How to increase sales? How to beat competition? How to keep customers loyal? These are pertinent questions for a small business. And as a business owner, though you may have those answers based on your acumen and experience, this is also where market research services can help.
Market research enables businesses to learn more about their business’s potential. It provides data-backed insights into trends, customer behaviour, customer pain-points, competition, and identifies opportunities for growth. Getting started without proper research is a sure sign of slow progress if not failure.
In this article we will look at how to do market research for start-ups and small businesses in India in a practical, affordable way.
How to conduct market research for SMEs and start-ups – a 4 step guide
It’s not enough to have a great business idea – it’s important to validate and test whether the idea has potential for success. Market analysis helps with both and often opens new windows of opportunities.
From finalising product launch dates, to identifying additional product features, to determining pricing and packaging, the benefits of market research conducted systematically is manifold.
You can adopt a mix of several types of market research for optimal results – primary or secondary research, surveys, questionnaires, observations, and more. Be mindful of business needs, timelines and budgets, and you are set to begin.
Let’s look at a few more tips to help you get started.
Read More: How Can Surveys Improve Decision-Making for MSMEs?
- Finding your ‘Why’, ‘When’ and ‘How’ of market study
Before you hire a market research company or decide to do it in-house, find the answer to these three vital questions:
- Why do market research – To understand the goal or objective
- When to conduct research – To define time and the timeline
- How to conduct research –To identify the tools and methods
Let’s understand this with an example. Consider yourself a furniture manufacturer. You saw skyrocketing growth during the pandemic, especially in the office furniture division, i.e. tables and chairs. The sales figures have been sluggish of late. This needs to change.
- The ‘Why’ or objective of research would be to identify ways of increasing sales. Whether by tapping new markets, new customers, modifying pricing strategies, trying online/offline models, relooking at faster delivery (supply chain) or even introducing a new product line.
- The ‘When’ or time would be now. Since it’s an immediate business challenge, the sooner you draw insights, the better. You should however define a timeline, eg. Aug-Oct to collect data and analyse.
- The ‘How’ would be market research tools such as surveys, customer feedback, competitor research, social media polls (eg. Instagram/Twitter polls), web research, forums etc.
- Defining your ideal customer persona for research
The next important step would be to define your buyer persona or ideal customer. In many cases, the buyer is not always the end-user nor the decision maker.
For instance, in the previous example, office furniture purchased by one member of the family for another member. In this case, the buyer is not the end-user and may or may not have influenced the purchase decision. If your research involves customer feedback, the buyer would be able to comment on pricing, ease of purchase, delivery but not on ergonomics and usage satisfaction.
This explains the importance of market research for businesses. It ensures that you collect data from the right audience to support your research objectives and business goals.
- Conducting a 360-degree market analysis
Market analysis is not one dimensional. It requires a 360-degree approach, i.e. digging deep and evaluating all aspects. It requires you to understand:
- What are your competitors doing?
- How are similar products priced?
- What’s the standard packaging and distribution system?
- How to plan for inventory and stock?
- How to list products for eCommerce?
- Where is the audience (city/rural/state)?
- And much more
In the previous example, insights from market research may reveal:
- Rise in demand for standing tables – will require you to look at new product design
- Preference for wooden furniture – may require finding new vendors and craftsmen
- Higher purchase through eCommerce sites – will require you to list your business on eCommerce portals
- Quick 5-7 days delivery preference – may require you to find new logistics partners
These are different insights that can be gathered only through in-depth research. As a business owner, you can use the insights and plan your next marketing campaign, product development, and business growth strategy accordingly.
- Defining your competitive advantage
Your competitive advantage is what makes you different from the others. Do you have a unique product or service? Is pricing what makes you different? Is your customer support and service par excellence? Do you solve a specific pain point?
When you do a market research survey it helps you strategize around your competitive advantage or even identify new ones.
Going back to our example of you as a furniture manufacturer, your competitive advantage could be:
- Quality: Maintaining superior product quality with all the quality checks and tests done
- Pricing: Lower cost than established brands with similar product quality
- Innovation and design: Designing furniture based on global trends and ergonomics for comfort
Thus, you can plan your sales pitch and collateral on these parameters, rather than adopting a standardised pitch.
Outsourcing market research or doing it in-house?
The big question – should you hire market research service providers or take it up internally? Not an easy question considering both have their merits. Let’s evaluate it:
| Category | Hiring market research specialists | Doing research in-house |
| Expertise | They have the knowledge and expertise required and know what methods and techniques to use, which audience to target, how to collect and analyse data, and provide relevant insights. | Not experts, but have a better understanding of markets, customers and products. This is helpful but can make the research one-dimensional. |
| Tools usage | Market research companies usually use multiple tools, refer to secondary market reports, etc., to collect data properly and ensure that best results are achieved. | Usage of tools is limited as most tools require subscriptions. Tendency is to go for free tools that though good come with limited features. |
| Team | A more diverse team with specialists across marketing, finance, compliance, statistical modelling, data collection etc. | A smaller team with limited understanding of research methodology or best practices. |
| Expense | Comes at a price but it will give you returns in the long run (ROI). Reports and insights shared will be helpful in making strategic business decisions and prove profitable. | Economical and a good place to start. For better insights, it’s recommended for specialists to take over. |
In short – there are benefits of hiring a market research agency and also in doing it yourself (DIY). As a business owner, evaluate the pros and cons of both and decide accordingly.
A best match would be a combination of both where you get the expertise and unbiased results from experts, and the product knowledge in house.