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Market Research for Small business

Market Research for small business

Market Research is an excellent method of collecting information about the market in which your business operates or intends to operate.

A lot of information on how to build surveys and the varying methods that can be utilised to collect market information is readily available on the internet.

However, for the purpose of this article I would like to take a look why we carry out market research and the advantages as well as the pitfalls and obstacles it can sometimes throw our way.

There are numerous reasons why a small business or any company, regardless of size, would want to carry out market research.

Top Ten Reasons to Carry out Market Research:

1. Gathering information about current customers.

2. Looking for a new or additional customer base.

3. Assessing the feasibility of creating and releasing a new product.

4. Consumer product perception.

5. What changes a company could make that would effect (improve) it’s performance.

6. Ability to monitor current advertising awareness.

7. To help new businesses / entrepreneurs understand the market before they invest time and money. Is your product a feasible fit for the market – will it be able to compete with existing products?

8. How much the customer would be willing to pay for your product in comparison to a product produced by your competitors?

9. Can you produce or provide the product for your customer base at that price?

10. Market research can also provide your investors that your business plan is based on concrete research and displays an in-depth knowledge of the market place.

Now that the reasons for market research have been established its important to take into consideration –

The Pros and Cons of carrying out market research:

Pros of Market Research Cons of Market Research
  • Learn who your customers are and what they want.
  • Learn the best ways to reach your customers and how frequently you should attempt to communicate with them.
  • Learn the relative successes of different marketing campaigns in relation to their return in investment.
  • Helps you to spot potential issues with your current market and assists you to learn how to overcome them.
  • Identify and profit from sales opportunities you may not have realised were there previously.
  • Learn basic facts about your markets to assist in making better informed decisions and setup plans of action.
  • Can be costly and time consuming.
  • Errors in sampling can have a big impact on results and can lead to bad decisions.
  • People aren’t always honest in surveys and therefore answers will not always be accurate.
  • The information is only as good as the methodology used (i.e. telephone, face-to-face or online surveys).
  • There is a risk that the information is not what the company wants to hear.
  • The presence of bias or prejudice in surveys can lead to results that are not necessarily accurate for the market.

From looking at this list you could argue that the main factor acting against any company planning to undertake market research is the length of time it would take to gather a sufficient quantity of data as well as the costs involved.

But the question remains – will the data produced by the survey outweigh the invested time and money? This is really one for you to decide but let me leave you with this thought:

Knowledge is power and the more information you have about your market place and customer base the more efficient and profitable your company is likely to be.

Useful links:

Market Research – how to develop an effective customer survey

How to write a business plan – top ten tips


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Photo by Salvatore Vuono

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Discussion

4 thoughts on “Market Research for Small business

  1. Hi! Very good article!
    I thought you might be interested in learning the solution to eliminate two main cons you listed in conducting market research for small businesses – time and money.
    Check out http://askyourtargetmarket.com/
    It is very affordable Internet survey software (starts $29.95) with a built-in consumer panel. You don’t need to hire market research company, you don’t need even to call to start your survey, but you can get results from real people, your potential customers, within 72 hours.

    Posted by Sasha | January 24, 2010, 8:01 pm

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