Before moving into any kind of venture, it is important for budding entrepreneurs to consider one pivotal activity: market research. This research will help you identify who your customers are, what they like, and how best to reach them. By utilizing this strategy early on in the process, your product or service will reach a more targeted demographic, and have chances of success in the long run.
Why is Market Research Important?
Market research helps identify WHO your target market is. Your target market is your most likely, most loyal customers. These customers are the ones who are most likely to purchase your product or service. Your market is not everyone. This assumption is a sure way to burn out and misdirect valuable resources.
A Peek Into Your Target Market
When diving deep, aim to uncover:
- Demographics: Who are they in terms of gender and age?
- Behaviors: What defines their actions and challenges?
- Habits: How do they spend their day? Their shopping rituals?
- Values: What deeply resonates with them?
Market research helps you identify if your market is large enough. It helps you determine if there are enough people, who want what you are selling -and- not enough other options from competitors or alternatives to meet their needs. This will help identify the demand for your product, and ensure assumptions are realistic. A common belief is that if you make it, they will come. This is a myth.
Market research helps you determine the feasibility of your product/service and save money on things like inventory and advertising. It also helps inform you about what pricing is appropriate. Market research may also help you secure financing, as you will have data to back up your claims.
Types of Market Research
There are two types of market research. The easiest type is secondary market research, which is information that someone else has collected and you are simply analyzing it. This includes data from the state, internet, databases, industry journeys, etc. Often this information is national data and provides a broad overview. As you look through secondary data, look for data that helps you make better decisions for your business.
Primary market research is information you collect yourself and can help confirm that national data applies to your local area or product/service. This information is more challenging to collect but can be very impactful. Primary research is collected through interviews or focus groups, surveys, observations at a competitor, traffic counts at a location, reading reviews of competitors, and talking to local resources or neighbors.
As you do primary secondary research, it’s important to…
- Be Objective
- Challenge Your Assumptions
- Cast a Wide Net
Best Practices in Conducting Research
Balance National and Local Data – Sometimes Maine can be behind national trends. It is important to make sure that the national trends you find in secondary data apply to your business and business location (where applicable).
Note Potential Biases – Note any assumptions or biases that you may have as you approach your research. Recognize if these assumptions limit your data collection in any way.
Use Credible Sources (Secondary) – The internet is full of information. Seek out credible sources and verify the information on a different source to be sure you have solid information to use when informing your decision-making.
Respect Privacy/Legality (Primary) – Build trust with your future audience by being clear about how you’ll use their information and following through with your promises. Make sure you are staying within legal boundaries
There is a lot you can learn from the research you conduct. Be sure to track your results and document your findings. Analyze this data in full – both secondary and primary – to see how it might impact your business. Look for areas where the data might be skewed. Most importantly, adapt your approach to your findings. Doing this will lead to more informed decision-making and a more successful outcome for your business.
Here at SCEC we remain committed to offering resources and guidance in this domain. For further information visit our Resources Webpage.