How to do market research: an affordable guide for small businesses
4-minute read
Wondering how to get into the mind of your customers and tap into what they need – or better yet, solve a problem they didn’t know they had? Understanding what your customers want is at the heart of creating a successful business strategy.
That’s where market research comes in.
Why do businesses use market research?
Whether you’re just starting out or you’re developing a new product or service for an existing business, market research is an essential part of how you plan, market, and grow.
Read this guide to find out why market research is important and explore some affordable market research methods that small businesses can use to learn more about their customers and potential customers.
But first, it’s important to first understand what market research actually is.
Market research business definition
Market research is when you find out what your target audience and markets are looking for in a product or service. It’s a way of gathering data and information about what customers want, need, and buy.
Traditional market research examples include surveys, questionnaires, customer interviews and focus groups. While, increasingly, Big Data and artificial intelligence (AI) means companies can dig deep into the underlying behaviour and motivations of consumers through tracking and other clues we leave while browsing websites. There are plenty of reputable big data companies around that can help you examine large amounts of data on customer behaviours and patterns.
Why is market research important?
If your business is already up and running, chances are you’ve done market research as part of your business plan, and you might even have done a SWOT analysis.
But this research isn’t something you should just do once – it’s important to continue checking in on new trends and market challenges to make sure your business stays relevant.
Benefits of market research:
- test if a product or service is viable
- understand pain points and desires for your target audience
- identify a gap in the market<br />
- keep up to date with market trends, challenges, and how tastes are changing
- make sure your business is positioned in the right way when it comes to price, quality, cost and convenience
- learn from your competitors and get ahead
Whether you’re trying to find a new product to sell online or exploring different business ideas and trends, market research can help you understand whether consumers will be interested in your idea.
It'll also help you make sure you'll be able to achieve a good ROI (return on investment) as you'll be aware of what the competition is doing and price accordingly.
How to do market research for small businesses
Traditional market research such as interviews and focus groups can be costly and time-consuming. So this is probably the last thing on your mind when you also need to keep on top of tax and Self Assessment, and manage your budget and cash flow.
The good news is there are plenty of affordable research methods that you can do even with limited time and a smaller customer base. Here’s our top six types of market research.
1. Talk to your customers
Large market research companies might be able to reach thousands of people, but it’s still worth talking to your customers to hear their feedback and opinions. Hearing from people who are representative of your target audience can help you to know if you’re getting it right – whatever the size of your business.
Having a mailing list is one way to keep in touch with your customers and you could use this channel to send out a survey using a free platform like SurveyMonkey.
Surveys don’t have to be extensive either – there are various tools and plug-ins that allow you to set up exit surveys to appear automatically when someone buys something or leaves your website.
2. Social media listening
With an estimated 3.6 billion social media users worldwide in 2020, you’re bound to learn something about your customers by heading to pages and groups across different social networks.
Digging into existing conversations and engaging with discussions on Facebook groups, for example, can help you understand different opinions and issues related to your industry.
Meanwhile Reddit users can find a wealth of content and in-depth discussions if you know where to look. There are different communities, called subreddits, on pretty much any topic you can think of.
For example, if you run a craft business you could check out these subreddits:
- /r/craftbusiness
- /r/smallbusiness
- /r/entrepreneur
- /r/craftfairs
3. Analyse search trends
Answer the Public and Google Trends are excellent tools for getting to know what people are searching for on the internet and analysing location trends.
While with BuzzSumo you can find top performing content on the web related to your industry.
If you’re researching side hustles like candle making, for example, then you could take a look at trending products and reviews on websites like Etsy to see if you can solve a problem with your idea.
4. Competitor analysis
Stay on top of what your competitors are doing by regularly reviewing their marketing materials. While you won’t necessarily be able to know if their market research is any better than yours, it’s still useful to compare strategies.
Competitor analysis might involve:
- reviewing their website and social channels
- signing up for their marketing list so you can see how they talk to customers
- collecting any flyers and marketing materials
- reading customer reviews
- being a mystery shopper (this is when you anonymously visit a business as a customer to experience what they do)
This can help you compare things like price and visual merchandising techniques, for example.
5. Track website data
You’ve probably got a business website, which is a great way to access first-hand data on your customers.
Platforms like Squarespace and WordPress have analytics built in, or you can set up Google Analytics for a monthly fee. Even just tracking page views can help you understand the most popular pages on your site and see how customers engage with other pages.
You don’t need advanced knowledge of analytics, but if you want to brush up on your skills then you can check out Google Analytics training courses for free.
6. Product testing
Perhaps you’ve got a bricks and mortar shop or a food truck business. This could be an amazing opportunity to test out a new product and get opinions from your customers in person.
Have you considered giving away free samples while encouraging customers to complete a short online feedback survey with a QR code? Or why not run a competition on Instagram and get followers to vote on the next cake you’re going to introduce in your bakery?
Continue to test and learn
As your business grows you’ll probably want to explore some of the more traditional methods like focus groups and customer interviews so you can get deeper into the mind of your consumers. But until then, try out a few of the suggestions above and let us know how you get on.
Useful guides foer small business owners
- What type of business insurance do I need?<br /><br />
Is there anything else you want to know about how to carry out market research? Let us know in the comments.
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Written by
Catriona Smith
Catriona Smith is a content and marketing professional with 12 years’ experience across the financial services, higher education, and insurance sectors. She’s also a trained NCTJ Gold Standard journalist. As a Senior Copywriter at Simply Business, Catriona has in-depth knowledge of small business concerns and specialises in tax, marketing, and business operations. Catriona lives in the seaside city of Brighton where she’s also a freelance yoga teacher.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
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