A Small Business Guide to DIY Market Research
Marketing would be a whole lot easier if we could read our customers’ minds. Being able to create new products, features, and pricing that speak directly to their needs would exponentially simplify our jobs.
Sadly, most of us lack psychic powers.
We mere mortals need a way to learn about what our audience wants, how we can earn their business, and how we can keep them loyal to our brand over time.
This is the domain of market research, a skill that can be intimidating to non-researchers, but one that needs to be part of every marketer’s toolkit.
Terms like “market segmentation,” “longitudinal studies,” and “multivariate analysis” can make it easy to conclude that market research is for experts only.
But in fact there are just three phases to a market research project, and this beginners’ guide will help you tackle all three with gusto.
Effective market research can be broken down into three steps:
- Collect data
- Analyze and act
Once you get these right, it will be almost as good as being psychic.
Step 1: Planning for Market Research
As with all things in life, going into market research with a plan is going to yield the best results.
Before walking blindly in the world of research, ask yourself these questions about your products and services:
- Is there a need for this product in the market?
- Make sure that you are in the right market for your business. If you live in Anchorage, it’s not likely that you would want to start a business selling pools.
- Do my products meet specific market needs?
- Generalize the needs you are aware of and ask yourself if you meet them. Culturally, healthy eating is popular right now. If you plan to own a restaurant, are you going to offer healthy options as well as options for those on restrictive diets?
- Is my pricing fair and competitive?
- Pricing is one of the largest factors in why consumers may leave you for the competition. While you want to maximize your profit per unit sold, to maintain regular business, you need to be aware of what your competitors are doing and stay competitive.
Next Step: Create a plan for your research
By analyzing your answers to the above questions, you can come up with a good platform from which to start your research.
The goal is to have an idea of what you can fix and make a plan of how to do so.
For example, a specific market need could be gluten-free dinner options. Currently, you have one but feel like you should expand on that.
Your plan is to survey people with Celiac’s disease to see what options they would be most interested in seeing. Now you have a direction to get started.
Next Step: Form a hypothesis
Just like having a basic understanding of your market is beneficial to your overall research, so to is having a hypothesis to focus your attention on.
Before you begin the research phase, you should have dedicated some time to thinking about how you expect it to go. The true outcome may vary greatly but you will be a better position to analyze your data and make effective changes if you go into it with some plan of attack.
Step 2: Collecting Market Research Data
Collecting data for your research is a multi-faceted endeavor. Fortunately, with all of the technology we have at our fingertips, this is becoming a less painful task that ever before.
There are two ways that you will want to approach the data collection process:
Quantitative research is a more mathematical approach. This can involve surveying large sample sizes and, while it is less specific, it will allow you to find trends to act on.
Google Analytics is another example of quantitative research. Here you can look at where your leads are coming from, how long people are staying on your pages or maybe where they are leaving your page. This can give you an idea of what to fix to bring people through the sales funnel.
Qualitative research uses a smaller sample size but takes a more direct route and helps you figure out specifics. It can also help you answer questions that quantitative research brings up.
A great way to use qualitative research is to take your findings from the quantitative process and ask yourself why.
So, you’ve found where potential customers are leaving your page, now use qualitative research to figure out why.
You can use interview methods to learn specifically what it is about the page that is causing users to opt out. Focus groups are a prime example of qualitative research and can provide you with answers that are actionable.
User testing, both formal and informal, is also a great way to get objective insights into behavior patterns.
Types of Market Research
Once you have a plan and hypothesis, it’s time to determine the type of research you need. There are two types of market research that you will want to focus on.
- Primary research involves conducting your own research about products and services that you plan to offer.
- Secondary research looks at published data and can be used to create benchmarks and understand the competition.
While there is no set order to gathering your data, I find that conducting secondary research first can help give you the background information that will allow you to create a more targeted primary research project that produces better data.
How to Do Secondary Market Research
When conducting secondary research, you should have an idea of what information will benefit you the most.
Do you need to learn more about the market to help determine your target demographics? Are you hoping to learn more about the competition and how they operate? Do you understand consumer preferences and how they’ll play into your business model?
