In my work as a business coach, I am often amazed as to how little market research business owners do.
Yet it is one thing that is actually easy to do and is a must do if you want to have a successful business!
I will get text book on you today, by sharing the definition of Market Research and of course the various types of research you can do.
However, I will share some tips, stories and tools to help you master the art of doing marketing research!
Let’s dive in!
Market research is the collection and analysis of information regarding consumers (potential customers), competitors (same business type), and the effectiveness of marketing programs (i.e. direct mail marketing, newsletters, signage, etc.). It’s an act of action before leaping into a business and an educated move that determines the feasibility of a new business.
Through market research small businesses and corporations can test interest in new services and products, improve customer service and develop competitive strategies. Both startup businesses and established businesses need to define, evaluate, and plan a course to pursue their market. The end result of market research is creating a business that is more responsive to customers’ needs and this, in turn, increases profits.
I love the ideas that author and business expert Chet Holmes talks about in his book, The Ultimate Sales Machine. Research done well can actually place your company in a much better position compared to your competitors.
Instead of using the hard sell, use facts, figures and data to educate your client. It’s a much different approach to take in your overall marketing messaging initiatives.
Here is a case in point that Holmes mentions in his book and material. When he was contracted to help grow the business and sales of a leading consumer calendar manufacturer research was done that helped to propel sales for that calendar company into the stratosphere. What Chet Holmes’ marketing company uncovered was simply brilliant! They tested sales at Wal-Mart versus a leading bookstore chain. They found that sales for calendars at the bookstore chain were far greater than sales at Wal-Mart. Why?
Well, the calendars were positioned at the checkout at the bookstore and consumer studies show that calendar sales are an impulse buy and more of a “point of purchase” decision. At Wal-Mart customers had to venture through the store to the book section to find the calendars. Walking through a big Wal-Mart store is too much work for the average shopper to do resulting in low calendar sales.
So they asked Wal-Mart if they could re-position the calendars at the front of the store by the checkout. Can you imagine what happened to the bottom line? Sales took off big time. A little bit of research goes a long way toward small business success.
Here is one last tidbit. Wal-Mart outsells a lot of bookstores on books. They carry fewer titles obviously, but they outsell on quantity. That’s because Wal-Mart attracts way more customer traffic than many bookstores and when their books sell, they sell well.
Research is the key to small business success. Not only to help improve sales when you change where you place your products (such as the calendars) in your store, but as your business develops market research needs to be an ongoing part of your business. Anyone who is familiar with writing a business plan knows how unpredictable the market can be.
Three essential areas of market research to consider include:
- Consumer Research
- Information from and about customers
- Feedback on the likes and dislikes of customers
- Which services or products consumers like best
- Competition Research
- What works and what hasn’t worked for your competition
- Ideas you can you borrow from the competition, some call this R and D…no not research and development, but Robbing and Duplicating. Whatever you call it…it’s wise to model yourself after successful businesses in your field.
- Provides insight into how to increase your market
- Environment Research
- Political and environmental forces
All of this information shapes the way people do business. Keeping it close on hand allows you to stay abreast of and respond to particular trends or events that influence your small business.
Secondary research sources are easily obtainable. This is information that’s been collected by someone else. Google, the newspaper, magazine reports, government data and trade publications are all good sources of secondary research. Don’t forget directories like Scott’s Directories to help you connect to your best clients too. In case you are not familiar with Scott’s Directories, they are business directories that list every business within a specific geographic area. They break down the listings by industry and area, and they list contact names, business size and revenues too. It’s a Canadian company and here is the website link: http://www.scottsinfo.com/.
Most forms of secondary research information are accessible at the library or by researching the Internet. Your local Chamber of Commerce can help too in providing data and secondary research.
While all that is helpful, it’s actually primary sources you’re really after. Firsthand information obtained from your customer or the competition is current, thereby making it the most valuable source for market research.
Two of the biggest showstoppers that small business owners have in compiling research are time and money. If you really don’t have the time, find it. Schedule Monday mornings as research days. I personally have never liked selling or calling on clients on Monday mornings and my bet is you don’t either. So visit your library and park yourself into a comfy seat and stat to develop a better understanding of your client base, the local market and even what kinds of new clients to call on!
Stephen Covey wrote in his book (The 7 Habits of Highly Effective People) about the notion of taking time out to sharpen the saw. This where you stop the “busy-ness” and you take time to read, exercise, meditate, learn… to sharpen the saw so you have the energy and fuel to be more effective at managing work or your business. To me doing marketing research is an act of sharpening that saw.
It enables you to be more effective with your time, money and energy, by understanding your customer’s needs better, by knowing the market place and by knowing what direction to go and where to invest! Be sure you schedule time to research once a week.
Don’t forget to hire a student. College and University students are thrilled to get a chance to work in the real world before graduating. It pads the resume and they do great work. Talk to the Dean of Business and ask for some help in research…especially in obtaining primary market data.
We’ve established a need to do research and we’ve tried to ensure you’ve got the funding equation sorted out, but there are still more keys to success that you should use.
Check out your Scott’s Directory at the Library, this directory is local to your area (where you live) and had information on most businesses and is classified by industry type, geography, plus it lists the key people you need to connect with by name and role within the company!
Get industry data and news by clicking on Google News and then type in your industry, what you will find are new stories about your industry, that you can use to highlight the success stories of your field to your customers!
I did this with a client of mine in the home staging business. We were finding her cold calls were just not connecting! So, we went online to Google news and found a story about home stager’s that said, “Homes that get staged sell for 9% more on the re-sale value of the house and they sell a lot faster”!
Holy moly! We hit the holy grail!
We used that study word for word in her cold calls and guess what? These are the kinds of results that real estate agents wanted to hear.
They didn’t care about how long she’s been in business or how fabulous her work was, they wanted to know that through her work, they can make more money and faster!
Research pays dividends!
Study your local government’s ward profiles, where you get the lowdown on every ward in your city, and learn about the ethnicity, income, education, language, where they live (in a house or apartment) and the average age. If you are opening a kids clothing store, knowing what area has the most amount of kids in it will be vital to your success!
I could go on about tools and resources, but make the trip to the library, or book time at your fave cafe once a week and take the time to research, it will pay off big time for your success!