From Cathy Musselman, Entrepreneurial Coach
Market research is necessary in understanding who your customers and competition are. Market research can also identify trends that affect sales and profitability. Successful market research takes planning and strategy. As you conduct your market research here are a few common mistakes to avoid.
Not identifying what your product/service is. Before you can conduct your market research, be sure you have identified exactly what your product/service is. Make it simple at first. Yes, your product/service may have multiple offerings to multiple markets, but focus on the one with the most “Wow” and “Need” in today’s market. What is your product/service going to provide for the customer that improves their life or business, in other words, fixes their pain.
Not knowing what you are looking for. Take the time to define who your customers are. It is NOT EVERYBODY. Thinking too broad, you will run into the problem of not reaching your target market. You will waste time and money chasing after too many markets. Consider “What customer would benefit the most from my product/service?” Also “How much would my customer be willing to spend on my product/service?”
Overspending. Performing market research does not require a huge budget. Don’t be one of those business owners who gets convinced that they need to pay big bucks on the first market research firm that promises to give you data that you can find on your own or that a smaller firm can do just as well for less.
Not thoroughly researching the competition. The more you know about your competition, the better. Gather as much information as you can. Find out how they are conducting business, their pricing strategy, their marketing, and their strengths and weaknesses. This will give you the information you need to be on the competitive edge. Not fully understanding your competition is a sure way to fail in business.
Poor choice of reference materials. Today we have the powerful use of the Internet to gather market information. However, you must consider the source of the information. There are sites containing old data or biased material. Be sure the information source is reliable. Industry related trade associations are a good source for information. Joining a trade association in your field of business is money well spent. They can provide up to date data to help you with your market research.
Not researching price information. During your market research, be sure to ask your customers what they would expect to pay for your product/service. Look at what your competition is charging. Selling cheap is not necessarily the way to go, but if your customer is going to pay more, identify why they should pay more for your product/service. Identify the customer’s “Return on Investment” – what do they get from purchasing your product/service that makes your product/service a better purchase.
Conducting Market Research only once at the start of your business. Market research should be conducted periodically throughout the life of your business. You should be kept abreast to market trends – what is selling and not selling in your market – what is happening in the economy that may affect your business. By keeping up with your market research, you can prevent major business issues and be able to make those changes quickly and remain profitable.