A Guide to Market Research for Small Business
Before embarking on any business venture, it’s essential that you do some market research before you begin marketing your business. It will ensure that you not only understand your customer but also your competitors. This is especially true for small or less established businesses.
The type of market research you’ll need to carry out depends on your circumstances. If you are a small business with a loyal customer base and you are launching a new product, surveys are useful. If you are a brand new startup you won’t have a pool of existing customers to mine data from so competitor research will be vital. One thing’s for sure: businesses that do little or no market research will most likely fail.
Types of Market Research
There are two main types of market research:
Primary – first-hand information that you or a market research firm collects. Including focus groups, interviews and surveys.
Secondary – pre-existing information that is available to a large number of people. Includes trade reports, magazines, competitor or analytics websites.
Primary market research is more expensive and time-consuming but allows you to be more specific. Secondary market research takes a broader look at industry trends and is a good place to start when conducting market research.
Why is Market Research so Important?
You could have the most amazing product in the world, but if it doesn’t appeal to your target market, it’s unlikely to sell. This is where market research comes in. Every now and then you’ll hear about a wonder product that was so great it just flew off the shelves. Word of mouth meant more and more people found out about it. Celebrities started using it; it got the kind of free promotion that money couldn’t buy. This is rare. Really rare. For most small business owners, creating and marketing a product takes a lot of work and a LOT of market research. Market research allows you to do the following things:
Understand Your Customer
This is arguably the most important reason for conducting market research for small businesses. When launching a new product, you’ll need to have an in-depth idea of who your customer is. There’s no point in trying to sell cashmere to students. You’ll need to think about the following:
- How often will your customer buy your product
- How much they are willing to pay for your product
- What advertising platforms your customers respond to
- How will your product enhance your customer’s life
It can help to have a ‘buyer persona’; a fictional representation of your ideal customer that takes into account age, gender, income, education, job, life goals and kids, among other things. A buyer persona can tell you where your customer spends their online time and where you should spend your marketing efforts.
Know Your Competition
Unless you are incredibly forward thinking, someone has most likely created a version of your product already. It might even be a best-seller. Don’t worry – a little competition can be healthy… helpful even. This is because it’s possible to glean all kinds of insights from your competitors.
By doing a little research into your competitors you can find out what worked for them and what didn’t. You can then use this information as a starting point for your marketing strategy. Obviously, no one is saying to copy them exactly- you want to find your own unique niche – but it can be helpful to have some ideas of what your customers respond well (and not so well!) to.
Looking at your competitors can help you to develop a list of USPs. It’s a chance to work out what you can offer your customer that a competitor currently can’t. Maybe you have a very similar product to another business but they don’t offer free shipping. Would this be something that you can offer?
If you have a local business (for example a hairdresser, dentist, cafe etc.) you’ll want to start your competitor research in the city that you are based. Once you’ve researched your direct competitors, you could take a look at similar businesses that are seeing success in other cities, as it might give you some additional insights.
Test Your Products
Product testing is an essential part of the research process, and no one will be able to give you a better insight than your potential customers. You may think that you’ve perfected your product or service, but the testing phase can throw up all kinds of perspectives that you might not have thought about before.
Grow Your Business
After you’ve launched your startup and started making a stable revenue it’s understandable that you’ll want to think about expanding. Market research can help you identify areas for potential growth. If you’re thinking of opening a new store you can do some research on the best locations. If you’re thinking about launching a new product or service you can do some primary and secondary research into whether it’s viable.
Tools for Online Market Research
Before you start doing any primary research, carry out some more general secondary research. Here we’ve rounded up some of the top online tools that every small business should be aware of.
Google Trends has been around for a while and allows you to get an insight into the types of things that people search for online. It’s a pretty broad platform, but you can see searches as far back as 2004. The great thing about Google Trends is that you can search by location on a granular level.
Survey monkey is great a great tool for getting valuable feedback. If you have an existing customer base, you can offer incentives to ensure respondents complete your survey. Alternatively, if you’re a startup or brand new business you can purchase access to an audience that meets a specific demographic criteria.
Ahrefs isn’t a cheap tool, but if you’re counting the pennies you can sign up for a 7-day trial. There’s a whole heap of things you can do, from backlink analysis (which is useful for looking at your competitor backlink strategies) to keyword research.
Answer the Public
Once you’ve got an idea of who your audience is, you’ll need to work out what kind of things they are searching for. Answer the Public allows you to type in a topic in order to see the kinds of related searches that people are making. This then allows you to tailor your on-site content or social media posts to reflect what people are actually searching for.
Once your business is up and running you can monitor your website using Google Analytics. Ask any marketer and they will reel off the many benefits of this comprehensive tool. Google Analytics lets you see how your customers behave once they are on your website. It allows you to see the different traffic channels that drive customers to our website as well as a breakdown of your audience. If you’re new to Analytics you can register for the Google Analytics Academy for free.
Whether you’re an existing business launching a new product, or you’re setting up from scratch, it’s essential that you carry out both primary and secondary market research. We can help with a range of business aspects from marketing to conversion – get in touch with us today.