There are various market research techniques available. One can’t deny that Market Research is critical for both startup and existing businesses. An integral part of writing a business plan is conducting market research. Not only are our team at JTB Consulting often asked, “Why is market research important?” but we also receive the following question:
Market Research Techniques 101
I am in the process of starting my own business. Part of this process is writing a business plan to present to potential investors, which should include reliable market research. My business is a new Female Clothing Boutique selling bespoke garments, handbags and shoes. I am not sure how to do market research on my startup. I have a limited amount of my funds available.
Still, after a brief discussion with potential investors, they clarified that they want justifiable proof of why I feel my business will succeed. Can you advise me on what market research techniques are available and how I can conduct market research for my company facing this budgetary challenge?
Limited cash availability is one of the most critical challenges most entrepreneurs face. On the one hand, you want to start a business but have limited financial resources available to allocate to market research. On the other hand, all investors will require some factual statistics and market research included in your business plan to prove there is an opportunity in the market for your products/services. You can still conduct effective market research with limited funds with these five techniques.
Do the Groundwork Yourself
As an entrepreneur, you can’t expect a financier to take 100% risk by investing in your business without you not taking any risk yourself. The adage “putting your money where your mouth is” must be considered when preparing your business case. Any investor wants to see that you have enough passion and drive to make your business successful. This includes running around and doing all the legwork required.
A great place to start is using Online Survey Tools which allows you to design a focus group questionnaire that you can send to potential customers. For example, SurveyMonkey (www.surveymonkey.com) offers various packages, including their basic package, which is free. This will allow you to design a survey questionnaire with up to 100 questions and track the feedback results you receive.
Another cost-effective option is Google’s Consumer Surveys (www.google.com/insights/consumersurveys/home), starting from as little as R1.00 per question. Not only will the survey results be invaluable to fine-tuning your business strategy, but they will be factual and seen as primary market research by potential investors, which will go a long way in securing startup finance.
Secondary Sources are much Cheaper
Even though Google Search has provided us with a wonderful opportunity to search for anything imaginable, searching for reliable research is an art. Unfortunately, it isn’t easy in South Africa to find reliable and up-to-date information on all industries and markets. That said, websites such as StatsSA (www.statssa.gov.za) provide a detailed library of the latest research and statistics.
Most of these reports are focused on macroeconomic factors. Another alternative is searching for Dissertations and Research Studies conducted by students and other Academia. Several universities have online libraries that you can access, in some cases, for free. Using Google Search to source reliable statistics conducted by primary research firms is possible, but it will mean that you may have to browse through Pages 1 to 10 of the search results to find what you are looking for. Although this can be daunting, the information you find is, in most instances, free. Use search terms on Google such as “Fashion Trends”, “South African Fashion Industry”, etc.
Follow Expert Blogs and Research Articles
Consider signing up for the newsletters of Industry Organisations where your business will operate. A prime example is BizCommunity (www.bizcommunity.com), which publishes regular articles, blogs and expert opinions on some local and international industries. In addition, you can follow the Retail section on their website for your specific industry, which includes a subsection for Fashion, Clothing and Textiles.
A key component of your market research is your SWOT Analysis. Check out our article entitled SWOT Analysis and 50 Urgent Questions to Ask (Our Free Checklist).
Ensure that Market Research is Included in Your Business Plan
If you have already decided to invest your money with a Business Plan Writer or Business Consultant, make sure that part of their service includes some market research that they will conduct as part of writing your business plan. Unfortunately, although market research is essential for ensuring a business’s success, many small businesses do not have the resources to engage a professional Business Plan Company. However, all is not lost. Most reputable companies won’t mind answering a few questions (for free), guiding you in your market research efforts or pointing you in the right direction. All you need to do is ask.
You Need To Understand Your Competitors
A business needs to know who it is against; you need to establish who your competitors are and their strengths and weaknesses compared with your own business. The least expensive method of acquiring information about competitors is to visit your competitors, see how their Shop Assistant treats you, buy one of their products, and engage them via their website and social media pages. This way, you will be able to gauge and understand how these competitors operate, their success levels and how much of a threat they pose to you. You will also be able to investigate how they treat and interact with “potential customers, ” allowing you to build your value proposition around what they don’t do well.
An integral part of market research is the feasibility study. Here are 20 questions you can ask when you conduct your Feasibility Study in our article entitled When you do a Feasibility Study, you Must Ask These 20 Questions.
Tags: market research, market research techniques, market research method, type of market research.
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