How To Conduct Market Research, Even As A Small Business

Market research is the process of gathering information about the external business environment. This research allows executives to make informed decisions in their business strategy, marketing strategy and product or service development.

In doing so, entrepreneurs gain a) accurate information and b) reliable insights on:

• target markets, 
• competitors,
• industry trends,
• customer profiles and behaviours

Today, I delve into the various aspects of conducting effective market research so that you have the data required to make better decisions for your business.

Market research is like the Sherlock Holmes of the business world – it helps you gather clues about your specific market and customers, so you can crack the case of success. By conducting a research study using the two main types of market research – buyer persona research and brand awareness research – you can decipher what your target audience really wants and needs.

Buyer Persona Research

What is it:

Detailed profiles of target customers to better understand their needs, goals, and pain points. These personas are fictional yet detailed descriptions of ideal consumers or target market segments developed from thorough research and analysis of the existing and potential customer base

Why is it helpful to businesses?

Aids in understanding your customer base, effectively developing your offerings, and settling a competitive advantage. 

How do you do it?

Create a detailed buyer persona by determining your target market and customizing your brand’s messaging for that profile’s needs, aspirations and pain points. 

When to conduct it? 

When launching a new product or service When there are changes in the marketplace and its trends  When your existing personas are outdated.

Brand Awareness Research

What is it:

Understanding the level of familiarity and recognition consumers have with a particular brand or product. This research helps businesses gauge their brand’s position in the market, develop effective marketing strategies, and ultimately increase sales and market share

Why is it helpful to businesses?

Aids in deciphering the customer perception of brands in the market and their purchasing behaviour. Also serves to establish a strong brand awareness to stand out in a competitive market

How do you do it?

Measure brand awareness with brand awareness surveys, website traffic analysis and social media sharing analysis (mentions, stories, followers, engagement levels, etc.)

When to conduct it? 

When you wish to assess customer’s recognition of the available brands in the market When you wish to examine customer loyalty, brand perception  To help determine your brand’s position in the market 

---

Whether you’re a well-established company or a market research for a startup, utilizing tools like market statistics and research services is crucial to staying ahead of the competition and increasing your market share.

Market research not only helps you uncover valuable insights about your market and customers, but it also allows you to tailor your offering/s to meet their demands.

When it comes to market research, market researchers are the unsung heroes who uncover the mysteries of consumer behavior and preferences.

They ask the tough 5 common market research questions to get to the bottom of what makes customers tick.

1. Who are our biggest competitors?
   1.  identifying and understanding the main competitors in the market.
   2. By knowing who the key players are, a business can analyze their strategies, strengths, and weaknesses to develop competitive advantages.
2. How dynamic is our market?
   1. explore factors such as market trends, competition, consumer behavior, and any other variables that can impact the business’s performance within its market environment
3. What is our market share?
   1. determine the portion or percentage of total sales within a specific market that a company holds.
   2. Understanding market share helps businesses assess their performance relative to competitors and track their growth over time.
4. What factors influence your purchasing decisions the most?
   1. understand the primary factors that drive consumers’ buying decisions.
   2. By identifying these influences, businesses can tailor their marketing strategies, product offerings, and customer experiences to better meet consumer needs and preferences.
5. What improvements would you like to see in our offerings?
   1. seeks feedback from customers on areas where products or services can be enhanced or modified to better meet their expectations.
   2. By gathering suggestions for improvements directly from customers, businesses can refine their offerings and enhance customer satisfaction.

By diving deep into the market research process, the research efforts these detectives help companies make informed decisions and avoid costly mistakes. Whether it’s conducting form of market or market research using online surveys, these research companies are experts at translating data into actionable insights that drive growth and success for businesses of all sizes.

Failing to Effectively Collect Data About Your Market 

There are significant dangers to not conducting market research as a business executive. 

Loss of Competitive Edge

Failing to conduct market research can result in: 

1. Not even knowing what your own competitive advantage is
2.  Losing that competitive advantage to competitors who do invest in research because they gain insights that drive their success.

Increased Risk of Failure

Neglecting market research increases the risk of making decisions based on assumptions rather than data, leading to higher chances of business failure.

