Market research is a systematic and objective way of determining who your potential and
actual customers are and gaining information to gain an understanding of their needs,
desires and —most importantly— their behavior. Market research often helps
define who wants to buy a product or service, who can afford to buy a product or service
and who actually spends the money on a product or service.
You may find in a survey that nearly everyone may want a trip to Hawaii, for example.
But, who can afford the trip? That question narrows the field considerably. Next, who
actually spends money on such trips? Again, the field of potential buyers vs. real
spenders is funneled down to a smaller pool of individuals. You need to know how large
your potential pool of customers will be, their ability to pay for your product or service
and the history of spending that indicates the likeliness that your product or service
will sell in the marketplace.
Big corporations spend millions of dollars annually to study the marketplace. The small
business has an edge. As a small business owner, you are closer to the customer. The small
business is often able to detect buying patterns and customer desires (as indicated by
special requests) more quickly and react almost immediately. Market research informal as
with in-store observances or formal via a survey or focus group can provide valuable
information.
Market research gathers, focuses and organizes information about your market. It
reduces your business risks by making your business more responsive to the market, so you
can keep them coming back to your store. Market research can also help identify particular
sales and profit opportunities, as well as indicating waning interest in a product line.
You already conduct some research as a part of doing business. For example, you use
merchandise returns as a guide of products not to restock. You watch what your competition
is doing. And, you gather trade information from your professional or trade association.
There is probably a great deal of published information available on your particular
type of business. The Census Bureau has a wealth of employment, income and demographic
data available. You can download pages of information from the Census Bureau’s web
site at http://www.census.gov. You can also
call the Census Bureau’s customer service center at (301) 457-4100 to find out what
publications and reports are available; the bureau may charge a fee for publications.
You can also conduct a focus group or survey yourself. If you have a slim marketing
budget, this can provide some valuable information. Remember that although helpful,
self-organized market research will not be as objective as outside research. For added
confidence in research results, consider hiring a advertising agency or market research
company to create, implement and report specific market research to you.
If you would like some free and confidential advice on market research, contact the
SCORE Association (Service Corps of Retired Executives). SCORE is a nonprofit, volunteer
service organization, with 12,400 volunteer business counselors who donate their time and
talent to assist entrepreneurs. SCORE has helped more than 3.5 million entrepreneurs.
There are 389 SCORE chapters throughout the country, who offer low-cost workshops and
seminars, as well as free counseling and mentoring. For a referral to the SCORE chapter
nearest you, call 1 (800) 634-0245.
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