As an entrepreneur, it is essential to stay abreast of developments in the industry and make decisions based on the changing marketplace. A stagnant business owner or business model is likely to be left behind in the competitive landscape and poor performance and returns are bound to follow with bankruptcy as a potential recourse.
However, it need not have to be all doom and gloom. A proactive business can spend the time, effort and money, as needed for their level of operation, to perform market research. Often, research is probably happening unintentionally through watching competitor prices and moves, talking to customers, etc. This post provides details about a more formal approach.
Is market research necessary?
For a new business, details such as market information, segmentation, trends and SWOT analysis are essential to make decisions about the path to take. For an existing business, the marketing mix is more important. Depending on the business, the mix may differ.
For product or brand oriented businesses, the 4 Ps (Price, Product, Promotion and Place) are vital, while service businesses expand the research to 7 Ps (adding Physical Evidence, People and Process). The theories on marketing mix are varied as Lauterborn’s 4 Cs (Consumer, Cost, Communication and Convenience) and Shimizu’s 4 Cs (Commodity, Cost, Communication and Channel) attest. Irrespective of the tool used, doing research helps businesses to:
- Recognize current customer needs, wants and interests and create better marketing campaigns;
- Identify competitor advantages and assess self-improvement areas; and,
- Tap into new territories and offer customized products/services.
How does a business conduct market research
Once a decision is made to perform market research, the path involves two options.
Primary research. This is done through surveys (website, email, phone, mail and/or in person), observation (interviewing employees can provide a lot of information about customer profiles, goods and services in demand, dissatisfaction about any existing situation including pricing, first-hand feedback about competitor successes or failures, etc.) and experimentation (new stock, different arrangements, etc.). Although this process is long and expensive (when using an external agency), it can provide valuable insight about the many aspects needed to gauge current trends.
Secondary research. This uses available information from past surveys (could show unattended issues from previous questionnaires), research reports (may contain items worth exploring or experimenting with), sales invoices (portrays demand or lack thereof), receipts (matching customer address to products/services may show effectiveness of marketing), returns (may emphasize poor quality of certain products), formal complaints (highlights areas of improvement), etc. to address current issues. Evidently, this type of research is not as targeted as primary research but it can provide the necessary information while keeping costs and efforts minimal.
Another resource that businesses can utilize is statistical information from official data providers and other organizations. The Canada Business Network website offers free access to many analytical resources such as Demographics, Industry sector data, General research and statistics, etc. Other entities such as educational institutions, industry associations, governments and libraries may also have useful data for businesses to process. For further information about market research, creating questionnaires, finding Canada Business Network Service Centers, etc. please check out this page.
Have you done market research (either as an owner or as an employee)? If so, how was the reception to surveys? Did you obtain useful information that assisted in improving the business?If you would like to read more articles like this, you can sign up for my free weekly money tips newsletter below (we will never spam you).