8. Market Research

Characteristics of Successful Entrepreneurs

Market research is finding out, in an orderly fashion, what your target customer’s attitudes, opinions, needs, wants, likes, and dislikes are. Good market research eliminates guesswork and becomes the cornerstone upon which new business owners can feel confident to build the company’s strategies.

Most business owners and managers do some form of market research every day, even after the business has started to operate. For example, in the run of a usual business day the owner might check returned items to see if there is a pattern; stop a customer on the street to ask why he or she hasn’t been in the store for some time; or look at a competitor’s advertisements to see what they are charging for the same product the owner’s company is selling.

Why Do Market Research?

Information is power. Organized current information enables the new business owner to reduce risks, spot opportunities and problems in the current marketplace and get basic facts about markets and customers to make wise decisions and set up plans of action. If new business owners are going to do the best possible job for their customers, they must know them well—know why they buy, how often they buy, what they like and don’t like about a similar company/product/service, how they use the product/service and how much of it they use.

How Do You Do Market Research?

Market research is worthwhile only if the information gathered is useful. Thus, market research should be done within an organized structure that allows the business owner to objectively judge the meaning of the information gathered about the market. The five-steps for market research are:

    • The business owner must set goals by deciding what information is needed and why it will be useful
    • Gather the necessary market information from new and existing sources
    • Make a decision based on the market information gathered
    • Put the decision into action
    • Evaluate the results

Step two is essential, so make sure to look at industry sales records and trends, talk to employees of other companies in the same industry, and analyze secondary research information already in print, such as magazines, business publications and Statistics Canada publications which relate to your business. If further information is necessary, the business owner may have to conduct primary research, which is original data that has not been previously collected or assembled in an organized fashion. Primary research gathering can be as simple as asking potential customers and suppliers what they think of your product/service or as complex as developing and implementing structured questionnaires, focus groups and test markets. For the more complex methods of market research gathering, professional business consultants should be contacted.

Market research is limited only by a person’s imagination. Much of it can be done with very little cost other than time and mental effort. Market research is a simple and orderly way to learn about people. In today’s competitive marketplace, new businesses cannot rely on a hit-or-miss decision process for crucial questions pertaining to their customers. Good up-to-date research is essential. The following section will discuss the importance of, and how a business can distinguish itself by, providing exceptional customer service.

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Check out our New Business Checklist to find more helpful resources and considerations for starting a successful business.