Market research...sounds thrilling, doesn't it? It is probably one of the most time consuming parts of creating a business plan,and also one of the most important. In this series of articles, we will define market research and talk about the various methods used to conduct the studies.Today, we will talk more broadly about market research and start to define it.
A quick definition of Market Research from About.com:
"Small business owners use market research to determine the feasibility of a new business, test interest in new products or services, improve aspects of their businesses, such as customer service or distribution channels, and develop competitive strategies."
Simply put, if you do not study the likelihood that your product is needed or wanted, your business is at high risk of failure. This information can be used to develop or modify new products, establish pricing, identify customers and create targeted marketing campaigns. It is the portion of the business planning process that helps you identify if there is actually a customer willing to buy your product or service. And sometimes, you find that you cannot provide what the consumer wants at a reasonable cost to you, and so you decide not to pursue that opportunity.
Market Research is also used in established businesses to adjust product specifications. When a new internet application is release in Beta, the creators are looking for people who have an interest to sign up and use their product for a period of time, while giving feedback about the usability. This is a great way to ensure you will have a customer base for sales, as the early adopters of the product feel very connected to its development and can become very loyal customers.
For me, market research reminds me of school...remember when you had to do the lit review for your research papers? You spent time looking up various sources, seeing what was already published, seeing what research hadn't been completed yet, looking for a niche that hadn't been filled by what others were doing...this is the place where you establish your baseline, an essential element to any good plan, and particularly helpful for measurement purposes.
Take a minute to think about your market...have you researched what's available? Have you asked for feedback about your offering to determine if you need to tweak the design a bit to make it more functional? Don't skip this important step of your planning process because you are anxious to get going on "the fun stuff". It is a foundational building block that is an integral part of being successful.
Jean Ann Van Krevelen is the Development Director of OEN, as well as an entrepreneur. See more information on her blog, the Edgy Entrepreneur.