2 Market research
Watch this video from Startup Loans in which their ambassadors explain the importance of market research for a small business. Although the content of this video is largely talking about product-based businesses, there are many useful messages that are equally applicable to a service provider, such as establishing that people will want what you have to offer before you start.
Take a minute to reflect on Video 2. What were the most useful messages for you?
So, what is market research?
Entrepreneur Europe (no date) defines market research as:
The process of gathering, analyzing and interpreting information about a market, about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service.
Market research involves collecting two types of data:
- Primary data – information you gather yourself, e.g. through talking to potential clients, investigating competitors, and through using questionnaires, surveys and focus groups.
- Secondary data – information that has already been collated by others, e.g. government statistics and newspaper reports.
Your approach will depend on the type of project you are pursuing. For example, if you are planning an arts event, you might not feel that surveys and questionnaires are appropriate, but you will need to know whether your offer has an audience of some kind. Elias (2021) suggests a variety of possible low-cost ways to go about this, including:
Quora – a social media platform based on questions and answers. Users submit and answer questions and, through selective tagging when you set up your profile, you can monitor the burning questions your potential audiences are asking and see which solutions they think are the most valuable.
Amazon book reviews – reading the reviews of some popular books in your field can often help you understand what people feel they are benefiting from. Negative reviews may also show you unmet needs that you could take advantage of.
Facebook groups – type your industry or specialism into Facebook search to find relevant groups and read through the existing conversations and questions asked. Eventually you could participate in the group, asking your own questions, or even set up your own group, including a link to your own survey.
Analytics – if you have your own website you can use services such as Google Analytics to look at how people engage with it. Even if you don’t have a website, Google Trends will help you to see what is resonating with people in your chosen sub-region or even city. Many social media platforms such as Twitter and Facebook also have their own analytics tools.
- Google Analytics is a tool that tracks and reports website traffic, giving you data on session duration, pages visited per session, etc.
- Google Trends is a website that analyses top Google Search queries across various regions and languages, using graphs to compare the search volume of different queries over time.
Activity 2 What market research approaches have I experienced?
Think about your own experience of responding to market research, for example on social media, via email, at your front door, in the street, on your phone or in focus groups. What persuaded you to participate? Was it your interest in the product, the persuasiveness of the person conducting the research, the brevity of the questionnaire or the potential reward for taking part? Or, did you decline to contribute? If so, why?
In the box below reflect on what you can learn from that experience and what you might do differently if you were trying to find out someone’s opinions about your own business idea.
It’s so important to know if there’s a market for your offer before you invest time and money in setting yourself up. Market research is an essential tool that will help you get a feel for the reception you might get and who you are competing against.
Be aware that small-scale market research with a sample group of potential customers won’t always be representative of the response from your audience (or ‘market base’) as a whole. Use it as a tool to test the waters and inform your actions, but don’t rely on it to give you the definitive picture.
During the Covid-19 pandemic, one thing that has changed for many businesses is the way audiences purchase and interact with their products and services, for example, through an increase in online sales or home-based consumption. An important aspect of your market research will be to explore whether the pandemic has permanently changed aspects of your proposed product or service delivery, or whether things are slowly returning to a more familiar model.
In the next section you’ll start to look in more detail at your own target market and target audience.