Before you start a new business, new product, or service, it is important to conduct thorough and accurate market research. Market research includes research into the target customer of the product or service as well as any competitors that may already be providing a similar product or service.
In this article, we will give you some tips on how to go about conducting market research for your new business.
What is Market Research?
First, let’s take a look at what market research actually is. Market research is the process of collecting information about a particular market sector or industry. This information can be used to help you understand your target customer, their needs and wants, as well as any potential competition.
Why Do Market Research?
There are a few key reasons why it is important to conduct market research before starting a business:
- To understand your target audience and what they want/need
- To understand the size of the potential market for your product or service
- To identify any potential competition and how you can differentiate yourself from them
- To understand the costs and revenue potential for your business
- To develop a marketing strategy
It is important to remember that market research should not be conducted solely to sell your product or service. The purpose of market research is to help you understand what customers want and need, as well as how many potential customers there are in your target area. If a business does not meet the needs of its customer base, it will lose out on a lot of revenue.
Primary and Secondary Research Methods For A Business
There are two main types of market research methods – primary and secondary research.
Conducting Primary Research
Primary market research is the process of gathering information from people who may be interested in your business or potential customers directly. This type of market research can be done through a number of different methods, including:
- Focus groups allow you to find out what consumers think about a product or service. In a focus group, a small group of people are brought together to discuss a particular topic.
- In-depth interviews are one-on-one interviews with potential customers about their needs and wants when it comes to your product or service.
- Questionnaires allow you to gather information from a large number of people in a short period of time.
- Online surveys involve emailing potential customers and asking them questions about their needs and wants with regard to your new business.
Exploratory Primary Research
Exploratory primary research provides you with the opportunity to test your great business idea before starting up. This method of primary market research is conducted on people who are not customers yet but could be in the future. It typically involves collecting information about consumers’ needs and wants when it comes to a product or service that would meet those needs.
Specific Primary Research
Specific primary research is conducted when you already have a product or service and are looking to find out more about it. This information can help you identify any areas of improvement for your product or service, as well as provide insight into where the market will be in the future.
Conducting Secondary Research
Secondary market research is the process of gathering information that has already been gathered by someone else. This information can be found in a number of different places, including:
- Market reports analyze data from a particular market or industry.
- Company websites can be a great source of information about your potential competitors.
- Trade journals contain articles about specific industries or consumer markets.
- Government websites often have market statistics about various industries.
There are several public market data sources available including directories, databases, and other websites that provide publicly available information.
- Business directories allow you to find a list of other companies in a particular industry.
- Product review websites can help you understand the quality of your competitors’ products.
- Market research reports give you current data on a particular market or industry.
- Government census reports can give you valuable insight into industry trends.
- Databases allow you to search for a particular company or product.
There are commercial secondary data sources that provide a vast amount of information on various industries, but you have to pay for a subscription in order to access their database. These include:
- Industry-specific databases allow you to search a number of different sources for information about a particular market or industry. These types of databases can be very expensive.
- Trade magazines contain articles that are mostly targeted at business owners and managers, while trade journals tend to target academics and other professionals in the field who want to gain new consumer insights.
- Market research firms offer a variety of services, from providing market analysis to conducting focus groups.
- An industry trade association often has market research reports that are available to members only.
Once you have a general understanding of the different types of market research, you need to decide which type(s) will work best for your new business. The following questions can help you make that decision:
Do you have a product or service to sell?
If you have a product or service to sell, then you will need to conduct specific-problem research in order to understand how your product or service meets the needs and wants of potential customers.
What is the target market for your product or service?
If you know who your target audience is, then you can focus your research on that particular group of people.
What are the needs and wants of your target market?
To understand what the needs and wants of your target market are, you will need to do some exploratory research. This involves talking to potential customers about their needs and wants, as well as researching what is currently available in the market.
What are your competitors’ products and services?
If you know what your competitors are selling, you can use that information to understand the needs and wants of your target market. You can also use it to identify any areas where you may have an advantage over your competitors.
Types of Market Research
There are several types of market research including:
- Specific-Problem Research: This type of market research is most commonly used for new products or services. It involves understanding the problems that customers are having with existing solutions, and how your product or service can provide a solution to those problems.
- Exploratory Research: This type of research is used to gain a better understanding of a particular market or group of customers. It involves talking to potential customers about their needs and wants, as well as researching what is currently out there.
