Market research is an effective tool to assist your business planning.
It is about collecting information that provides an insight into your customers thinking, buying patterns, and location. In addition, market research can also assist you to monitor market trends and keep an eye on what your competition is doing.
Successful businesses undertake market research on a regular basis to:
- identify potential new customers
- learn more about existing customers
- inform their decisions regarding existing and new products or services
- better understand their competitors
- test new markets
- identify performance, pricing or promotion opportunities.
Define your market research objectives
It’s important to clearly define your objectives in order to achieve useful results from your research. Clearly defined objectives will help identify the best methods to conduct your research.
You will also need to determine the time frame and budget you can allocate to undertake the research. You might consider using a professional market research company to assist you.
Reasons to conduct market research
Identify potential customers
The type of information you need to know:
- Who is likely to use your product or service?
- How old are they?
- Are they male/female, married/single?
- Do they have children?
- Where do they live?
- What is their level of education?
Understand existing customers
The type of information you need to know:
- What do they value? Is it the level of service, product quality or prestige associated with using your product or service?
- Who influences their buying decisions?
- Which websites do they visit?
Understand your competitors
The type of information you need to know:
- Who are your direct/indirect competitors?
- Who is targeting the same market as you?
- What types of marketing campaign are they undertaking?
- Are they successful in their approach? If so, what’s working?
- Why is your product or service preferred over the competition?
Develop strategies
The type of information you need to know:
- Understand the environment associated with pricing, products, distribution and promotional channels.
- Use your research findings to make informed marketing decisions about how to price and distribute your products or services.
Prepare for business expansion
The type of information you need to know:
- Research will help you identify areas for expansion and test the market’s readiness for a new product or service (eg. deciding whether to open a second retail store and choosing the right location).
Identify new opportunities
The type of information you need to know:
- Your research could identify new business opportunities, under-serviced markets, changing industry trends, population shifts, increasing levels of education or changes in leisure activities.
Sources and types of information
There is a variety of data sources to assist you in researching your customers, competitors, industry and location.
Primary research refers to information gathered from original sources such as:
- surveys
- face-to-face interviews
- focus groups
- customer feedback
- questionnaires
Secondary research is information and data that has already been collected and analysed by other sources such as:
- Australian Bureau of Statistics
- industry and trade publications
- social media and websites
- marketing and consumer lists
- newspapers and media
- IBISWorld
The types of information you collect through these sources may be quantitative or qualitative.
Qualitative information measures the values, attitudes and views of a particular sample. This type of information is useful if you want to understand why people buy your products, how they respond to your advertising or their perceptions of your brand.
Quantitative information is based on statistics and may be used to predict market penetration, future earnings etc.
Free market research and industry data
The SBDC can provide you with access to a wide range of free market research and industry data to help you assess a business idea or help create your business plan.
Collect, analyse and act on the results
After identifying the source and type of information you need, you can start to collect it.
It is important not to allow your opinions or preferences to affect your research. Having a preconceived idea of the results will bias your research and provide false information. Remain open minded and be prepared for unanticipated results.
When processing data make sure you:
- keep your market research objectives in mind
- categorise data according to what is most relevant for your business, don’t become side-tracked by information that is just interesting
- collate your data using tables or lists to make it easier to identify certain trends and themes.
You may need to collect additional information if your results are inconclusive. Analysing the data should allow you to draw some conclusions regarding your initial objectives.
Action to take
Update your business plan and marketing plan with the information collected from your market research.
Useful resources
Business plan template
Build a website booklet
Guide to marketing and branding
More information
- Contact us for access to IBISWorld reports.
- Find market and industry data at the Australian Bureau of Statistics.
- Contact your industry association for industry benchmark data.
- For more practical advice and tips, see the Marketing section of our blog.
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