Doing Market Research
Learn how small businesses can do their own market research.
Many small businesses shy away from conducting their own market research (for example, gathering information from potential customers regarding their views of a product or a competitor) because they think it's too difficult to do. However, primary market research -- market research you conduct yourself -- should not be overlooked as a marketing tool. Small businesses can tackle primary market research relatively easily and inexpensively, and such research yields valuable information because it comes directly from your target prospects.
What is Primary Market Research?
Market research can be either primary or secondary.
Primary market research. In primary research, the business conducts studies with potential customers to find out how they feel about the business's product or service and the competitors' offerings. The studies also inquire into potential customers' shopping habits and preferences.
Secondary market research. Secondary research involves studying what others have learned about your market; typically this involves reading trade journals, other business publications, or reports generated from studies that others have commissioned.
How to Do Primary Market Research
The specific way that you'll ask questions to potential customers will depend on your type of business and the product or service you're offering. In general, there are three options: surveys and questionnaires, interviews, and focus groups. Here's a look at each of these.
Surveys and Questionnaires
Presenting your target customers with surveys or questionnaires is a great way to answer specific questions you have about those potential customers.
Formulate both research and survey questions. Start by identifying exactly what you want to learn -- these are your research questions. Based on these research questions, you'll draft the actual survey questions themselves.
The survey questions should be crafted to yield results that will help you answer your research questions, and should be as specific as possible.
Distribute surveys. You can send surveys in hard copy via mail, in plain text format via email, or -- even better -- by using a Web-based service, many of which are free. At sites such as SurveyMonkey (www.surveymonkey.com) and Zoomerang (www.zoomerang.com), you can create a professional-looking online survey, invite your prospects by email, and tabulate the results in useful ways, all for free. More features are available if you upgrade to a paying account, but the excellent free versions are a great place to start.
Interviewing Prospects One-on-One
There are a few different ways of getting information directly from individuals.
Talk with people who have relevant experience. One way is simply to set up interviews with people whom you trust and who may have relevant opinions. For example, if you want to start a child care referral service, you could meet with people you know who have young children and ask them about their experiences. Or if you're starting a software company that will focus on data management for construction companies, set up lunch meetings with people you know in the construction business and pick their brains about their data management challenges.
Canvass at targeted locations. Another way to interview people is to canvass them at locations where you are likely to encounter people within your target profile. A good example is going to a trade show related to your industry, standing in a high-traffic area, and asking people if they could answer a few short questions. The key here is to have just a few short questions that passers-by could answer quickly with concise answers ("yes" or "no," or a numerical answer, for example) that you can easily record on a clipboard or laptop computer. Other locations might include special events that appeal to your target audience.
A focus group is an event at which you provide a presentation or demonstration to potential customers and solicit their feedback. Often, feedback is gathered via a survey or questionnaire prepared in advance. Feedback is also obtained though oral question-and-answer sessions and discussions among the group, which are recorded by someone taking careful notes. Examples of possible focus groups might include:
- A food manufacturer holding taste tests of a new salsa, asking participants to rate flavor and texture, and to compare the new salsa to the competitors' versions.
- A software company having users test its new time-management application, asking them to rate it on ease of use and timing them on how long it takes to complete certain tasks with the software.
- A nail salon demonstrating its signature pedicure on focus group participants, asking them for feedback on their experience during the pedicure and on the results.
While there's nothing inherently complex or expensive about conducting a focus group, it will require at least a nominal commitment of your time. If you don't have retail or other space, you may need to rent an appropriate venue. Because of the preparation and possible expense involved, be sure to start the invitation process early enough to ensure that you get enough confirmed participants to justify the time and expense of doing the focus group.
To learn more about conducting both primary and secondary research, as well as how to promote your new business, get The Small Business Start-Up Kit: A Step-by-Step Legal Guide, by Peri H. Pakroo (Nolo).