Most business experts and lay people alike will agree that a very important factor for success in business is to know your market. If you don’t know who your customers are, what they like and what form of advertising they respond to, how can you be sure you’re giving them what they really want and get the most sales in return?
Likewise if you don’t know something about the competition in your area, how will you know how to compete with them to gain market share? Yet, as important as it is, market research is one area of business that too many of us overlook, or put off because we think it’s too complicated or involves too much work.
There are two main types of market research, primary and secondary. Both can be used to learn something about customers and competition. Primary research is information you gather yourself through various methods to develop a profile of your typical customer, and to find out about your immediate competition. Secondary research is data gathered from third-party studies such as Statistics Canada or local government economic studies. This can give you a “big picture” view of your market, and help you identify trends in population and in your industry as a whole.
Gathering primary research is as important for an established business as it is for someone who is starting up a new business. Consider a business that has been operating for 10 or 15 years out of the same location with perhaps the same staff. Business is good but not great, and the owner is starting to see a drop in revenue. The standard practice is to throw money at advertising. However, a better idea would be to conduct some primary research to target customers more effectively. This will provide a better return on the advertising money spent.
Instruct staff to inquire how the customer initially found out about the business and what made them decide to visit. Don’t be afraid to ask customers what they like about the business and more importantly, ask them what would make their shopping experience more valuable.
Record any products that customers ask for that aren’t in stock and research what is happening in this particular marketplace. Perhaps trends are changing, technology may be leaving the business behind, or clientele could be looking for something different. If a database of clientele exists, create a survey and distribute online via email. As well, ask customers that visit the location to complete a quick survey and add some kind of incentive to encourage them to do so.
The other piece of primary research is to evaluate the competition’s strength and weaknesses.
Conducting secondary research may help you to understand the target market, Statistics Canada website, under community profiles from the 2006 census will show a breakdown in population by gender and ages. The District Municipality of Muskoka and town websites contain economic development information as well as seasonal data,
Combining this research will help to provide an overall customer perception of the business and reveal possible trends on where or how to advertise. It may indicate that it’s time for a facelift or to take a totally new direction in services or products. The results may not be for the faint of heart. While the information gathered may be surprising, ignoring it could be financially devastating,
The Muskoka Small Business Centre can help you understand how to gather information and assimilate it. Contact us at 646-9021or www.muskokasmallbusiness.ca.