2014-12-18 01:00:20 Marketing English Good market research is at the core of any successful business. Gets tips from the experts about how to do market when starting your small... https://d2yxjugd6jl4bj.cloudfront.net/wp-content/uploads/2014/12/08232707/istock_000026639722_small__1_.jpg how to do market research How to Do Market Research for a New Business | QuickBooks

How to Conduct Market Research for a New Business

5 min read

Good market research is at the core of any successful business, but, unfortunately, many small-business owners are either intimidated by the process or believe it’s too expensive. To clear the matter up, we spoke to Robert J. Kaden, author of Guerrilla Marketing Research and president of The Kaden Company.

Small Business Center: Can you briefly define market research and its purpose?

Robert Kaden: The purpose of marketing research is to uncover the needs, wants, wishes, desires, and emotions of customers and prospects so that you can get them, keep them, and sell them more.

What types of decisions can business owners better make after conducting market research?

You name it. Well-done research will focus business owners on how best to use their resources in order to grow and prosper. Namely:

  • It can help to determine which products and services should be most strongly marketed and which have secondary importance to the growth of the business.
  • It can put in priority the types of marketing and operational issues that are critical to finding and keeping customers.
  • It can provide guidance as to the strongest and most compelling advertising and promotional content.
  • It can identify the messaging that will be most effective to building the company brand and image.
  • It can focus your employees, sales force, and operations on your most important reasons for being.

Can a small-business owner conduct effective, inexpensive market research?

Yes. But it takes time, commitment, and a willingness to take action. Time in that it’s necessary to learn the fundamentals of good research and have a willingness to execute many research steps in-house. Commitment in that research is an ongoing process. Conducting one study and hoping you get all the answers is fool’s gold. Action in that research doesn’t always support current approaches, and there should be a readiness to take action coming from research that may be contrary to pet theories and programs.

How can doing market research add to a small business’ bottom line?

Small-business owners make decisions all the time. Some are successful and generate incremental profit, while others are a total waste of money and effort. And, often, there is no idea as to why something worked or didn’t work. How can you grow your business without intimate knowledge of what brings customers to your door, keeps them there, and makes them happy about spending more money with you?  If you know the answers to these questions, you don’t need research. You’ve got your business nailed.

What specific steps can business owners take to research their industry today?

At least once every three to six months, small-business owners should take a number of research steps. These include:

  • Doing a thorough search of secondary sources. Use search engines to research topics that will keep you up-to-date on changes that are taking place in your industry, what new products are coming to market, and what your competitors are trying to do to stay one step ahead of you. Other than time, there is no cost involved in this, and it will give you so many new ideas for growing your business you won’t know what to do first.
  • Do a couple of focus groups. Get six to eight people to sit around a conference table and conduct several focus groups. Have one group be your permanent panel of current customers because these are the folks who really keep an eye on what you’re doing right or wrong. Have another group be “low-hanging fruit” prospects, and grill them on why they are not yet buying from you.
  • Do a customer satisfaction survey. Take the issues you uncover in your focus groups and write a questionnaire that, when answered by at least 75 customers, will tell you which issues are driving or repelling sales. Then take action and do more good things while also taking action to reverse the bad things.

How important is it for small-business owners to conduct research on their customers?

It’s where to start and maintain any research program. It’s hard to attract new customers, and it’s costly. The rule of thumb is that it’s five times more expensive to acquire a new customer than it is to retain an existing one. If you’re wise, you’ll conduct a monthly customer satisfaction tracking study. That way you can quickly spot areas of strength and weakness and make immediate changes or improvements. Ask customers to rate you on:

  • Their satisfaction with the many aspects of your customer service.
  • The extent to which your products or services continue meet their needs and wants.
  • The percentage of business you are getting from your customers, and how those giving some of their business to a competitor rate that competitor compared to you.
  • What new products, services, marketing, or pricing approaches customers wish you would provide and by doing so would render them more loyal to you.

What possible changes should come from such research?

Among the many, here are a few that are critical:

  • Hold hands with your customers by changing or improving the way your sales and operations people serve them.
  • Make improvements to current products through additional benefits or features.
  • Upgrade or change service, warranties, and guarantee policies that may be driving customers to a competitor.
  • Uncover unmet wishes and desires that your customers don’t even know they have and that will keep you ahead of the competition.

How can understanding the competition help business owners increase profits?

If you don’t know the strengths and weaknesses of your competition, they will eventually bury you.

Will you provide some specific steps to help them do this?

Research your competitors’ customers in the same way you research your own. It’s not hard, and the same research issues previously addressed apply as much to them as to you. By knowing competitive weaknesses, you can pinpoint the marketing, messaging, and operations most likely to sway a competitor’s customer to try you.

If you could give small businesses only one piece of advice about how to conduct market research, what would it be?

Leave your ego at the door. Know you don’t have all the answers. Listen to your customers. Be humble in how you serve them.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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