Wondering if market research is important for your small scale business? Stuck between choosing qualitative, quantitative or statistical sampling methods? You have stumbled upon the correct blog to answer all your questions.
People dealing in small business have to manage a lot of day-to-day operations. Thus making time for market research is difficult, especially when you have to learn about the whole process of market research. But it becomes necessary to keep a check on the audience periodically; otherwise, revenue could be lost. For a business venture to be successful, accurate information is required. Information about the existing customer base and the competition prevailing around the industry, in general, is an important aspect. It helps the business owners to determine the feasibility of the business before they make any commitments relating to substantial resources being used in the venture.
Effective market research helps to get inside the customer’s head. What kind of marketing research is to be used depends upon the availability of budget. It is tricky to find out which kind of market research would be suitable for the available time and cost investment.
What is Market Research?
Market research is an important tool to assist in business planning. It is the process of collecting information which provides an insight into the customer’s way of thinking, buying patterns and location. Market research helps to monitor the market trends and keep an open eye towards what your competition is doing.
It is the process by which information about the market is gathered, analyzed and interpreted. It helps in solving the marketing challenges that a business is most likely to encounter. The process of market segmentation and product differentiation is impossible to be conducted without a properly developed market research strategy.
Types of Data in Market Research
Primary research helps in gathering two types of basic information which are either explanatory or specific. Explanatory research is an open ended research. It helps to define a specific problem and involves detailed and unstructured interviews in which lengthy answers are asked for from a small group of respondents. Whereas specific research is precise in scope and is used to solve a problem that exploratory research has identified. Comparatively, specific research is more expensive than exploratory research. Primary research is targeted to the group by using resources such as direct mail, telephone and personal interviews.
This type of research uses information gathered by government agencies, trade associations, labour unions, media sources, industry associations and chambers of commerce. This information is usually printed on pamphlets, newsletters, magazines and trade publications.
Advantages of Conducting Market Research
- Helps in identifying potential new customers
- Learn more about the existing customers
- Have a better understanding of the competition
- Test new markets
- Identify new opportunities regarding performance, pricing and promotion
- Communicate their decisions regarding existing and new products or services
Why is Market Research Important for Small Businesses?
Helps in spotting business opportunities
Once the market research has been conducted, it becomes crystal clear as to which section of the society the business wants to target and what kind of goods or service they are reaching out for. Sometimes approaching other small businesses becomes mutually beneficial when the joint promotion is carried out. Knowing about the other products and services which the customers can buy helps in coming up with additions to the existing one.
Business risk is reduced
According to the Bureau of Labor Statistics, half of the businesses around the world don’t make it past the fifth year. Thus, to ensure that the business survives longer in the market, proper research about the customers and sales has to be done, which can be done only through market research. Regular market research needs to be conducted so that they can keep a check on the current and the upcoming potential customers.
Decision making becomes easier
Market research becomes an important part when tough business decisions are being made. The market research report can be used while making decisions. Decisions - such as where to spend advertising and marketing budget, opening a storefront in a new location, the price to be charged, and which products are to be discontinued - can be made with market research.
Create relevant promotional materials
Proper promotional materials need to be designed so that it would attract the eyes of the customers. To choose what type of text and images to add on the fliers, website, and social media accounts, thorough market research needs to be done to know exactly how to proceed. Since target customers have been identified and their needs properly recorded, it will become easier to know what to address and how to address when the marketing materials are being created.
A business which knows its customers more tends to capture the market. They can easily beat their competitors by fulfilling the demands of the customers in a better way and standing out in the market. To outsell competitors, market research can be used to target the dissatisfied customers and fulfil their unsatisfied needs.
Set better goals for the business
When targets are set out for the business, they are based upon the sales and customers. Without carrying out market research, it would become difficult to determine whether the goal is achievable or not. With the help of market research, it becomes simpler to determine the directions which the company has to follow to reach its goal.
Know where to advertise
Small business owners have budget constraints. Hence, it becomes very important for them to decide where to spend to optimise the maximum returns. Market research can help in identifying the intended audience and on which platform they would likely to see the passage being advertised.
Marketing research is an important task for a small business to be successful. It is very easy to begin with by gathering information about two things - the target customer and the competitors. One doesn’t have to get all the information at one go. The sentiments of the target customers keep changing over time. Thus, market research is an ongoing process that must keep a record of these. But a business must not forget about the proper execution while doing the research.
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Q. How long does market research take?
Ans: The time required to conduct market research depends upon the scale of the project. Many small businesses get useful results within a span of two to three weeks.
Q. How to find the right market research agency?
Ans: Recommendations can be taken from business contacts, trade associations. A proper inquiry must be made regarding the market research agency to find out if it is suitable for the business. Information regarding the price charged by them, their way of approach, how long have they been working and do they have enough qualified staff becomes some of the key important factors to consider while choosing the right market research agency.
Q. How much can a business rely upon the market research while making decisions?
Ans: The more amount of information a business has and the more up to date it is, the more reliable it is likely to be. It is important to note that market research cannot entirely take out business risks. Taking decisions without proper evidence would be like gambling. Market research helps in providing additional information for thought.
Q. What are the methodologies followed while doing market research?
Ans: The four main techniques of market research are surveys, interviews, customer observation and focus groups.
Q. What are the steps of the market research process?
Ans: The market research process comprises six main steps. First is defining the problem and then developing an approach to the problem followed by research design formulation and data collection. Then data preparation and analysis and the last one being report preparation and presentation.