Interacting with a potential customer is an opportunity for market research.Stockbyte/Stockbyte/Getty ImagesMarket research is the process of gathering and analyzing information about customer groups, competitors, your industry and the general business environment. Whether a company is small or large, market research plays a vital role in decisions about what products or services to offer and how to sell them. A small business owner must make gathering market information an ongoing process and a high priority. He then can be more confident in the decisions he makes, knowing they were based on solid data rather than guesswork or hunches.
Before an entrepreneur launches a new venture, it is essential that he can state with confidence that the marketplace truly needs what he plans to offer -- his products or services -- and that there are enough potential customers to support the business and allow it to be profitable. Market research at the pre-launch stage involves the business owner talking to as many different experienced businesspeople as he can about his venture and soliciting their opinions about its feasibility. He also gathers statistics such as demographic data and predictions about the future growth of his proposed target markets. He talks to prospective customers as well. This information is critical in helping him decide whether to take the risk of launching the company.
To grow his company, a small business owner may decide to offer new products and services, may expand the geographic scope of his marketing efforts and may change the marketing message he delivers to his market or the media he uses. The decisions whether to implement any of these changes are supported by market research. For example, if he wishes to begin selling his products internationally, he must have information on the number of potential customers and how many entrenched local companies he will have to compete against.
Before bringing a new product to market, large companies do significant test marketing, either selecting consumers to try the product or showing and explaining the product's benefits to them and soliciting their opinions about it. They seek information about whether these sample groups are enthusiastic enough about the benefits of the product that they would be highly likely to purchase it. A small business owner can do the same thing in a less formal way by talking directly to potential customers on an individual basis and asking them what his business could do to better meet their needs.
Market research also means keeping close watch on your major competitors' activities, particularly what strategies they have deployed to capture additional customers that are potentially your customers. Small businesses have many ways to monitor competitors' activity, including studying their advertisements, talking to their customers, visiting their websites, asking business associates about them or even visiting their businesses, in the case of retail enterprises. A small business owner also needs to be aware of new competitors planning to enter the market.
Small businesses that seek to continue growing are always on the lookout for emerging opportunities -- new products or services they could offer, new distribution channels they could use or ways of adapting their existing products to meet the needs of different customer groups. For a small business owner, everything he reads, such as trade journals, general business publications, newspapers and stories about consumer trends shown on TV, are rich sources of material for ideas on how to accelerate the company's growth. This type of market research involves paying close attention to the world around you and then creatively developing these pieces of information into potential opportunities.
A small business is affected by the performance and direction of the local and national economy. Monitoring the environment helps the business owner identify signs of a potential economic slowdown, for example, and take steps to be ready. Again by talking to his customers, vendors and other businesspeople he is in contact with, the owner can get an idea of whether they are optimistic or apprehensive about the direction the economy is going and can adjust his strategies if necessary. The small business owner might decide to postpone expansion plans if it appears the economic environment is turning negative.
Brian Hill's first writing credit was the cover story for a national magazine. He is the author of three popular books, "The Making of a Bestseller," "Inside Secrets to Venture Capital" and "Attracting Capital from Angels." Among his magazine article credits are the March 2005 and June 2008 issues of "The Writer." His interests include golf, football, movies and his two dogs.
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