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Why Market Research Is Important

If you’re starting a business, expanding into a new field or been trading for an extended period, effective research is strongly recommended by Paul Clapham Why Market Research Is Important

A lot of businesses are set up without the benefit of any research being done. An even higher proportion never revisit their research.

If someone asked you to invest in a business and they didn’t have any recent research to demonstrate why it’s such a good idea, would you write a cheque? I wouldn’t and I would expect bank managers to act the same.

Dated information

In the same way, if you’re still reliant on research you did 10 or 15 years ago, you’re working with dated information. Okay, running the business for that period of time means you’ll have much of the relevant information, but not in an organised fashion.

So for anyone starting a business, expanding into a new field or who has been trading for an extended period, I strongly recommend you do your research. Research could tell you your idea needs a couple of small tweaks to make it really brilliant or that customers will pay far more than you thought for your expertise. It’s worth every hour you spend on it.

Research always boils down to someone asking questions to strangers. For the small business, that usually means you, personally, asking, which is why a lot of businesses avoid it - it’s embarrassing. But it’s still vitally important.

What’s more, doing it properly and professionally can open some doors for you in the process. You should, however, keep research and selling separate.

Desk research to start with

A good place to start is at a business library, perhaps attached to a college or university.

Here you should find a collection of recent Mintel reports covering a vast array of subjects.

If your business sector has been covered, it will tell you basic national research information such as age and sex of customers, social class, income, purchasing patterns, newspapers read, regional variations and so on.

You may already know most of this, but it’s useful to have it confirmed and you’ll probably learn something new. Most businesses operate in a sector that has a trade association. You may already be a member of one or more. These guys are in the information business.

Okay, you may have to become a member to take advantage, but that could potentially answer the vast bulk of your research needs. In any case, they’re very helpful and will usually feed you information whether you’re a member or not.

Next contact specialist magazines. The advertising department of a consumer magazine will have research available telling you about their readers, whom they will know very well.

Trade magazines often have access to a similar package, but in any case will be keen to help you - you are their new customer. Editors of trade magazines can also help put you in touch with existing businesses in your chosen field.

If you’re trading area will be, for example, Kent, an established business trading in Oxfordshire will usually be happy to give you tips and information. A non-competitive local business - say a retailer selling a totally different product range - will happily share his hard won local knowledge.

The small business community is mutually supportive, so buy into its experience with pub lunches for a couple of people.

Shoe leather research

Thus armed, you’re ready for the hard graft. From this initial information, you’ll know the broad categories your customers fall into and be able to define where they live in your area. Get yourself a clipboard, dress smartly and go and ask them some questions.

What do you want to know? Clearly, this will vary from business to business, but here are some questions you might try:

  • Do they buy product/service x?
  • How often?
  • Where do they normally buy?
  • How many in their family?
  • What age group do they fall into?
  • How important is a local supplier?
  • How important is price?
  • Do they like promotions, eg free draws?
  • Which supermarket do they usually shop at?
  • When do they normally buy product x?
  • What do they expect to pay?
  • Do they prefer famous brands?

You can add a similar number directly relevant to your business.

An important point to make is you’re trying to find out what customers want, not shoehorning them in to fit your plans.

Start by telling them your name, give them a business card, say you’re planning to set up a business locally and your bank’s business adviser has strongly recommended you do some customer research.

Would they mind answering questions for a few minutes? Some will still refuse, but most will be happy to help and one or two might say: “Call me the minute you start.”

This good, old fashioned shoe leather route might not work. If your market is very specific - say young, single males aged 18-30 - knocking doors is an inefficient way to find them.

Try contacting local sports clubs. On training night, rugby players will happily spend five minutes ticking boxes on a short form if you offer them some beer from the jug you’ve bought in exchange.

Researching businesses

Those who are selling business-tobusiness rather than to the general public have more of a problem with access although, depending on who you need to reach, the telephone can work well.

Again, start your pitch with the statement that you’re planning to go into the xyz business and are doing preliminary market research. Would the managing director, finance director, sales director or whoever is most appropriate have five minutes to spare?

This might take a lot of calls to reach a reasonable number of the right people - senior managers actually are busy. But anyone who has been through the start-up process themselves will be sympathetic to what you’re trying to do and impressed by your professionalism.

The internet can offer a simple route here. Emailing several hundred potential respondents is easy and cheap. The problem, of course, is that there’s no requirement for them to respond. It’s most certainly worth trying outside your local telephone area, however.

If your business audience is general - say you’re going into office cleaning - you could achieve the result by contacting local business associations and asking to research their members at the next meeting.

Again, a few bottles of wine spread around the members would encourage them to participate. They could also turn into actual customers. Read more like this

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