- Competitive Research & Intelligence: This research is used to identify the strengths and weaknesses of your direct and indirect competitors, in order to help figure out how you can differentiate your company or product.
- Market Segment Research: Market segmentation involves separating your potential customers into groups based on similar needs, wants, or characteristics.
- Product Positioning: Product positioning focuses on how you want your product to be viewed in the market by your target audience.
- Economic Research & Analysis: This research is often conducted when deciding whether or not to start a business in a particular industry. It involves understanding the economic factors that could impact your business.
- Marketing Research: This research is used to understand consumer behavior, including what products or services they are interested in, and how much they are willing to spend on them.
- New Product Development: This type of market research is done during the development stage of a new product or service, and involves testing different options with consumers to determine which version would be most successful on the market.
- Social Research & Analysis: This research focuses on understanding the impact that your company’s social actions have on the public and how to use this information in a positive way.
- Distribution Research: This type of research is focused on understanding where consumers purchase products and services, and how to gain access to those distribution channels.
- Allocation Research: This type of research focuses on understanding which distribution channel will best reach your target audience.
- Market Forecasting and Trends Analysis: This research looks at historical primary data to determine future market trends.
- Pricing Research: This research is focused on understanding how much your target audience is willing to pay for your product or service, and what the competition is charging for similar products.
Once you have identified the type of research you will be conducting, you need to decide who your target market is. This can be done by doing a customer profile, which will help you understand what your target customer looks like. You will also need to determine where to find these target customers and how to reach them.
How to Do Good Market Research
Let’s take a look at the market research process. The following steps will help you get started:
Determine the purpose of your market research
Define your target customer
Gather data about the market
Analyze your data
Perform a SWOT analysis
Conduct a competitive analysis
Create a business plan
To start the market research process, you need to determine the purpose of your research. What do you want to find out? What are your goals?
The first step in conducting market research is to define your target customer. This is the group of people that you are hoping to sell your product or service to. You need to understand who they are, what they want, and what needs your product or service can meet.
Once you have defined your target customer, you need to gather data about the market. This data can include detailed information such as population data, demographics (age, gender, income, etc.), purchasing power, and what products and services are already available.
Once you have gathered data about the market, you need to analyze it to see what trends it brings to light. For example, if your target customer wants a product that is inexpensive and easy to use, this information will be useful when you are deciding on your product features. If you are providing a service, you need to research the average salary in your target area so that you can price your services correctly.
Once you have gathered your data and conducted your interviews, you need to perform a SWOT analysis. A SWOT analysis will help you consolidate all of the information that you have gathered and identify your business’s strengths, weaknesses, opportunities, and threats.
Once you have analyzed the specific market research data, it’s time to conduct an analysis to better understand the competitive environment. This entails researching other businesses in your area that provide similar products or services and understanding how they operate. It is important to understand what makes your business different from the competition and how you can capitalize on it.
Once you have completed your market research, it is important to include the findings in your business plan. The business plan will help you to determine if your new business is feasible and how you will go about marketing and selling your product or service.
This document will outline your business goals, marketing strategies, and how you plan on achieving them. Your market research should be included in the appendix as a supporting document for your claims within the business plan.
Market research should not be conducted solely to sell your product or service. The purpose of market research is to help you understand what customers want and need, as well as how many potential consumers there are in your target area.
Do Market Research Regularly
Once you have started your business, it is a good idea to conduct market research on a regular basis. This will help you identify any changes in consumer behavior and adjust your marketing plan accordingly. You can also conduct market research to identify your target market, which will help you to tailor your product or service to them.
Don’t Forget the Business Plan!
Once you have completed your market research, remember that it should be included in your business plan. Your business plan provides a method for showing investors that you are qualified and competent to start and run a business. The market research should be included in the appendix as a supporting document for your claims within the business plan.
Market research is an important step in starting any new business. By researching the target customer, the market, and the competition, you will be able to create a well-informed business plan that will help you to start and run a successful enterprise.
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Conducting market research is an essential step in starting a new business. By following the steps outlined in this article, you will be able to gather the information you need to make informed decisions about your product or service.
Some businesses may be tempted to conduct research themselves as opposed to hiring outside agencies. However, that is not to say that there are no businesses that should conduct their own market research. Instead, it all depends on the type of business and who makes up your target audience.
All businesses need to take an active interest in understanding their target customers and how they behave so they can provide products or services that will best suit their needs. Market research will help you to understand your customers and the market that they operate in.