Researching your small business’ industry involves gathering large amounts of data, as well as talking to members of the industry – the ones who know most about it. Some important questions to ask about your industry are:
- Is the industry growing?
- Where are the opportunities in the industry?
- What are the typical financial results for businesses in this industry?
- How is new technology being used in the industry?
- Who are the key players in the industry?
- Are there young, successful businesses in the industry?
Do primary and secondary market research to learn more about your industry before you start or expand your business.
What is primary market research?
Primary market research is collected by you, from your target audience. Here are the four types of primary market research:
- Observation – This means – without interacting – watching customers buying products or services similar to yours, listening to what they say as they shop, noticing what they buy and how much they paid. This type of market research works best if your business caters to customers, not to other businesses.
- Focus Groups – Focus group market research means assembling a small group of eight to 12 potential customers to gather information and opinions about your product or service. These groups are led by an objective discussion moderator. Focus groups are a great way to get feedback on a product or service idea directly from several potential customers.
- Interview – Interviews are 1:1, with a participant speaking to one researcher. Interviews are well-suited for product or service ideas that could be too personal or private for group discussion.
- Survey/Questionnaire – This method of market research involves getting feedback from potential customers through a structured, multi-question survey. Market research surveys or questionnaires can be done over the phone, through mail/email or in person. You may need to conduct several surveys to several groups in order to get feedback from all possible types of customers. If you don’t have the resources to conduct a large amount of them, small sample groups are okay, but be wary of making major business decisions based on this small amount of feedback.
What is secondary market research?
Secondary market research is information that’s collected by another person or organization that entrepreneurs can use, often for a fee. If you’re interested in opening a book shop, you may access statistical information collected by the Canadian government on things like income levels in your desired area, spending patterns and neighbourhood development. This data was collected by someone other than you or your business, and you don’t own it.
Unlike primary market research, data from other sources isn’t gathered with your specific business in mind. This means you may need to access several sources of secondary data, or you may not be able to find information that covers exactly what you need to know. Look out for when the research was undertaken – in our opinion, a study older than three years is too old, given how fast the business world moves. Relying on old, inaccurate or irrelevant information can cost your small business a lot of time, money and stress. Analyze everything carefully and trust your instincts.
It’s also important to consider the source of your primary market research. Look for legitimate sources that wouldn’t have been influenced by a different agenda. Good sources of secondary market research are government organizations, research institutions, universities and academic journals.
Market research is a good way to understand the viability of your product or service idea by assessing factors like market size, demand, and pricing. There are two types of market research: primary and secondary.