Essential Market Research For Your Small Business

Like it or not, competition is all around us. If you’re going to start a new business or launch a new product or service you must research the market first. You have to find out if the market wants what you’re selling or you will fail.

If your business is going to be successful you must know everything that is going on in the marketplace. You have to know who your prospects are, who your customers will be, and most importantly who your competitors are. There are many forces and factors behind how customers purchase products and services. Gaining the right knowledge goes a long way toward your success in business.

There is little room for guesswork in business today. Obtaining the correct information and knowledge that is to the point, objective, and thorough is essential to your business success. You can only gain this knowledge through research and testing.

You need to find out what problems need to be solved and if the market wants them to be solved? You need to find out what price the market will pay to have its problems solved. The answers to these questions will form the foundation for your business plan.

Good market research gives you the best return on investment you can have, but it is important to realize that it pays off in the long run, not in short run. There are two types of market research you need to be aware of. The first is quantitative which measures numbers and percentages of how much customers buy. The other is qualitative which gives you the reasons why customers buy a certain product or service.

Quantitative research reveals market share or how many people in a certain group buy or do something. Radio and TV ratings are quantitative research. Preference studies are quantitative in nature.

For example suppose you were doing a study on coffee and you found that 74 percent of the tested group preferred caffeinated coffee over decaffeinated coffee. Based on this study, if you were introducing a specialty brand of decaffeinated coffee, you would know that your market size is drastically less than the segment that prefers caffeinated coffee.
Without this knowledge you would have no idea what size your market opportunity is, whether you should be shooting at this particular target, or whether you will even hit it.

The primary component of any successful market research is gaining insight into your competition. At some point you need to develop a Unique Selling Proposition or a USP.
Your Unique Selling proposition is that distinct, appealing idea that sets your business apart from every other competitor.

Your entire marketing and operational success should be built upon your Unique Selling Proposition. Your USP can touch any part of the marketing gamut, price, service, quality, or exclusivity. You gain a unique selling advantage by offering a big, unique, and appealing promise that’s not being offered by your competitors.

How do you pick a USP for your business? You must identify which needs are going unfulfilled within your industry. Here are six examples to get you started:

1. You offer the broadest selection.

2. You offer the biggest discounts.

3. You offer the best advice and assistance.

4. You offer the highest quality products.

5. You offer the fastest service and delivery.

6. You offer the longest and most comprehensive guarantee.

Because of today’s technology it is easier to research and gain competitive intelligence about emerging competition than ever before. The Internet is a tremendous research tool. Surfing the Internet and looking at a competitor’s Web site is an easy thing to do. When you buy something from a competitor’s Web site it not only gives you valuable information but it also allows you to remain anonymous, something that purchasing offline doesn’t.

Here are some other ways to conduct competitive research online:

Participate or visit newsgroups and information forum.

Conduct surveys.

Extract and explore databases.

Find and contact strategic alliances.

Test market products, surveys, headlines, and advertising.

The more information you gather, the better equipped you will be to compete in the marketplace. It is always best if you do your research on a regular basis because the market and your competition are constantly changing. Once you have gathered new information you must be prepared to react quickly depending on what the research reveals about your competition and customer demands.

For example, if your customers start doing business with your competitors, it might be signal that you need to reposition yourself against the competition or at least research why your customers are moving to your competitors.

When it comes to customer research you need to find out three basic things: What does your competition offer to your prospects that they like best? What is your competition doing that your prospects don’t like? What do your prospects want that your competition does not offer?

Some businesses that can afford to, hire a market research firm to do their research for them, but nothing strengthens a relationship more than one-on-one dialogue with a customer or prospect. Asking questions helps you to do this. On the other hand, prospects and customers may be more willing to speak honestly with an objective third party than with someone directly going after their business. Here, the process isn’t as important as the answers.

Market research means researching the market opportunity, products, services, media options, competition, industry, prospects, customers, technology, benefits, partnerships, external forces, threats, and the economy. Most businesses fail because they launch a business, service, or new product without researching whether or not the market wants it.

The market will always tell you what it will buy and the price it is willing to pay. The market will never lie to you. If you do your research and listen to what the marketplace says, you will succeed every time.

Copyright©2006 by Joe Love and JLM & Associates, Inc. All rights reserved worldwide.

Joe Love draws on his 25 years of experience helping both individuals and companies build their businesses, increase profits, and achieve total success. He is the founder and CEO of JLM & Associates, a consulting and training organization, specializing in personal and business development. Through his seminars and lectures, Joe Love addresses thousands of men and women each year, including the executives and staffs of many businesses around the world, on the subjects of leadership, achievement, goals, strategic business planning, and marketing. Joe is the author of three books, Starting Your Own Business, Finding Your Purpose In Life, and The Guerrilla Marketing Workbook.

Reach Joe at: joe@jlmandassociates.com

Read more articles and newsletters at: http://www.jlmandassociates.com

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