Next, you’ll need to figure out what kind of information you need to answer your questions. There is a ton of information to be found so narrowing down your search will save you time and money.
Ask yourself what would be most beneficial: statistical data such as annual reports and financial records, or location-specific data and consumer information.
Once you know what questions you need answered have an idea of the information that will best answer them, you are ready to start the research.
Here are some great external options for conducting secondary research:
- Public sources such as libraries and government departments
- Banks and other financial institutions
- Educational institutions such as universities and technical institutes
For a complete overview of secondary research, check out this article.
How to Do Primary Market Research
Once you’ve completed your secondary research and have a solid understanding of your particular market, your target demographics and the competition, you’ll want to get started on your primary research.
Your primary research will get more in-depth about the particulars of your business, products, and location. The questions you ask will be specific for your situation but in general, you’ll want to find answers to these questions:
- What factors do the consumer when purchasing?
- What do they like/dislike about our current products?
- Where could this product improve?
- What is a fair price for this product?
Gathering Primary Research Data
There are a number of ways to get answers to these questions, however, when in the primary research stage, you want to make sure that you are collecting information from specific segments of people. Qualifying questions to ensure that your sample meets your demographics are a great way to make sure that your data is practical and actionable. This can involve offering incentives to respondents.
If you would like specific answers to how a product could be improved upon, a focus group is a great option.
Focus groups may require the largest incentive but are a great way to get direct feedback on a product. This involves bringing a small group of people together and having them sample your product. Afterwards you’ll ask them specific questions to gather feedback.
For overarching questions, such as, “what factors do you consider when purchasing?” a survey or questionnaire is a great way to get the opinions of a larger group of people. These can be created online and require less of an incentive as the respondent can take them at their leisure.
If your business is more service oriented, you will still want to explore all of these options, but what may benefit you the most is direct interviews. These can be done face-to-face or over the phone and can focus primarily on getting feedback about the performance of the service.
Analyzing and Acting on Your Data
The most important aspect of market research is acting on it. In order to thrive, you must be agile and willing to address any faults that your research uncovers.
Market Research Data Analysis
Throughout the steps taken during research, your quantitative studies should have pointed you in the direction of any areas of weakness. Now you’ll turn your eye on the qualitative research to learn how to fix the problem.
By studying Google Analytics, maybe you found the page where people are most often leaving your site. Having acknowledged the problem, you got direct feedback on where and why and are now ready to fix the issue.
Or while developing a menu, your team discussed the idea of introducing healthy options to please the more conscientious eaters. Using a survey, you polled your market and found that 40% of people said they are concerned about their health and would like to see a menu that reflects this growing trend.
Acting on your Feedback
Collecting all of this information without acting on it is time wasted, right? Take a look at the feedback you are given and come up with solutions.
If you’re not the sole proprietor, this could involve having your team get together to come up with ways to fix the issue. During brainstorming sessions, write every single idea down. Slowly whittle them away until you are left with tangible solutions to established problems.
You’ve discovered that there is a page where people seem to be falling off in masses. Your qualitative research should give you an idea of why they’re leaving that page.
Now, what can do you do to fix that? Is there something distracting them and causing them to lose focus? Is the contact form a bit too invasive and scaring people away? Fortunately, in the online world, you can use split testing to try out multiple solutions at once to find a winner.
For the restaurateur, data showed that a huge segment of your market is interested in eating healthy but that they are also economical when it comes to eating out. Through your secondary research, you found that the competition is making a killing by offering seasonal salads that are both healthy and cost effective. What do you do?
The More You Do Market Research, The Easier It Gets
If you’ve made it this far, it’s safe to assume that you don’t have a marketing research team at your disposal.
It’s easy to look at this and think to yourself that it’s too much work. “How can I overwhelm myself with all of this research when my business is losing money?” you say with your head in your hands.
Sit down, drink a glass of water and remind yourself why you got into business in the first place. Now ask yourself if that business is worth the energy required to make it successful.
Hopefully, the answer to that is yes.
Assuming it is, remember that each time you conduct research, you’re becoming more and more familiar with the market. It won’t happen overnight but soon you’ll have a good enough understanding of your audience that you’ll be providing the studies that newer businesses are looking to during their secondary research.