This post is by guest blogger Natalie Preddie. For more information on conducting market research for your small business, check out our new guide.
Market research is an integral part of your small business’ strategic plan. Market research consists of fact finding, analysis and problem solving; all are crucial in deciding how to best market your product and configure the potential growth of your business. When collecting your market research, there are five types of data that you should consider:
1. Identify your target market
Promotion helps you reach your target market, but first you must know who they are. Gather statistical information regarding your target market’s demographics, market segment, needs and buying decisions. Use your research to clarify which media will best promote your product, whether print, online or broadcast. Become an expert in your field and create personal profiles for your ideal customer. How old are they? Are they male or female? What is their job? What salary bracket are they in? What do they do for fun? Do they own a car? Do they have kids? Such details will help you clearly define pricing, promotion and place.
2. Understand the strengths and weaknesses of your competition
Collect data on how your competition promotes their products. What is their price point? What do you like and what don’t you like about their marketing campaign?
3. Develop a pricing strategy grounded in market research
Small businesses can set a price for their product or service based on popular profit margins, competitors’ prices, financing options, or the price a customer is willing to pay. A popular profit margin examines the profit of similar products also in your market. Profit margin is a very helpful measure when looking at other companies in your industry. Many industries have profit margin standards which are easily accessible on the Internet or through your Better Business Bureau.
4. Research similar products
Whether you sell a service or a tangible item, it is important to know what is currently on the market, and what the competition is offering. You can improve your product or service based on findings about what your customers really want and need. Focus on things like function, appearance, customer service and warranties.
5. Identify the best placement or location for your product or service
Where should you set up your product? Where should you distribute from? Is a department store the best platform for your product, or are your needs best met online?
This information will help you to avoid unpleasant surprises when starting, maintaining and growing your business. Regular market research will ensure that your business is aware of market trends, demographic shifts and changes to the economy. Your business can then evolve accordingly, growing steadily and increasing profits.
Natalie Preddie is part of the account services team at Ramp Communications. Previously, Natalie managed world wide marketing and PR teams, planned, produced and hosted international events, and launched high profile venues. Based in London for the past 8 years, Natalie’s marketing expertise has taken her to Asia, Africa and Europe, working with such companies as Sony, Soho Clubs and Bars, Panasonic, IBC and UBM. Ramp Communications is an agency that offers marketing and communications services and helps companies figure out how to best reach their clients with a clear and focused message. Ramp Communications establishes marketing strategy, plans tactics accordingly, and then implements those tactics, aka Gets Things Done!
Not using Wave yet?
Wave’s free financial management software makes it easier to invoice clients, get paid, and manage your books. Simply visit waveapps.com, click on “Create your free account,” and enter your email. You’ll be up and running in seconds. Try one of our free webinars to get the lay of the land, and download a copy of Fearless Accounting with Wave to get started with confidence.
The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.