This article is part of our Business Startup Guide, a curated list of our articles that will get you up and running in no time!
Most every small business or startup will benefit from even the most elementary market research. If it does not provide new information, it will at least confirm what you know.
When you’re starting your business, you need to have a deep understanding of your customers. In fact, knowing your customers inside and out is probably the most important key to success.
Your customers are the people who desperately need your product or service. You need to know who they are, why they want your solution, what they like and dislike, and even what they had for breakfast. Knowing all of this will help you find more customers and build a better product that your customers will clamor to buy and tell their friends and colleagues about.
This is where market research comes in.
What is market research?
Market research is the process of gaining information about your target market—a fancy way of saying “getting to know your customers.” Ideally, you find specific information about your target market and the key factors that influence their buying decisions.
As you get started, you’ll need to determine what type of market research is going to work best for you. Make that decision based on the value of the insights you think you’ll gain, versus the time and effort you need to invest to find the information.
Market research is often confused with an elaborate process conducted by fancy consultants that takes a tremendous amount of time and money.
That’s certainly not true. You can, and should, do most of your own market research, and it doesn’t even have to be that hard.
After I explain the different types of market research, I’ll share all the resources you need to do your own.
Types of market research
1. Primary market research
Primary market research is research that you conduct yourself, rather than information that you find already published. Primary market research is information that you gather by talking directly with your potential customers.
Here are a few ways to gather primary market research:
Hold focus groups
A focus group requires you to gather a small group of people together for a discussion with an assigned leader.
Survey your customers
Distribute these both to existing customers and potential customers. Sending out a survey using tools like SurveyMonkey is a great way to collect this type of information from current or potential customers of your business. You can even run tiny surveys right on your website with services like Qualaroo. Make sure to ask specific questions—but try not to lead people toward the answer you want to hear. Be as objective as you can.
Assess your competition
Look at your competition’s solutions, technologies, and what niche they occupy. Completing a competitive matrix can help you understand how you stack up against them.
Find potential customers and talk with them about their problems and your solutions to those problems. Ideally, conduct these in-depth interviews in your customer’s workplace, or wherever they will be when they might consider shopping for your solution.
2. Secondary market research
Market research may also come from secondary sources. This is information others have already acquired and published about customers in your industry.
Access to this secondary market research data may be yours for the asking, and cost you only an email, letter, or phone call. Much of it is entirely free and easily available online.
Here are a few ways to gather secondary market research:
- Trade associations: Trade associations are organizations that serve specific industries. There’s almost certainly one for your industry. Once you find it, contact them and ask them for information about their industry and markets in the industry.
- Government information: The U.S. government has a treasure trove of information to wade through. The data is all free but may take a little bit of time to find.
- Third-party research sites: For reasonable fees, there are market research companies that will sell you pre-written industry reports that provide information on industries and their target markets.
Where to find information
Here are our favorite resources for doing market research.
U.S. government resources:
Here are sites that provide excellent data within the United States:
- U.S. Census: This is a great starting point for data about the U.S. population. You can drill into the data and find out nearly anything you want to know about different locations and demographics.
- Census Business Builder: Beyond population data, you can look at how much people in your industry spend.
- Industry Statistics Portal: If you want to look up U.S. industry data, start here.
- American FactFinder: Use this tool to find income levels and other key facts about communities throughout the U.S.
- Bureau of Labor Statistics: A fantastic site for information on specific industries, like hiring and expense trends as well as industry sizes. If your target market is other businesses, this is a good place to look for data.
- Consumer Expenditure Survey: If you want to know what people spend their money on, this is your go-to source.
- CensusViewer: While it’s not a U.S. government resource, this free tool leverages US Census data and other data sources to give you access to data in an easy-to-use format that you can explore both visually on a map or in data reports for cities, counties, and entire states.
- Economic Indicators: Offers free economic, demographic, and financial information.
- SBDCNet Business Snapshots: You’ll find a great collection of industry profiles that describe how industries are growing and changing, who their customers are, and what typical startup costs are. You should also check out their list of market research resources, sorted by industry.
- Hoovers Industry Research: While not a free resource, the industry summary data provided here can be helpful if you need in-depth industry reports.
- BizStats: This site will let you search for useful industry-specific financials so you can see what companies like yours spend on marketing, healthcare, and other key areas.
Business location market research tools:
- ZoomProspector: This tool can help you find the ideal location for your business, or find new locations similar to where you already are for expansion and growth.
- MyBestSegments: This tool from Nielsen is a great resource for finding out what demographic and psychographic groups live in a given zip code or where the highest concentration of a given segment lives. While the most detailed data is not free, you can get a lot of great insights from the free version.
- SizeUp: This is a useful mapping tool to help determine where your target customers are. It’s very useful to help you determine the ideal location for your business.
- SurveyMonkey: Should you need to poll a group for business purposes, SurveyMonkey is free and reliable. Simply build the survey and send it out to your audience.
- Google Consumer Surveys: You don’t need to have a contact list to send out a survey on this site. With Google Surveys, you can target users from around the web and get instant feedback on your business idea.
- TypeForm: Whether you need a simple form or a survey, TypeForm does it beautifully. It’s especially good on mobile.
- Qualaroo: If you run a website and want to get quick feedback from the people that are already showing up there, Qualaroo is a great tool for this purpose.
Trade and industry associations:
Many industries are blessed with an active trade association that serves as a vital source of industry-specific information. Such associations regularly publish directories for their members, and the better ones publish statistical information that tracks industry sales, profits, ratios, economic trends, and other valuable data.
- Wikipedia’s list of U.S. trade groups: This is a fairly comprehensive list to start your research from.
- Directory of Associations: Another long list of associations. You should be able to find an association for your industry here.
- Google Trends: Use Google Trends to discover what people are searching on and how search volume on important topics is changing over time.
- Statista: If you’re looking for statistics and trends, Statista is a great place to get started. You’ll find data on virtually everything here.
Doing market research is a powerful way to reduce risk for your small business or startup. The more you know about your customers and your industry, the less likely you are to waste money on marketing and advertising campaigns that don’t reach the right people.
You probably already have a gut feeling about who your customers are and what their needs and pain points are, but taking some time to validate (or invalidate) your assumptions can make a big difference to your company’s bottom line and long-term viability.