Market research is one of the most important things you should consider when you are writing your business plan. By conducting a market research you try to understand the reasons why your customers will buy your product or service. Moreover, it touches upon aspects regarding customer behavior and how cultural, personal and societal factors can influence the customer’s behavior.
Furthermore, market research is divided into two varieties: primary and secondary. The former studies customers in a direct manner, whereas the latter studies the information gathered by others about customers. Primary research might be conducted by means of telephone interviews or online polls with members selected at random from your target group. To conduct primary research you could study your personal sales records. Finding secondary research can also be done by means of reports posted on websites of various organizations or blogs written about the industry your company is a part of.
For the market analysis of your business plan you could use either one of them or use a combination of both.
The most important questions you need to try to answer with your market research are as follows:
- Who are the people that buy your product/service (customers)? You need to make sure you have as much info about your clients as you can: their age, income, occupation, lifestyle, education levels, etc.
- Currently, what do they buy? Describe the buying habits of your customers when it comes to your products or services, not to mention including how much their buy, their selected suppliers, the most favored features and the usual price points.
- Why do they buy your product/service? The answer to this question can prove pretty tricky because you have to get in the head of the customer. The answers will definitely depend on the product and its uses. For example, customers that purchase frying pans will look for the ones with nonstick surfaces or go for the ones that offer 2 for the price of one. The customer’s purchase decision can also be based on the decorative colors used to create a certain product.
- Why do they buy from you and not from your competitors?
Despite the fact that some of the aforementioned questions may be perceived as difficult, you’d be surprised at how much detailed information you can get regarding markets, sales figures and even customer buying motivations. Tapping into information sources to get the answers to as many questions as possible will make your business plan more convincing, thus increasing the chances of success. You should also consider using business plan software programs because they have detailed research included as well as online research available. If you are already using this type of software, make sure to utilize this functionality and add additional data you will find elsewhere.
In addition, you could also search for companies that will sell you anything from studies pertaining to the industry to credit reports on individual companies. You probably already know that market research is not a cheap process. This process will require significant amounts of expertise, manpower and technology to conduct a comprehensive research. Large companies usually spend tens of thousands of dollars researching things they later decide they are not interested in. However, small companies cannot really afford to do that too often.
For companies interested in finding the best way to conduct a market research, the fact is that the best one for you is the one you do yourself. In-house market research should look something along the lines of telephone interviews with customers, customized forecasts from published sources or competitive intelligence found on your rivals through social media platforms. Facebook and Google Analytics are great tools for gathering research on customers.
You should also approach the market research with due diligence. When you are looking at comparative companies and their data, find a close match.