The 21st Century is considered the "information age", and some say it is the "innovation age." Whether your company is large or small, the right amount of financing and experience alone is not enough to succeed without a constant flow of accurate and timely information.
Large companies do sophisticated market research to find out everything possible about their customers. Although you probably won't be able to afford a separate marketing research department to gather and monitor all the information about your customers and competitors, as a business owner you must know your markets, competitors, customer wants and needs, and "what it takes to be competitive." You need to go beyond the what, where, when, and how questions about your business. You need to know your customers' purchasing habits, and why people buy your products and/or services.
Market research needs and objectives - The first step in market research is deciding what you need to find out. This will determine the type of research you will do. Do you need to know how key target buyers think about your product category, category brands, and buying patterns? Focus groups may be the way to go, even though they may not be statistically reliable. Or do you need to know general industry trends? In that case, reading information from industry trade associations and industry experts is all that you may need to do. Or you may need to do a more in depth research. Market research breaks down into two categories:
- Primary research is concerned with the design and implementation of original research; that is, data collected from the source. The advantage of doing primary research is that you can get information on the specific question or problem you need answered, not information that merely applies to your industry or type of business in general. Primary research is generally divided into two categories: "experimental" research and "non-experimental" research.
- Secondary research is doing library research with books, periodicals, and other research reports. This is usually the cheapest and easiest type of research for small businesses to conduct. However, it may be less reliable than primary research, because the information you obtain was not developed with your particular problem or situation in mind.
Small companies market research - There are many market research techniques available; however, some may not be affordable or appropriate for your company. Smaller companies' managers have to be creative in:
- Limiting the amount of research and setting budgets
- Working with market research experts to research problems
- Accepting the possibility of a greater number of errors or a "lower confidence level"
- Conducting and analyzing market research with company personnel