Market research is an essential part of any business that wants to offer products or services that are focused and well targeted. Good business decisions are based on good market research and intelligence. By researching your market thoroughly, you can minimize the risk to your business, identify new opportunities, while helping you communicate better with your customers.
We have outlined below the key stages of market research which all businesses should undertake:
Stage 1: Target Market
- Identify Your Target Market
Who is your paying customer and how much do you know about them? Will you sell to consumers or businesses?
Identify your market’s key demographic, geographic, psychographic and behaviouristic characteristics including:
- Demographic: age, gender, Income, Education, Ethnicity, Family size
- Geographic: region, city, neighbourhood
- Psychographic: Social class, lifestyle, personality, values, life stage
- Behaviouristic: buying pattern, consumption, loyalty, attitude
- Assess Your Target Market’s Spending Habits
Using the information gathered from Step 1, assess how much your target market is willing to spend on your product or service and how often they are likely to buy or use it.
Secondary sources are the easiest method of determining this.
If you are providing a niche product of service which is not included in existing research, you will need to conduct your own primary resources, with your potential customers. By asking them directly how much they are willing to spend or do they spend over a year, you will be able to use this information to make a feasibility statement about your business idea.
- Identify Your Customer’s Preferences
When describing customer preference research, it is a three stage process:
- Find out what pain needs relieving
- Go away and create something that you think will relieve your potential client’s pain
- Take the product or service out to them and ask them what they think before going to market.
Discovering what your potential customers “likes” and “dislikes” are about your product or service is critical for your business success. Face-to-face surveys and focus groups are tools that will help you increase sales by identifying features that your customers like and reduce costs by identifying features they don’t like.
- Consumption Trends, Past and Future
It is important to monitor the trends which may affect your target market.
Google offers two useful tools for monitoring trends:
- Google Alerts allows you to set up alerts using key phrases such as the name of your industry and the phrase “consumer trends”. Google will then send emails to you with any new commentary, blogs or news which mentions your industry, product or service.
- Google Trends allows you to view what is trending online through search. With data available back to 2004, you can research which topics, products or industries have been searched for over time. The tool will allow you to drill down from a country level to individual cities with the key news which resulted in any spikes in traffic.
- Project Your Target Market
Check population trends for your target market to assess the number of potential clients for your product or service.
Stage 2: Competitor Analysis
- Know Your Competition
Use business directories, web searches, local knowledge and industry associations to research your competition. You should be aware of each competitor’s:
- Products and services
- Age of business
- Number of employees
- Know Your Competitors Advantage
Routinely monitor your competition and watch for any advertising, brochures or updates to website.
Use this data to observe who they are targeting and the techniques they are using and list the areas that you can and cannot compete.
Collect a list of the services, products and locations they are serving and observe whether you can compete with them in the same area.
Discretely buy from you competitors and find out what kind of experience you received as a customer and the quality of products or services.
Stage 3: Current and Future Trends
- Identify Opportunities and Threats
Are there technological opportunities for your business in the future? Is social media important for your business success? Are there technological threats looming on the horizon for your business? Are there electronic versions of your product or service that threaten your bottom line? These and other trend concerns should be researched when starting and operating your business.
Stage 4: Operations and Management
- Assess the Average Costs and Revenues for Your Type of Business
Before starting your business it is important to understand the average costs and revenues needed to operate your business. It is essential that you identify and forecast these expenses and revenues accurately in order to stay on top of your operations and achieve success in your business.
Costs and revenues which should be identified and forecasted include:
- Wages and salaries
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