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Written by Sylvia Westrup
Market research is a vital tool for all businesses. Collating information on markets, companies and people is essential when setting up or growing a company. Sylvia Westrup shares her research knowledge.
How can market research help small businesses? Market research is essential to the business planning process, especially when starting a business. You need to know who are your potential customers, who the competitors are and what they offer. This information will be vital for your business plan. For example, the market research industry in the UK was worth over 1.2 billion pounds in 2004 and that there are over 700 market research companies listed in The Market Research Society Research Buyers Guide.
The potential membership size of Women in Business West Kent was important for WiB's own business plan, but the number of women in business locally was not known. However, we were able to find out that there are 15,228 companies in our area and the FSB survey shows that 15 per cent of businesses are owned by women. So our potential membership is 2284 businesses. (Evidently there's still much work to be done on our membership drive - so please keep spreading the word to your female business friends and associates.)
There are two main types of research: Secondary or Desk research - this means using information that is already available or published. Traditionally this was through libraries and trade associations but now the internet is a useful source of a wide range of information.
Primary research - is where you are collecting new information. Existing businesses can use market research to identify trends, develop new product ideas, test the market demand for a new product or packaging. Many companies make major assumptions about their customers' or clients' needs, thoughts and intentions, without asking them first.
There are a number of different methods and tools at your disposal. Which tool you use depends on what type of questions you are asking. Before undertaking any research project, it is crucial to define the research objectives ie. what are you trying to achieve from the research? and what do you need to know.
Where you want insight into people's views and attitudes, a qualitative approach is used. The questions are open and flexible (what do you like and dislike about X?) and the interviewer records the comments made word for word. Usually a small number of interviews are conducted (say 20) and the data is much richer and gives a better understanding of customers. Sometimes 8-10 similar people are invited to attend what is called a focus or discussion session where group dynamics come into play. A facilitator, who has a list of topic areas that the client wishes to know about, conducts the group.
If you want to find out how many people do something then a survey with a series of pre-designed questions (questionnaire), where everyone is asked the same questions would be used. For example, how many people exercise? This can involve talking to (interviewing) a number of people over the telephone, in the street or at peoples' homes. Sometimes the questionnaire is sent by post, to be filled in and returned. This depends on budgets, time restraints or geographical locations of the people who you want to talk to (sample). All the information is then entered into the computer and combined. This is known as quantitative (numerical) data and often reported in terms of 'X per cent of people would buy a product'.
There are people who specialise in obtaining secondary data but much of the information can be found without their assistance. However, for primary research it is better to employ a professional.
The Market Research Society has a list of specialist agencies at www.rbg.org.uk while over 200 independents can be found at www.indepconsultants.org