Here at Business Link, we talk to our clients about market research every day—we talk about things like what is market research, why it’s important, and how to do it. We even presented on the topic about 75 times in our most recent fiscal year. For those busy would-be or current business owners out there, use this as a starting point as you dive into your own research and planning projects—and always reach out with any questions specific to your business!
What is Market Research?
I often see market research being used interchangeably with marketing. Market research may inform your marketing (more on that later), but they are different concepts and processes.
Market research typically involves researching the characteristics and needs of your target market, learning about the industry you operate in, and evaluating the competitors you face. The first step is to gather information, but then you also need to analyze and interpret that information so that it is useful.
Why is Market Research Relevant?
Market research is relevant for so many reasons! We often have people asking us about the feasibility of their idea. They are looking to determine if people will be interested in what they are doing. In other words, will people pay for the product or service? Does it fill a gap in the market? There is no one source of information that will provide an easy answer to those kinds of questions, but market research overall can help to find some answers and make more informed decisions.
Market Research Myths
Additionally, there are two common misconceptions I often hear that market research can help to dispel: “I have no competitors” and “everyone is my target market.”
- Relating to competition, a quick Google or social media search often helps to find companies that are operating in the same area as you are. Remember that customers have limited money, so even if a company is not doing exactly the same thing as you are, they could be competing for those dollars. If what you are doing is more niche or new, think about how people met those needs previously.
- As to target market, if you are targeting everybody, you won’t reach anybody. It is important to define a target market for your business, as it shows any funders or partners that you’ve done your homework, and it also influences other aspects of your business. Think about and do some research on who the best customer for your business would be, and then think about how to attract them (this is where that marketing thing comes in).
Market Research and Your Business Plan
There is a specific section to summarize the market research in the business plan, but it can also influence other parts of the plan or decisions you may make.
- You may have done some research on what your competitors charge and your target market’s preferences that could influence marketing strategies such as pricing and advertising.
- The financial plan is another important piece of planning that should be linked to your market research. You may be able to find industry averages from a tool like Financial Performance Data, but this section will be a culmination of overall industry trends, how many competitors are present, consumer attitudes, your marketing strategy, etc.
How Do I Do Market Research?
There are two forms of market research you can utilize. I would say that every client I’ve worked with has found the need to engage in both forms, as they provide different levels of information. Think about how you can use each in your business:
- Primary research typically involves communicating with potential buyers of your product or service, or other businesses in your industry. You may get the most meaningful information from primary research as it is generally local research, and the potential buyers of your product or service will provide insights into their attitudes, when they buy, and what makes them choose one provider over another. It can take a lot of time and effort to conduct primary market research, but it can also provide some very useful insights into your business ideas and help you to connect with potential customers. A Business Link advisor can help you get started with your primary market research.
- Secondary research typically involves looking at published material. In this case, someone has already done the work of gathering the information so that it can be found online through government resources, industry associations, paid databases, etc. While primary research is local information, secondary research is broader in scope and often includes information about the industry in a wider geographical area. This is one of the free services Business Link offers because access to these databases can be expensive.
To illustrate the difference between the two types of market research, I can easily find general demographic information for my city or neighbourhood from the Canada Census (secondary research). However, when it comes to getting more nuanced as to things like what people in my city or neighbourhood do or think, that requires primary market research.
What Should I Do First, Secondary or Primary Market Research?
Sometimes you can know immediately whether your question will require primary or secondary research based on the general information found above. If not, do secondary research first as it requires less time. If you can’t find what you are looking for, it may be time to consider primary market research.
How Often Should I Do Market Research after Starting My Company?
At the beginning stages of your business, it is generally common sense to conduct market research. But as we all know, things can change quickly, and there are always opportunities to grow, so consider doing market research regularly as you run your business. You can constantly be engaging in market research, as customers are often sharing their wants and needs, and there are industry events or publications to keep up with.
That can seem daunting, but ongoing market research doesn’t have to be a formalized process as it might have been when you started the business and applied for a loan. Keep your eyes and ears open, and your business will be that much better off!