Market research is the collection and analysis of information about consumers, competitors and the effectiveness of marketing programs.
Small business owners use market research to determine the feasibility of a new business, test interest in new products or services, improve aspects of their businesses, such as customer service or distribution channels, and develop competitive strategies.
In other words, market research allows businesses to make decisions that make them more responsive to customers' needs and increase profits.
While market research is crucial for business start up, it's also essential for established businesses. It's accurate information about customers and competitors that allows the development of a successful marketing plan.
While it's common for businesses to hire market research companies to conduct market research for them, it is possible for small business owners to do their own. For an explanation of the basics of market research and tips on designing your own market research surveys and questionnaires, see Do-It-Yourself Market Research.