’s invaluable to any business owner. You may have thought that market research is conducted exclusively by big businesses because only they have the time, budget, and expertise. But that’s not the case anymore since small and medium-sized companies can do online market research using a series of tools and techniques that fit tighter budgets.
When Should You Conduct Market Research?
Market research basically means gathering information about your target audience, market size, competitors, and more. Businesses can use this information to create better products and services, boost sales, set prices, maximize customer satisfaction, and develop more effective marketing strategies.
In fact, this information is fundamental to a business’s marketing strategy. It’s your starting point and what guides you in the right direction. It keeps you from making costly mistakes because you were acting based on incorrect assumptions.
Conducting market research is particularly important when:
- You want to check if a new business idea is feasible
- You want to enter new markets
- Before launching new products or services
- Before applying for funding
Now you know why and when to conduct market research, but how? The first thing you’ll need to do is identify your goals. This means you need to think about what you want to use the information you gather for, so you know which questions to focus on.
Some of the most frequent market research goals are:
- Comparing competitor prices to check if there is potential for your company to increase prices
- Improving customer service so you can boost word of mouth referrals
- Identifying customer personas so you can tailor your products and services and maximize sales
- Sizing the market before investing resources in launching a new product
- Pinpointing ad messaging that best resonates with your target audience
It’s important to understand how your customers make their purchasing decisions. And to understand that, you first need to know who they are. A buyer persona is a fictional representation of your ideal customer, focusing on key characteristics such as age, gender, family size, income, job title, behavioral patterns, and more. Most businesses have several buyer personas that make it easier for them to plan their marketing campaigns.
Your buyer personas don’t have to reflect every member of your target audience, but they should embody essential traits and feel like a real persona with complex wants and needs.
Once you’ve identified your buyer personas, you need a sample of customers who have recently made a purchase and another of people who decided not to make a purchase. This will help you figure out your customer’s purchasing habits and potential challenges.
You can do this through surveys such as Opinipoll, phone interviews and focus groups. Surveys are, by far, the most affordable and convenient way to gather customer feedback. Most surveys nowadays are done online using various survey tools, which gather data such as location, gender, age, title, and purchase frequency followed by relevant questions based on the market research goals discussed earlier in this article. The information gathered can be used to isolate segments and trends.
A fast, easy and cheap way to research the level of demand for a product or service is keyword research using tools like Google Keyword Planner that allows you to see how many people are searching for what your business has to offer during any particular time frame.
If very few people are searching for what you’re selling, that’s obviously not a good sign. However, if they’re searching for something closely related, keyword research will give you insight into what features you should add to your products and how to best advertise them. You’ll know what keywords to include in product names, descriptions as well as your home page. Having a home page that ranks high in Google search results will increase your online visibility and boost sales.
Using the Google AdWords Keyword Planner is not difficult at all. You log in and go to the keyword planner tool page, where you’ll find the “Search for new keywords” option. Here you type in keywords related to your products or services ad check the search volume. You’ll also get additional keyword suggestions.
Another useful Google tool is Google Trends, which shows the demand for a product or business idea over the past few years based on keyword search activity. If the type of product you want to develop and launch is tied to a newer niche, this tool lets you see if the niche you’re targeting is a rising trend or just a fad.
Scope the Competition
Even if you think you have your buyer personas and target audience figured out, today’s consumers have more options than ever before, so they never have to settle, nor are they inclined to. The world is their oyster, and they know it. This means you have to scope the competition and identify weaknesses that you can use to your advantage.
Don’t get discouraged if, at first glance, it seems like the market is full of competitors. If there weren’t many, it would mean that there isn’t enough demand for that particular product or service. You’ll need to take a closer look at your most powerful competitors and find out what their strengths are. It’s often not as easy as Company A versus Company B since larger companies can create divisions to capitalize on profitable new trends.
For example, Apple is best known for iPhones, iPads, and Macs, but the company also has a division for music streaming services that competes with Spotify.