Market research is essential to constructing a viable business; before you open your doors, be they physical or virtual, it’s important to understand what your potential consumers want. The research that can be done is varied and complex, so consider this a succinct first step to understanding how good research can give a business a competitive edge. The first thing to remember is the four Ps of marketing. They are:
Good market research must provide data about what kinds of products sell to your potential consumers, the price point they are willing to pay for comparable goods or services, how those consumers generally go about purchasing the product or service, and the best way of reaching your particular market segment. As the owner of the business, it’s quite likely you have experience with the segments you want to target; a cookware producer, for example, is unlikely to target teens, whereas a young adult novel publisher won’t be trying to distribute to octogenarians. You can determine the ways your potential customers buy through two forms of market research: primary and secondary.
Primary research is conducted by you, or by a third-party you have hired to conduct the research. For a small business with little capital, hiring a third-party firm can be cost-prohibitive, so it may be best to handle through your own resources. Primary market research at this level is typically done through surveys; these can be done through mail, by phone, or online. Oftentimes, web or e-mail is the best route for a business; such surveying is quite cost-effective, and you’re unlikely to catch someone at “a bad time” as they’re already surfing the web; this avoids some of the hassles of a phone survey. Online surveys are quite customizable, and you can limit responses by age, region, gender and more. The Business Development Bank of Canada has a list of survey providers for online market research; some are even free, to help you keep costs low.
Secondary market research is done with resources already available; studies, censuses, and other publically available information can enter into your research to give you a more accurate picture of the market. This type of research can be particularly effective for e-business that seeks to sell internationally; survey data available to you may be inadequate for large swaths of your potential demographics, so reading up on market trends in every area you plan on selling can allow you to discover new arenas for your company.
The key to market research, like with anything when starting a new business, is to leverage existing resources. You likely know other players in your area of expertise; talk with them, evaluate how they do business and compare their market trends to your projections. Sometimes, it can be difficult to look at trends, project expected profits versus expected losses, and figure out what your net growth will be each year; this can become especially cumbersome when evaluating sales and other taxes. Don’t hesitate to speak with Compass Accounting to better understand what your margin will be.