When you run your own business, it’s easy to get caught up in your day-to-day and put off development tasks like market research. Many small business owners consider it too expensive, time-consuming or simply unnecessary for all but large corporations.
But getting to know your customers is vital both for this week’s sales figures and for long-term success - no matter how big or small your business. Conducting market research is an effective and surprisingly low-cost way to boost commercial growth and gain the edge over your competition.
The phrase ‘market research’ might stir memories of repetitive questionnaires or being stopped in the street. But alongside traditional methods like focus groups and in-person interviews, there are lots of free tools available now to help you to get to know your customers - from online surveys to social media. These new, digital options are seeing small businesses harness the power of market research at a fraction of the cost.
Effective market research can bring a number of invaluable benefits to a business, such as:
1. Evaluate your business idea
We’ve all heard the stories: an entrepreneur commits 100% of their time and money to a new business idea, only for it to be a commercial flop. Conducting preliminary market research before you launch a business or product is an effective, low-cost way to minimise your risk and test market response.
Here are a few questions your research should answer:
Business owners often answer these questions themselves. But it’s almost impossible to remain objective when you’re invested in a project. Market research provides an invaluable, outside perspective to help you evaluate your idea before you commit.
2. Secure financial investment
You’re convinced your business will be a success. But if you’re going for outside investment, you’ll need objective data to prove it’s more than a nice idea. Remember, investors might not be experts in your specific niche or market so it’s important to give a clear picture of where and why you fit in. Don’t leave them guessing!
A combination of primary and secondary data will help you write a robust business plan and demonstrate demand for your product to prove your business is viable.
Once you’ve prepared your pitch, here’s how to make an impact with your presentation.
3. Increase return on your marketing spend
Marketing costs can be a drain on any company. But getting results from your spend is even more important when you’re a small business. You can increase your success rate by basing your strategy in research and not in guesswork about your market.
Building a picture of your target customer will help you hone your marketing message, so it resonates with the right people. Get out there and talk to your customers in-person, survey them or engage with them on social media. Then use your findings to create a persona that represents your ideal customer. Depending on your product or service, you could include their:
When you know your customer - their struggles, ambitions, who they are and where they want to be - it’s much easier to engage them with your marketing efforts. For example, a meal delivery service using “Tasty Dinners Delivered!” will hit home with a busy, working parent but “Meal Prep Done For You!” would be more effective for targeting a young professional with fitness goals. It will also help you decide where to advertise for maximum impact - does your audience spend time on Instagram or are they more likely to read ads in the local paper?
4. Develop market-led innovations
Whether you’re a new start-up or an established business, innovation is key to consistent commercial growth. With the rise of the consumer-led economy, innovations founded in consumer-need are more likely to succeed. And it’s not just about having the right product, it’s about delivering it at the right time. Here’s an example:
In 1993, Apple launched its first ‘personal digital device’ or PDA. The Newton was a handheld device and an early predecessor of the iPhone and iPad. But it had a brief commercial lifespan and was cancelled in 1998. Today, the Newton remains one of Apple’s greatest financial failures. Aside from a host of performance problems and a hefty $700-1000 price tag, Apple introduced the Newton to a market that simply wasn’t ready for it a product of its kind. At the time, although competition was scarce, so was consumer demand.
Far from creating a new market, Apple inadvertently paved the way for Palm Computing to successfully dominate the market with their smaller, cheaper and more user-friendly PDA, the ‘Palm Pilot, in 1995. Where Apple failed to carry out or apply proper market research, Palm Computing used it to identify a gap in the market and offer consumers what they really needed.
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5. Get your prices right
Every entrepreneur struggles with pricing at some point in their business. Depending on your industry, competitors might not publish their prices, making it tricky to work out the ‘going rate’. Underpricing can leave you out of pocket or overworked, and being too expensive can price you out of the market. Research will help you find that sweet-spot or test the waters before a pricing change. Here are two ways you can use market research to help you set your prices:
Look out for events organised by your local Chamber of Commerce or track down your competitors at industry expos and tradeshows.
Ready to secure the edge over your competition? Whether you’re a entrepreneur with a new business idea or a growing company looking to future-proof commercial growth, market research can provide the guidance you need at any stage of your business.
Gazprom Energy is a leading and award-winning business energy supplier, helping thousands of small businesses manage their gas and electricity contracts. To find out more about what we can offer your business, visit the homepage or call us today on 0161 837 3395.
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