How valuable it would be to have real, reliable market intelligence (like above) guiding your principal business decisions... but, how realistic is this for your small business?

Targeted and dependable market research can have a dramatic effect on the direction of your business, and may ultimately determine its success. Though market research is not always easy to gather or to interpret, there are many cost effective ways to learn about your market and facilitate quality business decisions. Numerous firms will provide thorough market research services for a fee. Other tools do exist however, providing that your organization is willing to devote time and resources to acquire this valuable information. I’ve outlined two of the most effective self-directed market research methods below.

Market Surveys

Surveying your customers and potential customers is one of the most effective means for gathering direct feedback from your most important constituents. The method includes tracking what actual buyers are purchasing and planning to purchase with future budgets. Market surveys can be as simple as three short questions typed and mailed directly to clients, or as detailed as an in-depth, statistically accurate study posted online or conducted by telephone.

The collective responses you solicit can help you identify drivers and inhibitors that influence spending and buying behavior, pinpoint growth opportunities beyond your current offering(s), and uncover opinions and perceptions relating specifically to your business and that of your competition. A sample question (and one of the most valuable pieces of information you can gather) might include, “Would you recommend our business to a friend or colleague?”

Along with the benefits, survey work does pose a number of risks. While all feedback and survey findings are valuable to a point, be careful not to assume a full understanding of your entire target market based on a handful of responses. With an inadequate number of responses you run the risk of basing your analysis and critical business decisions on biased, unsubstantiated results. Remember, good or bad, each response is just one person’s opinion.

Another potential danger exists in poorly worded questions. Those questions lacking a clear focus will make it difficult to determine the respondent’s true sentiments. Keep your questions simple and straightforward, examining each for context and any possible misinterpretation. Test your survey on a dozen friends or colleagues.

For smaller pools of respondents, consider using open-ended questions. This approach will be more manageable, statistically relevant, and an efficient means of harvesting spontaneous opinions, ideas, and honest feedback.

Competitive Intelligence

New players in an industry often boast a thorough understanding of their primary competitors—including how they differ and where each dominates—but it's the businesses that last that have typically developed an acute grasp of the competitive field and understand its ever-shifting dynamics.

To accomplish this in your own business, first consider your key competitors. Include the related firms your customers work closely with, those who have defeated you on recent bids, promising boutique firms, and those with differing, yet substitutable offerings. Go to their Web sites, visit their storefronts, and explore their press releases, yellow page listings, and other advertisements. Talk to industry colleagues, trusted customers, and relevant media associates for a knowledgeable outsider’s view of the competitive field. Go online or consult local trade organizations to gather information on competitor’s revenue, profitability, recent growth, partnering opportunities, corporate structure, and strategic direction. Mine for strengths as well as weaknesses and areas of vulnerability.

Subscribe to pertinent local or industry publications and newsletters. Join trade organizations and participate in their events as a means of getting to know others in the community—often the “movers” and “shakers” in the marketplace. Many organizations conduct or sponsor market research on behalf of their members and have useful information available upon request. Many media outlets offer research services to their advertising clients. If you’re paying for advertising, be sure to ask for detailed demographic information beyond simply who is likely to view your ad. For the asking you may be provided details about what organizations comprise a particular market segment, a description of their core business, where they reside, etc.

Keep a log or database of all the competitors you discover. Rank your business and your competitors on key metrics such as flexibility to customer needs, breadth of service offering, timeliness of delivery, and price. Plot each on a sliding scale. A visual representation can help you pinpoint goals and accurately measure your comparative business performance. At the end of this exercise it should be clear why some firms are growing while others fail to thrive. Hopefully yours will be counted among the former.

Of course, there is only so much time in the day. Market research must compete with a multitude of projects for your limited time and resources. Keep in mind that any amount of research can elevate one’s understanding of customer needs and competitive maneuvers. Start small. Gather as you go. Soon you’ll realize that you know a lot more about the market than your modest marketing research efforts would suggest—and your precision business decisions will be the proof.

If you have ideas to share, please email us.

© 2004 Jill Toole, M.B.A.