“Data, data, data. I cannot make bricks without clay.” – Sir Arthur Conan Doyle
So said the irrepressible Sherlock Holmes in one of Arthur Conan Doyle’s classic stories, and so echoes thousands of business analysts and statisticians the world over. Before launching a new business, going into production on a new product, or starting a service business … before throwing thousands of dollars into getting your idea to market … before signing that lease and ordering the stationary ... you need to figure out if there’s actually anyone out there who will buy your product.
“But, I’m an architect. People everywhere need architects. I’m opening a graphic design agency. There are businesses in my area, and they all need business cards and posters and website designs. I’m a lawyer … everyone needs a lawyer at some point in their life, right?”
Why Don’t Businesses Conduct Market Research?
It seems like such a simple step. Before you invest a ton of time and money into starting a new business, you figure out if there’s a market for that business in the first place. And yet, far too many business owners neglect market research. This contributes to the shocking statistic that 1 in 5 small businesses fail within the first year.
Why wouldn’t you take the time to research? It could be that:
- You’ve had a great idea and you don’t want to hear any negative feedback on it.
- You believe market research costs a significant amount of money, and you can’t afford it.
- You’ve cased that area. You’ve snooped on other competing businesses. You’ve done your market research, right? Right?
- You have a timeframe for getting your product to market - perhaps to coincide with an important event - and you don’t want anything to hold up the process.
Whatever the reason, you will usually find that a little research in the beginning, even if you need to invest some money, will save you many dollars and significant heartache in the future.
Two types of Market Research
There are two different types of market research you can undertake. We recommend a mix of both.
Primary research comes from your customers - the people who will actually be buying your products and services. Usually, you can gather primary research through:
- Surveys: If you already have a database of potential clients, push out a survey asking them what they are looking for from your industry. Be sure to include open-ended sections for comments. These can be particularly illuminating.
- Focus groups: Ideal for testing a product with a specific group.
- Website polls: Often not as reliable as closed surveys, as you can’t control who is answering, but a great way to get continued feedback on improving products / services.
- Reading what they read: Magazines, blogs and other forms of media geared toward a specific market can help you figure out what your customers are looking for.
- Hanging out online: Check out social media pages, #hashtags, discussion groups and other online locations to see what your audience is talking about.
- Your website: Collecting important data through a analytics software like Google Analytics can reveal important data about your core demographic. Find out where people are visiting your site from, and which devices they are using, so you can adjust accordingly.
Secondary research comes from outside sources - often, studies done by other organisations on demographics, tastes, decisions and values of certain groups can prove a valuable source of data for you when making decisions about your business. Here are some places you can conduct secondary research:
- Universities and Libraries: These contain reports, journals and archived papers of thousands of studies across the world.
- Museums: Not all museums contain only “old stuff” and their archives can be a valuable source of information about certain groups.
- Government Departments: All government departments will be conducting research on a regular basis, and most of this is available freely for public use.
- Industry Associations: Of all your sources, these trade associations will have some of the most important insights into competitors in your area.
- LinkedIn: Visit popular groups within your niche and ask questions about pain points for certain products / services.
- Discussion forums: Pose interesting questions and ask users who are fans of similar products / services what they need and want.
Saving $$$ on Market Research
Paying a company to perform your market research can be a costly endeavour. As a startup company, it’s probably best to perform your own research. It might not be as scientific or as accurate, but it will give you a fair idea of whether your business will float or sink in your current market.
Here are some free and cheap solutions for conducting primary and secondary market research:
- Use free survey tools like SurveyMonkey to create a survey you can send out via social media and on your website.
- Talk to social media, communications and marketing graduates about conducting a market research project for your company. Graduates are always looking to pad their resumes and you should be able to get an enthusiastic worker at a great price.
- Head to your local library. It’s not all copies of Twilight and 50 Shades of Grey. You might be surprised at what’s available in your public library. Many academic journals and other papers can be accessed free online there, and the subject librarians can be extremely helpful.
- Conduct your own product testing by giving out free samples at events or outside stores. This can be a great way to test a new product.
- Browsing the internet takes nothing but time. Take a few hours to research some websites and social media pages associated with your target market, and identify some of the key pain points.
- You are probably already a member of your local industry organisations and associations. Talk to other business owners or your association staff about the research you need to conduct. They will probably be able to point you in the right direction, and the association might even have something useful on file.
- Investigate the government agency under which your industry sits. Government agencies are always conducting research, and most of it is free for the public to access and use.
- Community organisations can also be a valuable source of knowledge for certain demographics and areas. You might even be able to partner with a community group to provide something beneficial in return for some research assistance - such as exchanging some free legal advice seminars for the ability to survey members about your services.
You’ve Finished Gathering Data … Now What?
As Sherlock Holmes says, data (clay) is needed to make your bricks. Your bricks are the products and services that build a successful business.
Once you’ve collected data from various sources, it’s time to put it all together.
- create charts and graphs to present data in different ways.
- share your findings with other stakeholders and business partners.
- collect comments and survey answers from potential customers, rate them and group them in order to understand them better contextually.
- pull out the relevant data from your studies and journals, and discard the rest.
Then, you need to mull. What is the data showing? What improvements can you make to your offerings to help them stand up better in the market? What are people saying about the current climate for your company? How many people will actually swap over to your new business, or is there a strong brand loyalty for your competitors in the area? It can be helpful to write down a list of questions you have and find the answers in the data.
What you do with your market research is up to you, but it’s important to have all the clay you need first first, before you start making your bricks. Otherwise, you’re going to end up with a very crooked house.