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Market Research Basics for Small Businesses
Friday March 2, 8:00 am ET
By AllBusiness.com

Before selling a product or service, it's important to know the market that you will be entering into. Research includes finding out what potential customers need, want and don't want, and why. Your goal is to build a demographic profile of your customers. A research or business library can prove helpful for studying the manners in which other small businesses have approached their target audiences. You can then take a similar approach, adding your own creativity and the particular benefits of your products or services.
Surveys, questionnaires, and focus groups are three among the many ways to obtain original data on potential customers. You can also get basic information when a customer calls for your services, visits your facility, or browses your web site. When customers make a purchase, or any kind of inquiry, you can find out where they heard about your business. In this manner you can better plan, and track, your marketing efforts.

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Your marketing plan should be the result of your market research. You can then proceed to use the most viable means to promote and advertise your products or services.

There are many factors that will impact on your marketing plan including:

Your budget
The type of products or services you are selling
Your geographic region (Are you selling locally? Nationally? Globally?)
The amount of sales volume you can handle
Your methods of distribution
The amount of personal service you can or cannot provide
Your personnel
From market research you can also learn about pricing, trends, and competition. Typically, you will want to structure your pricing to be competitive. Depending on your position in the market, you may opt to undersell the competition and offer discounted items, or you may price items on the higher end and offer personalized attention and strong customer service. Pricing strategies are important and you'll adjust as your business grows.
Market research will also help you gain a greater understanding of the actual value of your product or service in the marketplace. By continuing to do market research as your business evolves, you will see what changes occur within your particular market.

Means of researching the market include:

Trade magazines
Trade associations or organizations specific to your type of business
Industry Web sites and email newsletters
Visiting competing businesses and/or reading the annual reports of competitors
The local Chamber of Commerce
When gathering market data you can use either primary or secondary research. Primary research means gathering your own data based on surveys, focus groups, and through other means. Secondary research means using other sources such as the United States Census Report, books, or trade magazines. Many businesses use a combination of both primary and secondary research.

Find more advice on Direct Marketing and Market Research at AllBusiness.com. AllBusiness provides practical information and services for business professionals and growing businesses.