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How Entrepreneurs conduct and use market research?
Market research regards learning about your customers. Specifically, market research is identifying the needs and wants of your target customer, scope business operations to meet those needs, the manner in which to reach the customer with your offering, and broadening your product or service to include other prospective customers.
What is marketing research?
Business owners and entrepreneurs acquire information through marketing research that helps identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve the understanding of marketing as a process.
Is marketing research valuable to entrepreneurs?
Marketing research can help small businesses determine the following:
- What are the demographics of your potential customer base? (Age, race, ethnicity, community or belief association, socio-economic status, etc.)
- Where is your potential customer base located?
- How may people within a given area meet those demographics?
- What is the level of urgency (level of need or want) for the product among the potential customers?
- To what extent will your product or service meet that specific customer demand?
- Are there other businesses already serving these customers?
- How well do these competitors meet the customer’s level of demand?
- Does any competitor have a competitive advantage over other businesses in meeting the customer demand?
- Do you have a competitive advantage in meeting the customer demand? That cannot be replicated? That cannot be outdone?
The above questions are just examples of the type of information you will want to understand in evaluating the value proposition or potential of a product, service, or idea to be a profitable entrepreneurial venture.
Two basic types of market research
The two basic types of marketing research are Primary and Secondary Research.
Secondary Research involves using data or information from third parties to make an assessment about the characteristics of the market. Primary research involves assembling information and resources oneself to determine the market characteristics.
Quantitative and Qualitative Primary Market Research
Primary research is split into two categories: quantitative and qualitative.
Quantitative research provides hard numbers to some of the questions above. For example, it should give you a baseline of the number of potential customers in a given product market, the number of potential markets, etc.
Qualitative Research deals less with hard numbers and addresses more of the preferences among identified customer segments. This research method relies greatly on soft data, such as conversations and customer opinions.