How to Conduct Market Research the Right Way

Starting a new business? Market research will help you determine if there’s a need for what you plan to sell and avoid costly mistakes. Here’s how to research the market for your small business.

Whether you’re starting a brand new business, adding new services or considering other major changes to your business, market research is essential. Although there are some small business owners who skip the research and operate on a seat-of-the-pants approach, doing so often wastes time and money and sometimes  leads to business failure.

Market decisions are among the most important decision you need to make for your business. You need to decide what merchandise to sell, what type of customer you want to target, where to locate the business, and make many other market-related decisions .All of them will have an impact on the future success of your business and your revenue.

What is Market Research?

You’ve likely heard the term before but the definition is often incomplete. What we often think of as market research is the time you spend before starting your business where you analyze past market trends to decide if your product or service has enough demand to make it worth your while.

That’s certainly true and important,  but market research should never stop. Before making a big business decision, you should conduct market research. Let’s say that you found a new location with more favorable lease terms. Should you move based on price alone? How likely are your current customers to follow you?

Market research also looks into the future. When Apple invested into the development of the iPad, it already knew that consumers wanted a smaller, lighter computing device. It knew that if it could make the iPhone larger, consumers would purchase the product. This was all thanks to the company’s market research.

Market research should look to the past, present and future to study consumer trends. Here’s how.

Look at the Economy

Maybe you’re not an economist but with a little research, you can learn to read and understand reports outlining economic indicators, income and earnings data, and employment statistics. If the economy is weakening, the demand for high-end products and services may lessen. If average income remains low, consumers will demand high value at lower prices.

Invest in Industry Publications

Regardless of the type of business you own, there are trade groups that compile industry statistics that are important to your business. If you’re not a member of your industry’s trade group, join today. Not only does the group advocate on your behalf, they likely publish detailed industry statistics that are essential for making business decisions.

Some of those reports are expensive but it’s far more expensive to invest in an idea that fails. Also, look for research firms that follow publically traded companies related to yours. If you own a sporting goods store, look for Wall Street analysts that follow companies like Dicks, Nike, Lululemon, and Under Armour. Along with their research of the company, these analysts also compile industry data that applies to every business—large or small—in the space.

Finally, do a good old fashioned Google search. Check industry blogs, trade magazines, and any other high quality information you can find. Much of what you uncover will be useless but some will be highly valuable. That material deserves a bookmark in your browser.

Look Internationally

If you are a typical local business without any sales taking place internationally, you still have a use for market research outside the borders of the United States. An electrician probably isn’t traveling overseas to work but the price of copper on international markets could affect the price of wire. A farmer knows that international demand for grains affect domestic prices, and a Realtor knows that global real estate markets may drive more foreign buyers to American soil.

Those in retail or e-commerce might sell to global markets. They have to know the state of the global markets. Look at the Trade Compliance Center or buyusa.gov for more information.

Pound the Pavement

Finally, ask the public. Conduct an online survey, ask your customers for their opinion when they purchase from you, call past customers, ask a question on social media or hire a firm to conduct the research for you. If you’re looking for direct feedback on a new product you’re planning to develop or a new service you want to add, the best way is through direct, personal research. It’s tedious but it will yield results.

Bottom Line

If you’re making decisions, your thesis should be largely based on objective data. Your gut instincts may carry a little bit of weight but companies that conduct complete market research quickly learn whether an idea is worth the investment of time and capital.

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