Although market research is an essential element for ensuring the success of an enterprise, many small local businesses do not have the resources to engage a professional marketing firm. However, all is not lost because it is possible to conduct your own market research on a limited budget.
Understanding the need for market research
Not many small businesses can afford the thousands of €’s required to have a professional company conduct a market research campaign for them. Nevertheless, this does not mean these businesses have to forgo the enormous benefits that accurate and effective market research can provide for the business. Success in any business is founded upon the accuracy and depth of the knowledge and information that is available to the management and collecting and analyzing such information is the key to market research.
In plain, market research is simply the art of gathering relevant data and information and being able to analyse it in a manner that will provide benefit to the business in terms of understanding the following: –
A) The ideal market place for the sale of the product or service
B) The target segment of consumers likely to purchase the product or service
C) The extent and competitiveness of existing businesses within the market where you intend to sell your product or service.
D) Other external issues that might have a positive or adverse effect upon the business and its products.
Whilst this may sound as if it requires a great deal of effort and cost, in fact all of these areas can be addressed by the business itself on a very low budget. This article focuses on examining simple market research that can be conducted by local small business enterprises.
Selecting your market place
It is possible, especially if the intention is to create a locally based business, that there will be a reasonable amount of personal knowledge available. However, in the case of a small retail/service business, ensuring that the product or service being offered fits with the present and future demographics of the area is also important. Researching for this information can be undertaken on a low cost basis by simply driving around the area, conducting research related to changes likely to impact on the local retail environment through newspapers and local authorities, and noting this information for future reference.
Why is this information necessary? The answer can be explained by reference to the following examples related to businesses that are focused on delivering property related goods and services. If you are selling lawnmowers and gardening services or outdoor hottubs, there is unlikely to be many people wanting to purchase these if property in the area you are thinking of setting up your retail shop predominantly consists of flats. Similarly, offering construction and maintenance of private garages is unlikely to be successful in an area of terraced housing where open or off street parking is the only option for homeowners. While it is true that you can use the Internet as a means of extending the geographic reach of your business, a solid local foundation for trade is always beneficial.
Consumer targeting and segmentation
The second question that needs to be asked in market research is, where are the customers who have a need for the product or service I am offering and how can I reach them? Again, when focusing on local area reach, unless you have the time and inclination to knock on every single door in your targeted location you will never get a totally accurate response to this question, and even then you would have to rely upon ever occupant being home at the time you called.
Market research in this respect is about percentages and reducing the level of waste, not eliminating it. In this respect, you can perform the same task as a market research company does at a fraction of their cost. Make up a survey that has questions that you need to find answers about from likely customers. Take it along to a local shopping area and spend a few hours asking people to take part. It is surprising how much important information can be gathered from this process. Alternatively, you could conduct the same type of research through a door to door delivery of the survey. However, this is likely to be less productive because, unless there is some incentive and the return cost is covered, the numbers of responses are likely to be low.
A way of determining where your target consumer is most likely to live is by combining common sense with the data you have collected from property types. For example, new estates are likely to be inhabited by young couples and families. Flats could be said to be home to first time buyers and the elderly. Similarly, older type housing might be the dwellings for middle-aged and elderly and, finally, detached and expensive properties will indicate a consumer group that has a reasonable level of wealth and disposable income. This information allows you to more accurately target where to focus your promotional material.
Understanding your competitors
A business needs to know who it is up against, in other words how many competitors there are and to identify their strengths and weakness when compared with your own business. The least expensive method of acquiring information about competitors is to look in local telephone or other directories. However, these do not give too much detail about the competition.
To understand how competitors operate, their success levels and how much of a threat they pose means that there is a need for more detailed information. In the case of publicly quoted companies, this information can be gained from their websites.
However, such information may not be available for smaller competitors. Nonetheless, it can be acquired through a simple process of a “mystery shopper” research approach. Businesses owners love to talk about their products and services to prospective customers. By either pretending to be a prospective customer yourself or getting someone else to fulfill this role, it is possible to gain knowledge of how local competition works, the type of service they offer and, from an analysis of this information, work out where your business can gain a competitive advantage.
Other external influence on your business
Finally, there is a need to research other external information that might be relevant to the success or failure of your enterprise. For example, if you are opening a shop and the local authority are making the area outside your premises a no-parking zone; this will affect your revenue and customers. Similarly, if you had purchased a bar just before the smoking ban in public retail places came into force, the impact of this upon business turnover needs to be calculated. External rules, regulations and other developments that is likely to affect your business need to be known and kept up to date.
A simple range of research methods for acquiring information relating to external issues is comprised of reading the local newspapers and listening or viewing local news media, making enquiries at local authority offices and websites and generally being receptive to information from local sources.
As described in this article, conducting market research on a limited budget is not difficult. The major cost with these exercises is time and commitment, not financial. If you want to improve the chances of business success, but have a limited budget, all it takes is a little dedication on your part to make it work and the rewards will be worth the effort.
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