Whether you’re selling coffee or conferences, knowing and understanding your market is extremely important. It is, of course, necessary to take research results with a pinch of salt – it’s research and not rocket science. And we’ve all heard stories about businesses triumphing on the merit of gut feeling alone. But it’s also important to be aware that 90% of successful businesses have made their most important decisions with the help of market research.
Steve August, chief innovations officer at Focus Vision, has been in the market research industry for more than ten years. He makes the point that market research should be used to validate business decisions, but that entrepreneurs should still follow what they feel is the right path.
August emphasises the value of investigating the economic context at the very beginning: “It doesn’t matter if you’re selling locally, if you’re selling regionally, or if you’re selling globally. Wherever it is you need to know the dimensions of your market: how much money is being spent there and what your piece of the pie could be.”
And it doesn’t have to cost you an arm and a leg, explains Luke Sehmer, senior research director at Research Now – there are existing resources that you can use to your advantage, he says. “When you set up a new business, cost is an important factor, and market research can be considered a discretionary spend. But market research in its purest form can just be gathering intelligence about the market, which doesn’t have to be done through surveys or focus groups. It can be found in existing reports, industry reviews and conversations with consumers, many of which can be sourced through the Internet.”
This can include exploring what your competitors are doing, reading blogs to get an idea of customer sentiment, using free survey tools like Google Consumer Surveys, and utilising information on sites for entrepreneurs. There are even things available to you to help you research markets that don’t already exist, says Sehmer. “If a market doesn’t exist and you want to explore the opportunity, consider the Google analytics tools. Trends lets you see what people are searching for and in what volume, so if everyone is searching for hats for dogs but no one is providing hats for dogs, perhaps you’ve realised a gap in the market.”
Some entrepreneurs bypass market research and instead trust their own gut. Sehmer argues that “often they have a gut feeling through their intrinsic knowledge of the industry, so their opinions are in no way unfounded.”
Market research can save you money in the long run, too. August, of Focus Vision, believes that the most important time to conduct market research is when you’ve got a good idea of what you want to put out to market. It’s at this point that you should make sure your thinking is aligned with your customers’, as “nine times out of ten this feedback will allow you to save money and get you a better return on the product or service you’ve created.” Research can also be useful if you’ve got, or are looking for financial backing. Sehmer says: “It can be a great way to prove to investors the value of what you’re doing and the opportunity that it represents.”
But what about getting down to the nitty gritty of market research? Most companies use it to help them to refine their products or services, or to adjust their messaging according to what consumers value in their offering. August explains that the most important thing to do is to decide on the questions you need answers to, to consider what information you need to answer those questions and to work out how exactly you’re going to get it. For August, focus is also crucial for a small business with limited resources, as “you have to be very clear on what you want to learn and take it in small bites.”
Basically, do your homework. Getting to grips with your consumer base is crucial to any business’ success, big or small. It doesn’t need to be expensive, and it will be worth it in the long run.
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