Misunderstanding the Market

Without adequate research, businesses risk selling to the wrong target audience and misunderstanding the needs and preferences of their marketplace. 

Lack of Customer-Centric Approach

Not conducting market research hinders the development of (effective) customer-centric marketing strategies, impacting the ability to meet customer expectations effectively.

Indecision and Inaction

Neglecting market research can lead to indecision, fear of risk, or being overwhelmed by too many options, hindering proactive decision-making and growth opportunities. 

Benefits of Market Research (Especially To a Small Business) 

Market research offers numerous advantages to small business executives, empowering them to make informed decisions and drive growth: 

Cost Savings and Risk Mitigation

Small business executives are enabled to save money by preventing costly mistakes and minimizing investment risks. In conducting market research, business have the data required to accurately analyze, anticipate and overcome market trends and challenges. This serves to successfully adapt their business strategies and stay ahead of the competition.

Enhanced Strategic Positioning

By conducting market research, small business executives can:

1. identify their value proposition
2. strengthen their company’s position
3. identify potential threats and opportunities
4. make informed and strategic decisions

Competitive Insights

Market research provides valuable insights into competitors, allowing small business executives to understand their competition better and make sound business decisions based on this knowledge.

Informed and Improved Decision-Making

Small business executives benefit from market research by gaining access to data around customer needs and preferences. This supports sound decision-making processes, helping them navigate challenges and effectively seize market opportunities. This improved capacity for decision-making spreads across all areas of the business: product development, marketing strategies, and business expansion. 

Improve Your Offering to Convert More and Retain More Customers 

As a small business owner, conducting market research surveys can provide valuable insights into customer preferences, satisfaction levels, and buying behaviors. Customer surveys and interviews can help small businesses refine their offerings and improve customer satisfaction, leading to increased loyalty and sales.

In formal education, you’re likely to have come across different types of market research. They may have been split by who conducts them, and the type of research that’s collected. Then, you may have come across different tools to use when conducting the research.

Among these types of market research are: primary research and secondary research. Primary research involves collecting data firsthand, through methods like surveys, interviews, or observations. On the other hand, secondary research involves collecting existing data and reports from already-conducted or published research.

Primary market research is tailored to specific research objectives and provides fresh insights, but it can be time-consuming and costly. One of the biggest challenges is knowing how to design your questions.

If you’re unable to get a satisfactory answer from your subject, you’re not asking the right question. Change your question to acquire a more useful result. 

Secondary market research, on the other hand, is more cost-effective and quicker to conduct, as it relies on existing data sources.

The difference between primary and secondary research, alongside their respective benefits and disadvantages are as follows: 

Pros of Primary Research	Cons of Primary Research
Provides firsthand, specific, and tailored data to address research objectives Offers control over data collection methods, ensuring relevance and accuracy Allows for the exploration of new areas or topics not covered by existing data sources	Time-consuming and resource-intensive due to the need for data collection from scratch Costlier compared to secondary research as it involves direct data gathering efforts Potential for bias or limited sample size if not conducted rigorously

Pros of Secondary Research	Cons of Secondary Research
Cost-effective and time-efficient since data is readily available from existing sources Helps in building a strong literature review by leveraging existing knowledge Provides a foundation for further research by identifying gaps in existing information	May lack specificity or relevance to the research objectives due to being generalized or outdated Data quality can vary, leading to potential inaccuracies or inconsistencies in findings Limited control over data collection methods and potential for biases in original sources

Comparing Qualitative and Quantitative Research Methods

Qualitative research focuses on gathering non-numerical data to understand opinions and motivations. Meanwhile, quantitative research is a form of market research that collects and assesses numerical data to identify patterns and trends. For example, how many orders a customer in a certain age bracket makes to an eCommerce brand in a year. Regardless of the type of research method chosen, both have their unique strengths and are often used in combination for a holistic research approach.

