Best Ways to Do Market Research for Your Business Plan

Best Ways to Do Market Research for Your Business Plan

One of the main advantages that small businesses hold over their big brothers is the ability to research their target market with laser focus. They can dedicate more resources to a smaller segmented, focused group because their resources are not being spread across a multitude of different markets. Focused market research allows you to understand your target market. Their behaviour and how their buying decisions are influenced by societal or political factors. Here are two important facts that are absolutely paramount to being successful:

Successful companies are 242% more likely to conduct market research.

Companies that document their marketing strategy are 538% more likely to be successful.

What we learn from those facts is that top businesses conduct and document their marketing strategy.

My point is that market research is an essential part of a sound business plan. The two main forms of research are primary and secondary. Primary is gathered from your own records such as sales and current customer feedback. Secondary research comes from sources outside of your company – blogs, research studies, and competitors.

Answer the Right Questions

A sound business plan can include any combination of those two types of research as long as it answers the following questions.

Who is your ideal customer? This is developed into a profile that’s used alongside your marketing strategy. Data includes age, occupation, education level, skillset, and lifestyle. The goal is to create the profile for a real person.

What type of products does your ideal customer buy? You will need to describe the habits that your ideal customer has related to your products. Those habits influence what they buy.

Why do they buy? To answer this question, you will have to get into the head of your ideal buyer. This will depend on the industry. For example, cookware buyers tend to gravitate towards either the most effective non-stick pans, or packages that offer the most pans for a low cost. Athletes buy products based on performance rather than price.

What will make them buy your products? Once you have answered all of the questions above, now you can look closely at marketing itself. As a small business, you will need to market to your strengths. You’re probably not going to be able to offer the lowest prices, so you will need to find something that sets you apart from the competition.

Effective Market Research for Your Business Plan

Market research requires a significant amount of resources. Industry leaders tend to waste a lot of money on research that they ultimately decide is unneeded, but small businesses can’t afford to do that. You want to make sure that you’re researching the right thing. In most cases, primary research is going to be your best bet. You can create small surveys for customers to take part in after they make a purchase or even have some telephone interviews with clients.

Asking your social media following questions is another invaluable way to find out their likes and dislikes. Google Analytics also allows you to sort out information pertaining to your web visitors.

Creating comparisons is another great option for small businesses. Consider comparing your business to:

  • Businesses of relatively the same size
  • Businesses in the same geographic location
  • Businesses that have a similar structure

Here’s a quick step-by-step look at market research:

  1. Determine what questions to ask your target market.
  2. Prioritise those questions.
  3. Review all research methods and determine the most cost-effective solution.
  4. Compare the cost of performing the research in-house with outsourcing. Sometimes, it’s cheaper to outsource.

The bottom line is that the best business plans include a well-documented market research strategy.