Market research is critical to making sure that your business is heading, and continuing to head, in the right direction.
So what is it?
Put simply, market research is collecting and analysing information about your potential customers and competitors. If you are just starting up, it will help you to determine:
- What your ‘ideal customer’ looks like and how they behave age, income, spending habits, education, location, hobbies, where do they hang out online and offline. If your customer is a business you’ll want to know their industry, size of business and who is the decision-maker for your product/service. Find out their desires and needs, and specifically what problem they have that your product/service can solve.
- The size of the overall market. Once you know who your ideal customer is, you’ll be able to work out how many of your ideal customers exist within your geographical reach. .id are population experts and access to this database is often free via your local council website. Alternatively you may be able to get this information from the Australian Bureau of Statistics.
- If there is a demand for your product or service. Is there already demand for your product/service or will you need to create the market? How much does your ideal customer spend per year or per transaction on your product/service?
- How many other companies are competing in this space – and how they are competing eg. price, messaging, where are they advertising, what are their strengths and weaknesses?
If you are already in business, market research will help you to determine:
- How your customers found you website, social media, flyer, referral
- What they like and don’t like about your product and service
- How they are using your products
- If your existing customers are the same as your ‘ideal’ customer that you originally defined
So you will see market research is a process of continual improvement which helps you to refine your marketing processes and direct your marketing efforts over time. The more specific you can get about this, the more targeted you can make your marketing messages. And the more targeted they are, the more effective your return on investment is likely to be!
Even if you have been in business for years and think you already know everything there is to know about your customers and competitors, you might get some surprises that will change or help you tweak your marketing approach.
How do you go about conducting market research?
- Secondary (or ‘desk’ research) – draw on existing, relevant research, for example, Australian Bureau of Statistics data, trawl the internet to find your competitors, look at Industry Associations.
- Primary research – go out and get the information yourself! Can be either or a combination of:
- Qualitative – based more on opinions of a smaller group of people eg. a focus group
- Quantitative – based on statistics of a larger group of people eg. a survey where people are given distinct options to choose from
You can do market research yourself or you can employ a market research agency to conduct it on your behalf.