Posted: Tue 1st Feb 2022
As a small business owner, it’s vital that you have as much information at your fingertips as possible.
Whether you’re launching your brand for the very first time, unveiling a new product line, making fundamental changes to your website or expanding into new territories, conducting comprehensive and accurate market research will provide a brilliant springboard for success.
In this blog, we’ll explore the benefits (and indeed drawbacks) of market research as an entrepreneur.
What is market research?
Conducting this research will give you a much clearer idea of the direction you should be looking to take your business.
After all, if you’re working on the release of a shiny new product, or hoping to implement a brand-new advertising strategy, wouldn’t you want to know ahead of time how these are likely to be received?
Why is market research important?
Market research is a crucial tool in the arsenal of any entrepreneur, allowing them to do the following:
Identify new customers
Target demographics and potential new consumers won’t magically present themselves – you have to unearth exactly who is likely to buy your product or service. Age, income and location are all factors to consider, so bear this in mind when collecting data.
Improve areas of the business
Feedback from existing customers is a great type of market research and can give you valuable information as to how you improve existing parts of their business.
If your small business is looking to undertake a significant rebrand, or perhaps redesign an already popular product, testing it within your community before pulling the trigger will provide crucial information as to whether these changes are worthwhile. That reduces the risk of them being poorly received.
Knowing your audience will also provide important clues as to where you should be focusing your marketing efforts. Whether you’re advertising on social media or placing ads in physical spaces, you are more likely to connect with your intended audience following solid market research.
Stay on top of trends
The marketplace is an ever-evolving beast, so regular exploratory research into changing consumer trends can help you when developing strategies.
What are the benefits of market research?
There are two main types of market research: primary and secondary.
Both have their own set of benefits, but they can be just as important as each other if you want a comprehensive idea about how customers of the past, present and future behave.
Primary market research
This is research you (or someone you commission) carry out first-hand to gather data and information straight from your target audience.
This is also known as ‘field research’. It’s generally the most time-consuming and expensive way to conduct market research, but it’s how you can gather all the information you need straight from the horse’s mouth, as it were.
Main types of primary research
Benefits of primary research
Allowing yourself the time and budget to conduct these methods effectively will likely pay off massively down the line, but what benefits can it yield?
Greater control: When you're the ones conducting the research, the sky is the limit! You can decide how your data is collected and monitor sample sizes, helping you focus more specifically on the exact type of data you’re looking for.
Accuracy: Primary market research ensures all the information is gathered by a trusted pair of hands, making errors and inaccuracies less likely.
Proprietary rights: This is important, should you want to keep your findings hidden from competitors. Primary market research belongs to the researcher and thus can deny others access.
Secondary market research
This is when you analyse information already available to you.
Main types of secondary research
Data collection via:
Benefits of secondary research
While the above methods don’t provide the level of tailored, first-hand information that primary research does, there are still a number of major benefits for you to consider:
Affordability: Secondary research is a low-cost practice. You can do it at any time, in any location. And while it’s a potentially time-consuming exercise to trawl through archives or textbooks, it’s cheap.
A broad range and availability of information: Not only are secondary sources easy to find online or in libraries, they’re also essentially never-ending. There is likely to be data readily available for most business-related topics under the sun, so the likelihood of finishing your research empty-handed is minute.
Credibility: This is where secondary sources can complement primary research methods. If your trusted and respected secondary sources back up the findings within your previously conducted surveys or focus groups, it’ll add a layer of authority to your data which was perhaps originally absent.
This outside information shows that multiple people/organisations have received very similar findings, giving credence to your methods and reducing the potential for errors.
What are the limitations of market research?
Of course, nothing in business is perfect, and both methods of research have their limitations.
Primary market research: the limitations
Time-consuming: While the data is often invaluable, these methods take a lot of time and effort.
Expensive: A potential expense of making sure your primary research is conducted properly is outsourcing to an agency, if you feel there are insufficient in-house skills to do the job.
Reliability and accuracy: This can be affected by small sample sizes, and also (often subconscious) leading/loaded questions.
Secondary market research: the limitations
Readily available information: This means competitors may already have access to this information, rendering your findings less useful.
Out-of-date information: With trends and behaviours forever changing, basing your actions solely on old and possibly obsolete data can have the opposite impact to what was originally intended.
Lack of specifics: Unlike with primary data, the inability to focus specifically and forensically on key points of interest can mean findings, while useful, don’t have that ultra-tailored flavour to them.