How to Conduct Market Research

If you are planning to start a small business, particularly if you are starting your business from scratch, you are going to need to know how to conduct market research.

Once that you have developed a business model, one of the critical steps in evaluating the potential of that model and planning for your business is doing the market research.

Never done it before?

Not everyone who wants to start a small business has a research and analysis background and quite a few get cold shivers if you try to talk stats with them. So these sections are the ones that are most likely to be handled badly or skipped all together.

But quite frankly, if you decide to cut the research and analysis from the process because it is too hard or you don't know how to do it, you might as well not bother starting your business at all!

So could you use some help?

On this page you will find information on how to conduct market research on your small business idea.

Work Out What Information You Need Before You Start

Market research is no different from any other research project. To be successful, your research project needs a clear scope and that includes a problem statement.

What question are you looking for an answer to?

In the case of a new product or a new business, the question or questions are generally:

• Who will buy the product,
• Why will they buy it, and
• How much are they prepared to pay?

Before you start knocking on doors and showing people your product, take some time to really think about what it is that you want to ask of the market and design your research project accordingly.

Determine Where the Information Is

Where are you going to find the answer to your question? Does it reside within the statistical data related to your industry that is collected by government agencies or research organizations, or does it reside in the hearts and minds of your target customers?

Perhaps it is a combination of both.

The information you are looking for might be found in libraries, from your competitors, in newspapers or journals, within a commercial database, or from your prospective customers. Unless you have a reasonable idea to where to look for your data, you are highly unlikely to find it!

Decide How You Will Process the Information

No matter how clever your research design is, data very rarely have any discernible meaning until it has actually been analyzed.

Before you can decide how to ask the question, you need to work out what you intend to do with it once you have it. Do you want to statistical analysis? Then you are going to have to collect quantitative data. Or are you going to use a form of content analysis? In that case, you might like to use a questionnaire or a survey that asks open ended questions (qualitative data).

Implement Your Market Research Plan

Once you have completed your plan for your market research project it is time to implement it. You can either do the research yourself or you can hire a firm that specializes in providing market research services for small business. Paying someone else to do the research could be expensive, but you really need to balance the cost against your ability to do the research.

Do you have experience conducting research? Do you have the time needed to do the research? If not, consider paying someone else to do it!

Secondary Information Sources for Market Research

If you do not feel confident about undertaking a market research project yourself, one of your options is to use secondary data and analysis. There are several very well known organizations who specialize in undertaking this kind of industry or market research to be packaged into reports designed for new entrants into the market.

For an Australian example you might like to try the Business Startup Guides produced by MAUS.

If you do decide to buy an industry research report from one of these companies, you might the report fairly useful providing your new business is not 'too different' from the norm in the industry.

If you have invented a completely new product, or you are using a revolutionary system or technology to deliver your products or services you might find that this type of report is a little too generic and has little relevance for your business model.