Market research is a vital part of any business strategy and most entrepreneurs wish they had more money to spend on it. But when budgets are tight, you can do some do-it-yourself research to help you plan ahead
Many small firms are already doing market research, they just don't call it that. When you consult staff, chat with customers or ask friends to give you feedback on your products, you are conducting informal market research. This kind of do-it-yourself market research can provide you with enough information to help you improve your business planning.
It doesn't have to cost much but you do need to do it thoroughly. You need to find out what you already know about your products, your competitors and the market. Look at your own data and statistics, see what category your products and services are in and establish where you fit in the market.
You also need to find out what you don't know - find the gaps. For instance, you might know who your main competitor is but not know how they have come up with a price for their product.
Your customer-facing staff can be a tremendous source of information. Good salespeople, in particular, know their customers and understand the market well. They are often best-placed to highlight trends and spot threats and opportunities. But salespeople are doers not writers, so they tend to keep this information in their head. It's worth sitting down with your staff to get them to tell you what they know.
To understand your target market, you need to know who is buying, what they are buying, when and why. Your own records should give you most of the answers. What you may not know is what prompts your customers to buy. Customers are usually happy to provide feedback, not least because they want a competitive marketplace and to get the best price and service. As a small firm, you have an advantage in that you are closer to your customers than your bigger rivals, so you can take advantage of your relationship with your customers to get valuable feedback.
Companies often look at market research when they want to launch a new product or service. Before you launch, do some internal market research - try doing some brainstorming with your staff. Next, test the idea among key customers, ideally face-to-face. If you sell via a distributor or retailer, do these preliminary end-user tests before you take your new product to the distributor to prove there's demand.
Ask someone outside of your firm to do some mystery shopping. This means they visit or call your company and pose as a customer. That way you can get a true picture of the quality of service you provide. At the same time, you can use the same person to check out rival establishments. If you run a local café, for example, use a mystery shopper to get the inside track on how your nearest competitor is doing. It is worth bearing in mind that a one-off visit will only tell you about that establishment on that day. You may need to make several visits to form an accurate judgement of how your rivals are doing.