When entrepreneurs are in the beginning stages of planning their business, they need to determine their niche market and their target audience. Before investing a huge amount of time, it is important to discover critical information such as why a consumer will purchase your product over a competitor. To obtain this information entrepreneurs should use different types of market research. Primary market research is gathered firsthand from primary sources for specific reasons which provide insightful information your company can use to make smart business decisions. Secondary market research is information pulled from pre-existing data. This method is faster, but doesn’t offer the control of primary research. Entrepreneurs should use a variety of methods in order to get the most value of out of the information.
Primary Marketing Research
1. Focus Groups
Your business has to first establish the target audience for the research and then choose participants who represent a sampling of the market. The facilitators guide participants through discussions that are crafted to get honest, natural opinions. Properly conducted groups can provide qualitative primary source data that can help improve products, enhance services and guide future initiatives. Since these groups are interactive they often generate greater insight than other research options. Plus, focus groups can be conducted in person or through video conferencing online.
Quantitative findings from focus groups can be tested for accuracy with a larger sample size through surveys. Surveys are typically conducted online, over the phone or in person. To craft a well-developed business marketing strategies and initiatives, you need to know if your ideas are valid across a large customer base. Surveys are the most effective way to accomplish this.
3. User Groups
Different from a focus group, user groups typically gather experience data to provide insights for web designs. User groups tend to be individuals who share similar goals, interests and concerns instead of a diverse demographic. User groups meet regularly to discuss their experience with certain products while researchers take notes.
Secondary Marketing Research
4. Competitor Benchmarks
The most widely used source of secondary market research is competitor benchmarks which measures specific growth metrics and compares it with other businesses in the industry. Your business can purchase financial benchmarking data and can compare operating costs, sales and profit margins. Competitor benchmarks are useful to identify ways to reduce costs, increase efficiency and improve allocation of operational resources.
5. Government Statistics
Legal publications, government created data sources and statistics published by the state can provide great information. U.S. census provide national demographic data and filed patents can act as a preview of industry trends and future innovations.
It is important to be open-minded when conducting market research because not all of the feedback is positive. After conducting focus groups and surveys, you may find customers are are looking for a slightly different product or service. By studying published information before you start your business, you know that your product will be properly priced and customers are searching for it. This will make your company more competitive in the market.