Whether you are launching your business or are already trading, knowing your place within the market is essential for business development and undertaking market research is a fundamental part of this process.
Market research allows you to view your company and evaluate your business in relation to others. But where to start and what techniques to use? We answered questions on what methods of market research to use in order to maximise your returns. We also asked some of loan recipients for their thoughts.
What is market research?
Once you’ve got your business idea, the next step is confirming if there is a demand for your product or service. Market research is an essential part of showing there is demand for your business. It is about filling in information gaps to help your business avoid making costly mistakes.
Remember after analysing your results make sure to act on your findings – market research is a major part of a business plan.
Methods of market research
Remember that your aim is to get an accurate picture of how customers respond to your product or service so that you can adjust your business to fit. It’s a good idea to use multiple methods of research to get a better sense of your customers and the market.
For advice on conducting research into export markets take a look at these 7 steps to take before you export.
Below we have taken a look at some of the most common market research techniques used by small businesses.
Create a survey to generate feedback from existing or potential customers. Free online tools like SurveyMonkey are helpful in designing and publishing professional looking surveys, but the content is up to you. Make sure you have clear objectives and are asking the right questions to get the answers you need.
You can distribute your survey in any number of ways from publishing on social media and sending out to your email lists, to grabbing a clipboard and heading down to your local high street or trade event.
Networking and Events
Attending events is a great way to meet people in the same position as you, while also an opportunity to undertake some free market research by talking to potential consumers, competitors and industry leaders.
Building networks with other businesses in the same industry or with complimentary businesses can help make sure you are up to date with new techniques or regulatory changes to your sector.
Speaking to friends, colleagues or peers
Seek honest views and constructive criticism of your business idea and how your business can do better. It’s important to note that friends and family can offer biased opinions.
Secondary research or desk research
While carrying out your own research that is specifically related to your business is a must, there is also plenty of research already in existence. Take a look online, at libraries or in government data for consumer data on your specific sector.
A focus group is about organising discussions with potential customers to get detailed opinions about your business idea, product or service.
The groups are usually made up of 310 people and ideally should be led by an independent moderator. Bear in mind you may need pay attendees or offer an incentive.
A structured set of objectives is important to getting the most out of a focus group session.
How do I know who my competitors are?
Research doesn’t end with looking at your customers, it is important to see where you business falls among its competitors. You need to establish how competitive you are, who the market leader is and whether your product or service differs to similar companies. Depending on your business finding out who your competitors are may be as simple as searching the local area for potential rivals, or searching online for similar products or services – remember in an increasingly global consumer world you may be competing with business from across the world.
When looking into competition, you can break down your competitors into two sections, direct competitors and indirect competitors.
What is direct competition?
Any business offering a similar service or product to you. For example, if your business is a coffee shop, direct competitors are other coffee shops. Think about how your business matches up in terms of price and customer experience.
What is indirect competition?
Any business selling substitute or alternative products that are aimed at the same client base. For example, if your business is a coffee shop, indirect competitors are other business places supplying food or drink such as pubs.
What do I look for in relation to competitors?
When evaluating your research in relation to your competitors, there are three essential areas you need to consider.
Price – Is there another business offering the same product at lower prices?
Quality – What can competitors offer their customers for the same price as your product or service? How similar or different is this to what you offer?
Location – Where are other competitors based? Do they have the same customer footfall as you? With the rise of online shopping and international exportation, you can’t afford to only research similar products and services offered in your local area – location doesn’t always rule them out as a competitor.
What is a SWOT analysis?
If you’ve never heard of a SWOT analysis there’s no need to worry. It’s business jargon for a simple way to identify your business’ strengths and weaknesses, as well as the opportunities your business could face.
Strengths and weaknesses are internal capabilities. Look at where you are succeeding and doing well, against where you can improve. This should be an ongoing process whereby you evaluate your positives and negatives in order to move your business forward.
Opportunities and threats are external factors that may arise. In order to maximise opportunity you must evaluate the threats associated. SWOT analysis helps to compare and contrast both opportunities and threats in conjunction.
If after completing your market research you decide that your business needs funding, why not begin your Start Up Loan application today.