Market research is essential to making sure your business gets off to a good start, and has a reasonable chance to survive the critical startup woes. Market research is essentially the process of collecting, organizing, maintaining, and analyzing data that enables you to make good decisions about the market segments to which you should market, the services and or products to market, and what would motivate your prospects to make a purchase. Market research also involves the documentation of data collected and its preservation for future use.
Analysis of your market includes finding out what groups of potential customers there are, which are the segments you want to serve, what their needs are, what product or service offering would be of interest to them, what your competitors are doing, what pricing you should use, and how you should distribute your offering to your target markets.
The objective of your research should be to answer some very specific questions of prime importance to your business success. These might include topics such as:
1. What groups of potential customers have specific needs you might be able to fill;
2. How might those needs be met for each group or target market;
3. What would make the product or service appeal to each of the target markets;
4. How much would the customer be willing to pay;
5. Who are the competitors in your marketing area;
6. What would motivate the customer to buy from you rather than the competitor(s);
7. How the product should be branded to be most identifiable.
Surveys and Interviews
Marketing & Advertising mentor Jay Conrad Levinson, author of the Gorilla Marketing books says the least expensive marketing technique is to create a questionnaire and mail or e-mail it to members of your target market. Explain that that the more you know about their needs, the better you’ll be able to provide service to them. He also suggests checking for online discussion forums in your field of business, and conducting research among the participants. You can also surf the web for businesses such as yours to take advantage of their market research. One of the ways I have found this type research to be very productive is to connect with your prospects by telephone, mail or e-mail to set up an appointment with them to conduct a face-to-face interview. You will typically get a better understanding of their requirements, challenges they face in getting the service in a manner that meets their needs, and you have an opportunity to create a personal relationship prior to making your product or service offering. The key to making this work is to select members of local industry to be “experts” whose opinions are valuable. And, promise them a copy of that final report when the study is complete.
Excellent low cost tools for gathering information during your initial market research, focus groups are a somewhat informal technique that can help you assess needs and feelings both before you start your business and on a periodic basis thereafter. In a focus group, you bring together from six to nine users of the service or product you plan to offer to discuss issues and concerns about the features and benefits desired. The group session typically lasts about two hours and is run by a well-prepared facilitator who maintains the group’s focus, and guides the conversation to gain particular information on predetermined issues. Focus groups often bring out spontaneous reactions and ideas that supplement the sought after intelligence, and result in expanding your knowledge about the topic being researched. Having a facilitator to run the session permits you to sit on the sidelines and more closely observe body language and group dynamics. Since there often are major differences between what people say and what they do, direct observation and videotaping of the session always needs to be done. The videotaped session should be periodically reviewed to supplement the value received.
Thoroughly planning the questions to be addressed in your focus group sessions will ensure that you gather valid comments to reveal firm guidelines for organizing your marketing strategy, as well as helping you understand the competitive landscape in your industry. Determine what you want to get out of a the session, test your questions to ensure you get the feedback you need, and have a facilitator keep the group on topic.
Effective use of focus groups can help you determine your customers’ opinions of the level of service they are currently receiving from your competitors, marketing issues on service or product acceptance, needs that are not being met or could be better met. You will discover the strengths and weaknesses of your competitors during the session and will be able to use the information to identify the special niche in the market place for your business.
Another inexpensive measurement tool you should use after you have your business in operation is the customer panel. It differs from the focus group in that a representative group of current or previous users are brought together to critique your service or product offering. A customer panel will open your eyes and give you very valuable information to help you improve your service or product. Hearing and seeing your customer express their opinions in an open forum is even more powerful than gathering comments from customers in a formal feedback report.
There are outstanding resources on the web to help you do preliminary and detailed research into your industry. Knowthis.com has an excellent grouping of links to articles on a number of topics, as does gorilla.com, about.com, and a seemingly endless list of others. Through the generous contributions of a number of users I have posted an entire page of links to help you find good resources for conducting research on my Business Research page.