Nancy H. Bull
Gregory R. Passewitz
Customers are the foundation of any successful business. Effective market research results in increased sales and profits. Use market research to develop marketing plans. Market research provides a more accurate base for making profit assumptions and helps develop critical short- and mid-term goals.
Market research: 1) identifies customer needs and wants; 2) determines if the product or service meets customer needs; 3) identifies potential target markets; and 4) determines the best advertising technique for each customer group. Market research is an organized process to collect information about the business environment before the business starts. It includes talking with customers about their occupations, interests and buying habits as well as listening to customer requests for products and services.
Market research may make the difference between the right and wrong decisions that affect sales. It may reveal unfilled needs, suggest marketing strategies or identify the competition's strengths and weaknesses. Business cannot afford poor decisions.
Market research involves asking questions, recording information and taking time to learn from the information. Market research develops an information base to estimate sales, develop market strategy and decide how to enter the market.
One approach to market research is to compare customer needs and wants to competitors' weaknesses as well as to customer demographics. For example, a large customer base of dual income families with discretionary income may exist. If this customer base is being ignored, turn competitors' weaknesses into a business strength by expanding store hours to evenings and weekends, offering a better quality line and targeting advertising to this group.
Customer profiles help determine if a market segment is large enough to be profitable. Ask these questions to identify important customer characteristics:
All the answers may not be available. Part of the picture gives a base on which to build a marketing program and target an advertising plan. A sample customer profile for a particular product or service is shown on the next page.
Once the customer profile is developed, collect information from current customers by personal interviews, telephone surveys and mail surveys. To collect information from potential customers:
Direct observation of customers provides good, reliable and easy-to-obtain information.
Additional sources of market information include: the Small Business Answer Desk (1-800-827-5722), administered through the Small Business Administration; regional planning organizations; banks; real estate agents; or economic development agencies. Customer phone numbers, addresses and past business records indicate geographic market areas.
Market research defines the business in terms of customer needs and wants. Market research identifies the available market, how well advertising is reaching the target market, changes competitors have made, what new products should be offered and changes occurring in the market place.
To be successful, a business owner must know the market. Market research is a simply structured, objective way of learning about people - the people who will buy the product or service.
I am a: ____ light user ____ medium user ____ heavy user ____ non-user
I use your product/service: ____ daily ____ once a week ____ once a month ____ once a year
I have used your product for: ____ a short time ____ many years
I have tried similar products. The names are:
I use your product in combination with: ____ other products ____ different seasons ____ etc.
I buy your product at a: ____ supermarket ____ drugstore ____ department store ____ discount store ____ hardware store ____ other store
The quantity I buy at one time is: ____ a single package ____ several packages ____ many packages
I shop in your store: ____ more than once a week ____ at least once a week ____ every two weeks ____ once a month ____ once a year
The distance from my home to your store is: ____ less than five blocks ____ one mile away ____ two or three miles ____ five miles ____ more than ten miles
I usually buy these types of products at your store:
The part of my shopping I do with your store is: ____ All ____ Most
My favorite stores that are similar to yours (and including it) are:
Each year I spend this amount in your store: $_______
|I have||Competitor #1 has||Competitor #2 has||Competitor #3 has|
|5.Variety of selection|
|11.Convenient store hours|
|13.Concern for customers|
Effective market research must include business strengths as well as weaknesses. Take corrective action to strengthen your market position. To help organize your market research, consider the following format: Targeted markets: Potential strengths: Potential weaknesses: Potential competitors: Potential opportunities: Potential threats:
How to Set Up Your Own Small Business. Small Business Newsletter. (August 1986).
Small Business Development Center, University of Wisconsin Extension. Vol. 7, No. 6. Safit, D. and Gibbons, G. (1991)
Marketing Research - insight and outsight handout. Adopted from Wheelen and Hunjen (1987).
Sexton, D. and Bowman Upton, N.B. (1991). Entrepreneurship: Creativity and Growth. New York: MacMillen.
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