Market research is essential to understanding your customers and your competition. Market research can also identify trends that affect sales and profitability. But successful market research takes planning and strategy. Here are some of the most common mistakes businesses make in conducting market research and tips for avoiding them.
1. Overspending. If you are smart about it, performing market research does not require a huge budget. But in their haste, many business owners shell out big bucks on the first market research firm that promises to provide them with all the data they could ever want on their target audience. If you are hiring an outside firm, shop around for the best deal.
2. Not knowing what you are looking for. Doing market research in the hopes of discovering something (anything!) about your customers can be an exercise in futility. You should know what information you need before you even begin. Have questions ready for which you are seeking answers, such as “What are the specific needs of my customers?” or “How much would my customers be willing to spend on this product?”
3. Poor choice of reference materials. The Internet is a great place to start your research. Business libraries are also worth visiting. But you must consider the source of the information you are getting. This is particularly a problem on the Internet, where sites can include dated or biased material. Research your research materials; check dates and double-check pertinent information.
4. Not thoroughly researching the competition. Get as much information about your competition as you can. The more you know about how they are conducting business, their pricing, and their strengths and weakness, the more effectively you can establish your competitive edge.
5. Not researching price information. If done properly, your market research should tell you what customers expect to spend and how high they will go to purchase a product or service like yours.
6. Researching the wrong group. Before accumulating first-hand research from your customers, you need to have an idea of who they are. For example, a focus group must meet your demographic needs, and a survey must be answered by prospective customers. Often businesses make the mistake of gathering random data, much of which does not apply to their business needs.
7. Not honing a good research instrument. Just handing out a questionnaire is not good enough. You need to be sure that your survey will provide you the answers you need. Take the time to hone a solid research instrument that helps you find out about your customer base.
8. Not being aggressive enough in your research efforts. The best surveys or questionnaires are useless if you do not get customers to answer them. Businesses are often not aggressive enough and end up with piles of unanswered survey forms stacked up by the cash register.
9. Relying on one set of data. Whether it is the U.S. Census or a survey you personally conducted, one set of data is rarely enough to get an overview of your target audience. Use various data, including information from primary and secondary resources.
10. Ignoring your market research. The only thing worse than not doing market research at all is spending money on it an not utilizing the results. Some business owners also tend to toss good research aside just because it did not support the answers they wanted to see.