Market research and analysis can provide your business with a competitive advantage while helping you plan for the future. This article will discuss specific market research and analysis types and give you tools to help you get started.
Conducting Market Research for Your Business
Market research blends consumer behavior and economic trends to confirm and improve your business idea.
It’s crucial to understand your consumer base from the outset. Market research lets you reduce risks even while your business is still just a gleam in your eye.
Gather demographic information to better understand opportunities and limitations for gaining customers. This could include population data on age, wealth, family, interests, or anything else that’s relevant for your business.
Then answer the following questions to get a good sense of your market:
- Demand: Is there a desire for your product or service?
- Market size: How many people would be interested in your offering?
- Economic indicators: What is the income range and employment rate?
- Location: Where do your customers live and where can your business reach?
- Market saturation: How many similar options are already available to consumers?
- Pricing: What do potential customers pay for these alternatives?
You’ll also want to keep up with the latest small business trends. It’s important to gain a sense of the specific market share that will impact your profits.
You can do market research using existing sources, or you can do the research yourself and go direct to consumers.
Existing sources can save you a lot of time and energy, but the information might not be as specific to your audience as you’d like. Use it to answer questions that are both general and quantifiable, like industry trends, demographics, and household incomes.
The US Small Business Administration has a comprehensive list of market research resources.
Direct Research
Direct research requires you to interact and collect data from your target market personally. Although this market research method typically takes time and money, it provides you with valuable information that may benefit your business for years to come. Some of the most utile techniques to conduct direct research include focus groups and surveys. Therefore, it is crucial to have a specific goal in mind when developing the questions you’ll be asking.
Competitive Analysis
Competitive analysis helps you learn from businesses competing for your potential customers. This is key to defining a competitive edge that creates sustainable revenue.
Your competitive analysis should identify your competition by product line or service and market segment. Assess the following characteristics of the competitive landscape:
- Market share
- Strengths and weaknesses
- Your window of opportunity to enter the market
- The importance of your target market to your competitors
- Any barriers that may hinder you as you enter the market
- Indirect or secondary competitors who may impact your success
Aside from the bullet points listed above, you can implement simple competitive analysis methods. For example, take a look at some of your competitors’ websites. Notice what they are doing correctly and incorrectly, and try to spot service or product offerings that you can use to gain a competitive advantage.
