Businesses use market research to gather valuable information in their quest for success. Market research, for instance, can provide information and answer questions about a particular segment of the population, customer preferences, and geographic areas.
There are two types of market research methods: secondary research and primary research. These methods, used properly, can help you to efficiently hone in on your target market for a new product and rise above the competition.
We make business formation EASY. Learn about our DIY business formation services here.
What is the Difference between Primary and Secondary Market Research?
Secondary market research uses the information gathered from secondary sources, such as government agencies, trade journals, trade associations, or the chamber of commerce. Since the results of these studies are not customized for a particular small business, secondary market research is less accurate than primary market research, but it can provide general information.
Primary market research, on the other hand, produces specific results tailored to a particular business and offers a better assessment of the business' assumptions.
Performing Primary Market Research
Although a professional research company can perform primary market research, it is cheaper for a business to conduct its own study. The cost of paying a professional company usually ranges anywhere from $3,000 to $25,000, depending on the type of research performed. In most cases, a business can perform the research itself for significantly less. There are three ways to conduct primary market research: surveys and questionnaires, interviews, and focus groups.
Creating Surveys and Questionnaires
The use of surveys and questionnaires is a good way to gather information about potential customers. Before creating survey questions, it is necessary to formulate research questions to clarify what business goals a survey will address. Survey questions, therefore, should be drafted to meet the goals of the research. Common research goals may include the following: identifying the target customers, the types of products they buy, where they shop for a specific product, and how much they pay for a product.
There are various ways to distribute surveys. Surveys are sent through the mail, in email, or are conducted through Web-based services. Online surveys are professional, easy to use, are distributed via email or mobile phones, and are sometimes free. Upgrading, however, may provide the subscriber with access to advanced features like survey reporting, survey creation, and analysis tools.
Conducting One-on-One Interviews
Gathering information from interviews is another good way to learn about potential customers and a particular industry. There are generally two ways to gather information through interviews:
- From experienced individuals in a relevant industry: Consulting with individuals with knowledge and experience in a particular industry can help answer questions about target customers, competition, and industry practices and trends.
- From individuals within a target profile: Conducting interviews with individuals in a customer profile is an effective way to gather information about potential customers. It may be necessary to conduct interviews at places where the targeted customers are likely to visit. Make it easy to answer questions by allowing for a simple "yes" or "no" answer.
Obtaining Feedback from Focus Groups
Conducting market research through a focus group is a valuable way to obtain feedback about a product or a service. A focus group, for instance, may be used to test the appeal and taste of a new food product in comparison to a competing product, or to test the usability of a new computer game. After participants watch a demonstration or presentation, feedback is collected through group discussion, from individual oral question and answer sessions, or from a written questionnaire or survey.
Keep in mind that obtaining feedback through a focus group may entail the added expense of renting a space large enough to accommodate the focus group.
Get Legal Help with Your Marketing and Advertising Efforts
When you think about marketing and advertising, you may not immediately see the need for legal representation. But there may be instances where you need to know the regulations that limit how a business markets its goods. If you have any questions or want to ensure that your ad campaign is legally compliant, consider meeting with a business and commercial law attorney.
See FindLaw's Marketing and Advertising Laws section for additional articles and resources, including Marketing Your Business: 7 Important Considerations.