Pros of Qualitative Research Methods	Cons of Qualitative Research Methods
Ideal for exploratory purposes, providing in-depth insights and rich information Offers a deeper understanding of complex phenomena through detailed analysis Allows for flexibility in data collection methods, enabling researchers to adapt to emerging themes	Subjective nature of data collection can introduce bias and interpretation challenges Limited generalizability due to small sample sizes and focus on specific contexts Time-consuming analysis process compared to quantitative research methods

Pros of Quantitative Research Methods	Cons of Quantitative Research Methods
Provides statistical rigor and objective data analysis for precise conclusions Enables generalizability of findings to larger populations through structured methodologies Facilitates comparisons across different variables using numerical data	May oversimplify complex phenomena, potentially missing nuanced insights Limited ability to explore underlying reasons or motivations behind numerical data Requires a larger sample size to ensure statistical significance, leading to higher costs and time investments

Identifying Target Markets through Research Questions

Research questions play a vital role in identifying target markets by probing customer demographics, behaviors, and preferences. 

Consider asking the following questions:

1. What factors influence your purchasing decisions the most?
2. What improvements would you like to see in our offerings?
3. How do you prefer to receive information about products or services?

By asking specific questions, businesses can segment their target audience and tailor their marketing campaigns to reach the right customers.

Creating Specific Research Questions for Business Ideas

When developing new business ideas, it is essential to create specific research questions that delve into the market demand, competition, and feasibility of the idea. Examples of reflective research questions that nudge such answers are:

1. What problem is our product solving?
2. Who is our target audience?
3. What product features are the most appealing to potential customers?

By answering these questions, entrepreneurs can assess the viability of their business concepts.

Understanding Market Size through Research Questions

Research questions related to market size help businesses gauge the potential demand for their products or services.  You may ask the following questions to help answer this:

1. What is the estimated demand for our product or service in the market?
2. How does our target market segment based on demographics and psychographics?
3. What pricing strategies would be most effective in capturing a significant market share?

By estimating the market size, businesses can make informed decisions about pricing strategies, production volumes, and market positioning.

Conducting Focus Groups for Product or Service Research

Focus groups are a valuable market research method for gathering qualitative insights into customer perceptions, preferences, and feedback on products or services. By facilitating discussions among a small group of participants, businesses can uncover valuable insights to enhance their offerings.

Exploratory vs. Specific Research Methods in Market Research

Exploratory research aims to explore new ideas and concepts, often used in the early stages of research to generate hypotheses. Specific research, on the other hand, focuses on testing specific hypotheses and answering predefined research questions to validate findings.

Implementing Market Segmentation in Research Strategies

Market segmentation is a strategy that involves dividing a target market into distinct groups based on demographics, psychographics, or behavior. By segmenting markets, businesses can tailor their products, pricing, and promotions to cater to the unique needs of each segment. When dividing your market into specific segments, you can tailor your research questions to that specific segment of your target market.

E.g. you’re a yogurt company, but you offer various different types of yogurt: fruit flavoured, protein-boosted yogurt, and vegan yogurt. Naturally, the customers who buy these three types of products will be in specific groups, there will not always be an overlap. Your vegan group of customers are unlikely to be interested in your fruit and protein lines, so you need to have different questions for them in order to serve them better.

Business Plans for New Products

For startups launching new products, incorporating market research into their business plans is essential to understand market demand, competitive landscape, and target audience. By conducting thorough research, startups can mitigate risks and increase the chances of product success. 

Identify Business Opportunities

Market research helps small startups identify potential business opportunities by analyzing market trends, customer needs, and competitive gaps.

By leveraging market insights, startups can innovate, differentiate their offerings, and capitalize on untapped market segments.

Targeting Niche Markets

Market research plays a crucial role in targeting niche markets by understanding the specific needs and preferences of niche customer segments. By tailoring products and marketing messages to niche audiences, businesses can establish a competitive advantage and drive customer loyalty.

1. Market research serves business owners in acquiring data about the external business landscape in order to make informed decisions in business strategy and deployment. 
2. Market research helps the business understand their existing or potential position in the market according to existing and upcoming trends, consumer behaviour and existing competitors. 
3. There are many ways to conduct market research, by doing it personally or collecting it from secondary sources; using numerical data or qualitative data; and by making use of various tools, such as interviews, surveys or focus groups. 
4. Market research aims to collect accurate and useful data on 5 key questions in order to support business activities: 
   
   1. Who are our biggest competitors?
   2. How dynamic is our market?
   3. What is our market share?
   4. What factors influence your purchasing decisions the most?
   5. What improvements would you like to see in our offerings?

FAQs