How to Conduct Market Research

 

The best way to find your potential customers is to conduct market research before you start your business. In order to have business success, you need to know what your customer needs and why. Then you can create an effective marketing plan that positions you and your business as the perfect solution to your customer's problem.

Locate Your Ideal Customer

When you have a great business idea, you must first identify who needs your product or service. Ask yourself if your potential customers are in the same age group, the same profession or located in the same or similar geographical areas. Next, you will need to find out the size of the potential market for your business. If your service or product is not totally new, you may already have competitors who have captured a share of the market. Initially, you cannot expect to replace all of your competitors, even if you have a better product. However, you can identify and target the unserved or underserved segment of your potential customer base.

Preliminary Market Research

Start your market research at government agencies like the Census Bureau to find customers by age and geography. This allows you to pinpoint where your customers live. Census Bureau data also lets you find out your potential customer's educational level, household size and makeup and employment status.

The next step in your market research is to study trends that give you clues about your customer's problems and needs. One way to do this is to study consumer magazines relevant to your business. Read the headlines and study feature article topics to detect trends. Open a few magazines in the library or the grocery store and check the advertisements. Paying advertisers provide good indications about what the people who buy magazines are buying.

Industry Market Research Sources

Read trade magazines for your industry to identify important trends, and find out how other businesses are reaching their customers. Contact your industry associations and your local Chamber of Commerce. Get advice about your market and its potential for growth in the near future.

Review data on business activity by state, city or zip code in the Census Bureau's County Business Patterns. Analyze monthly and annual sales statistics for manufacturers, retail and service industries in the Economic Census that the Census Bureau conducts every 5 years. Use this information to spot potential problems and opportunities.

Surveys and Focus Groups

Once you have identified some of your potential customers, create a questionnaire to get more information about your customer's current problems, spending habits and personal preferences. You can conduct in-person surveys in shopping malls or recreational areas, or pay college students to conduct them for you. Surveys will help you find out if you have the right product or if your business idea needs some tweaking. If your budget permits, you can a conduct 1 or 2 focus group sessions with a small group of your questionnaire respondents to demonstrate your product or service, observe their reactions and get in-depth feedback.

Analyze Your Data

Your market research should help you develop an effective marketing plan. Use the data that you collect to assess the potential market for your service or product and identify your competitors. Then develop a marketing strategy that puts your business in the best position for success.

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