Doing your own market research isn't difficult, although it does tend to be time consuming. If you own a small business, you're probably researching your markets continually informally. Every time you talk to a customer about what he or she wants, or chat with a supplier or sales rep, you're conducting market research.
But more formal market research is also necessary to keep your business vital and growing. I think of market research as a grid.
Market Research Grid
The Market Research Grid shows the two types of data sources and the three areas of research that are important to any business. You need to gather information from and about your customers to focus your marketing efforts, maintain and improve your customer service, and to guide your efforts in developing new products and/or services.
Looking at the grid, information gathered about the competition can help you determine what works and what hasn't worked, give you ideas for improving your products and/or services, and provide insight into how to increase or shift your share of the market.
The environment section of the grid refers to those economic, social, and political forces that shape business. Gathering information about the environment allows you to stay abreast of and respond to particular trends or events that impact your small business. Whether it's a predicted drop in interest rates, or the closure of a local mill, you need to be aware of it and judge the ripple effect on your business, for good or ill.
Think of secondary data sources as market research data that's already been collected by someone else. Printed or online phone directories, government publications, and sources such as Statistics Canada, trade journals, and surveys conducted by other companies are all examples of information that's already been gathered that you can use to get a fix on what your customers want, what the competition has done, and what the environment is like. You can find links to many valuable secondary data sources, including Canadian statistics, in my Business Reference Information library.
Primary sources provide firsthand information. When you survey your customers or question the competition, you're gathering information directly from the source. While this kind of market research data can be the most costly and time-consuming to gather, it can also be the most valuable, because it's the most current and the most specific.The first step in market research is to frame the question or questions you want answers to. Suppose, for instance, that I already run a successful retail business selling window coverings (blinds, awnings, and drapes). I'm wondering about adding a blind and drape cleaning service to my business. So my market research question is, is a blind and drape cleaning service viable?
Through monitoring business trends (reading as many magazine, newspaper, online, and trade journal articles as possible related to business), I know that consumers are increasingly concerned about recycling and reusing. And I've been watching local businesses find success selling used goods, from computers through vintage clothing. My monitoring of the environment tells me that people may be more interested in doing something with their old blinds and drapes instead of buying new ones.
For a market research question of this nature, the first area I would research is the competition. Let's suppose that there are three other window covering businesses in town. I can call them and ask them if they supply this service. If they do, I'll find out as many details as possible. Just because someone else offers the service, doesn't necessarily mean that I shouldn't; it just means I'll have to carefully consider issues such as market share and positioning.
For additional information on how to check your competitors activities see Competitive Intelligence, 6 Ways to Find Out What Your Competition Is Up To and Competitive Intelligence: Watch ‘Em Through Their Web Sites and What's The Competition Doing?.
The bulk of my market research will be consumer based. I'd start with a market research survey of my current customers, focused on whether or not they would be interested in such a service. This could be as simple as asking everyone who came into the store, or as formal as a questionnaire. If the response was positive according to the criteria I had set, I would move on to telephone interviews with randomly selected members of my targeted population. If these were positive, I might proceed to more in-depth market research survey interviews with selected respondents. Research can also be indirectly obtained via customer complaints, see Customer Complaints Create Profit.
As I proceed, my research needs to become more specific. My first market research survey might be as simple as, "Would you be interested in a drape and/or blind cleaning service?" But if indications are positive, I need to know a lot more than just whether or not customers are interested.
For example, I might ask how many times a year the survey respondent would use such a service, or how much he or she would be willing to pay to have his or her drapes cleaned. Generally, the more detailed and specific the information I gather in my research, the more useful it will be for making a decision.
On the following page are some tips for getting the most out of market research when you're doing it yourself.