20th January 2020
5 Tips for Conducting Effective Market Research
If you’re preparing a business plan, you’ll need to conduct some market research. Exactly what this involves will depend on your business, but five things you may need to consider include:
- The balance of primary and secondary research required
- Exactly who your target customers will be and what they want
- Potential competitors and relevant market conditions
- Whether your business has a unique selling point
- How you will write up and present your findings
Read on for a closer look at what these involve below.
1. Primary vs. Secondary Market Research
One factor is how you’re going to conduct your research. There are many methods available, including surveys and focus groups. But the big divide is between primary and secondary research:
- Primary research involves gathering your own data (e.g., speaking directly to customers). This ensures the information is relevant to your business plan. However, primary research can be time consuming and expensive.
- Secondary research involves using existing data. This is often data from government agencies and research companies. But it can also involve analyzing internal data from an existing business venture.
Generally, primary research is most important for learning about customers, while secondary research is a good way to find out about competing companies and market conditions.
2. Know Your Audience
The most important thing to research for a business plan is your target audience. Key questions you may need to answer include:
- Who will your customers be (age, education, occupation, income, etc.)?
- What are their current buying habits in relation to your product/service?
- What motivates purchase decisions among your target customers?
If you can answer these, you can focus your business plan accordingly.
3. Know the Market
The other major component of market research is the market itself. This includes competitors, who may be targeting the same customers. But it should also include wider market conditions.
On the first point, focus on companies that:
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- Are a similar size and serving the same region (global or local)
- Have a similar ownership model or structure
- Are newer and have emerged under similar conditions to your own
The wider market conditions, meanwhile, are important for planning. For example, you need to be aware of market trends and economic forecasts that could affect your business over the coming months.
4. Find a Unique Selling Point
The ultimate goal of market research is to give customers a reason to do business with your company. To work out your unique selling point:
- List the ways in which your business meets your customers’ needs.
- Find the thing that makes your business distinct from your competitors.
- Brainstorm ways to communicate this advantage clearly and concisely.
The key is to fulfill a need your customers can’t get elsewhere. This may be by offering a new product or service that nobody else has offered before. But it could simply be that you’re offering a new twist on an existing business model, such as providing a more personalized service.
5. Document Your Findings
How you present your findings will depend on the situation. For instance, if you’re pitching your idea to funders, you may need a polished presentation. But if you’re simply conducting internal research, you may just need to present the key details clearly and concisely for your colleagues.
In any case, documenting your market research will often involve:
- Summarizing the most important information from your research
- Writing up a buyer persona for your ideal target customer
- Using graphs and other visual methods to present statistical data
- Creating an action plan for how to follow up on your research
And don’t forget to have any documentation you create proofread! This will ensure your research is error free, maximizing your chances of success.
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