If you haven’t tried market research services for your small business yet, there are benefits and opportunities you are missing.
Many SMEs feel that market research and analysis is for large businesses only, but start-ups and small businesses can also make the most of it. When planned and conducted systematically it is economical, practical, and insightful for SMEs in the long run.
Before diving deep into how to conduct market research on a budget and limited resources, let us look at some key benefits of market research and surveys.
Benefits of market research for small businesses
Let us understand the importance of market research and how it can help small businesses in their growth journey. It enables SMEs to:
- Evaluate market demand for a new product, service, or feature
- Understand market trends, market size, customer needs, buying behaviours, pricing patterns, competitors, marketing and advertising trends etc.
- Find new opportunities for growth, new markets/customer base for expansion, etc.
- Test a new idea to measure success/failure and understand customer reaction towards it
- Gather data to build a growth strategy for business and/or seek investor funding
There are several other advantages of conducting market analysis for start-ups. As a small business with limited resources and experience in the field, it is however recommended that you seek expert assistance to keep the process systematic and achieve your goals.
There are several reputed market research companies in India that can help you gather relevant information. It is recommended to get them involved at the earliest, and set clear expectations on goals and deliverables, to avoid uncalled for expenses.
5 step guide to how small businesses can carry out market research
Like most things in business, market research requires a strategy and plan and cannot be based entirely on your business acumen and/or intuitions. There are different types of market research that you can conduct (i.e., primary and secondary research) each with their pros and cons, and different market research methods that you can adopt to reap maximum benefits.
The why, how, and when are questions that you will have to answer (preferably along with a market research firm by your side) to minimise the investments (cost, effort, time, and resources), and maximise the returns.
Let us take a more comprehensive look at a systematic approach to market research and analysis.
1. Define your why
Start with the ‘why’ – why you should do market research?
Do you want to maximise profits and want to identify the sweet spot for pricing? Do you want to apply for a business loan and want to build a business plan for approaching investors and banks?
You will have to define the purpose of market research and analysis before you start the process. This is also the time when you should:
- Identify key stakeholders internally for the process (e.g., sales personnel often have meaningful insights on trends, buying patterns, product feedback etc.)
- Refer to existing material and data sources (e.g., sales data)
- Set a timeline for the process (e.g., 3 months) and systematically break it down to tasks/activities for specific weeks
Note: Whether you carry out research inhouse or hire professional market research services it is advisable to have a budget in mind to avoid surprises. In general, when you explain your goals to an agency, they will provide you with a breakdown of services offered and quote a price for it.
2. Determine your audience, market, and tools
You will next have to determine your audience (buyer persona), markets and tools used.
Identifying your target audience must be done thoughtfully. They will help you with data that will determine the outcome and final decision. Details like audience demographics, location, interests, buying patterns, pain points, etc. must be considered.
For instance, if you are a fitness equipment manufacturer, your audience can be B2C and B2B. For the B2C sector, it can be people aged 25-55 years, in metropolitan cities in India, middle-income households, who do not have the time to visit gyms but desire to stay healthy. They usually do online shopping and prefer to purchase via eCommerce stores. The goal of your market research can be to determine the right pricing strategy to understand how to price your equipment to increase sales, grow profits, and stay competitive.
You will also have to determine the markets you will be tapping. Start by understanding the market size, to evaluate if the market is saturated or open for new entrants.
For instance, in the previous example, since your goal is to sell online, consider which cities to sell in. Shipping charges for main cities will be lesser than tier 2 cities. In several cases, you can offer free shipping for main cities. Your pricing strategy will change based on the city (i.e., with ‘free delivery’ or ‘delivery charges extra’).
At this point, also remember to undertake competitor research for retail and online stores. This will help you understand how they price products, and gather insights on other activities like marketing spends, product range, customer reviews, social media activities, etc.
Tools and techniques used:
You will also have to determine the market research tools you will be using. As mentioned earlier, you can go with primary (first-hand research) and/or secondary (data from existing published material) research.
Primary research will help you gather more specific data based on your target audiences and markets. You can either go for a quantitative (number based, objective) or qualitative (subjective) research. Some of the options you can consider include:
- Online surveys (try using an online survey tool e.g., TCS iON Digital Survey, to create and share surveys)
- Email surveys to existing customers or external email databases
- Offline and online questionnaires
- Focus groups e.g., at a gym or health club
- Trial packs/free trial sessions
3. Outline the market research plan and execute
This is one of the key steps in doing market analysis for small businesses – planning and executing the research.
It is unlikely that you will be able to gather the desired responses in the first go and may have to repeat the exercise diligently. In certain cases, you will realise that some methods are delivering higher responses e.g., online surveys vs focus groups. In such cases, understand the impact of each method and why it was identified as a suitable tool. Focus groups though time-consuming provides in-depth details and insights that online surveys often do not provide.
Also, plan the journey, time, and medium of research. For instance, a customer is more likely to give feedback after a purchase or positive customer support service received.
The key thing to remember is that planning and execution should go hand-in-hand during the defined timelines. In that way, it will align and support the overall objective of the market research activity.
4. Analyse the data collected
Once you have collected the data, the next step is to analyse it. Consider doing it in two parts:
- Collating data: This requires collating all data from multiple sources into a single place. You may use online spreadsheets to fast track the process. Alternatively, if you have onboarded a market research firm for the process, they will help you with it. In this step, it is also important to take note of duplicate, incomplete, erroneous data, to ensure that the analysis is effective and accurate.
- Formatting data: This requires formatting raw data into content formats that can be understood by all. There are tools that can help with this, reducing errors and the need for manual efforts. What matters most, is ensuring that the research activities have helped you collect required data. If not, consider making changes in plans, tools used, and timelines, and conduct a second round.
Once you have your data ready it is required to programme it to generate meaningful reports. A market research report will provide facts, figures, charts, responses, and other key highlights to help you plan your next steps.
For instance, going back to our previous example, a research report finding may show you that your current pricing is 20% higher than what audiences are willing to pay. This will require you to rethink, re-strategize, and even plan an alternative approach for marketing and promotions e.g., position your fitness equipment brand as a premium brand for niche audiences only.
In short, the goal of conducting market research for start-ups should be to understand the pulse of the market, customer, and competitors. It will give you direction and recommendation on the next steps for success.
5. Refer to secondary research and internal data
Secondary research can be at times difficult to come by, especially for specific industries for the SME sector in India, but it is economical and will provide a high-level overview of the current scenario.
While published guides, market study reports, and online articles are a good place to start, also remember to refer to your internal resources. Sales teams, customer support teams, loyal customers can often offer valuable feedback on product/services, improvement areas, best features etc.
Moreover, internal data is collected over a period of time, usually throughout the year. This also provides data outside your research timeline, to make a more informed business decision.
Market research for beginners: Getting started
The objective of this guide was to encourage small businesses to seamlessly try market study services and reap the benefits of it.
As a small business, it is imperative to understand that market research has its benefits and there are opportunities that your business is missing out on without sufficient data.
With respect to how much does it cost to conduct market research the answer is varied. There are economical ways of getting started, with budgets as low as ₹50,000/- and there are more comprehensive plans that can go into lakhs of rupees. It will be based on your goal, timelines, market size, agency selected and other parameters.
You can also consider low-cost market research ideas such as social media polls, telephonic surveys, or online survey tools, but these will be limited and won’t provide a detailed picture of the market and opportunities available. At best, these should be carried out along with a more comprehensive market research activity, for the best results for your small business.