Whether you’re developing a business from scratch or expanding your existing product line, it’s vital to understand your market — your target customers, your competition, and the environment in which your company operates. A little basic market research can help you avoid costly mistakes, such as loading your warehouse with unmarketable products or spending your advertising budget on wrongly directed campaigns. Conversely, digging into the details of your market may uncover exciting new opportunities.
Say, for example, your firm manufactures solid oak furniture for an upscale clientele. You’ve been reading trade journals lately, and the next surefire product in your industry seems to be hand-crafted wooden toys. Should you start tooling up for this new product line — hiring skilled craftsmen, buying new machinery, and contacting new suppliers? Maybe. But conducting low-cost market research might save you thousands of dollars and loads of stress. You might find, for example, that your current customers really aren’t interested in wooden toys. They want the latest electronic gadgets for their kids and grandkids. Or you might learn that customers in your current market are already buying wooden toys from a competitor at a lower price than you can offer. On the other hand, your market research might uncover a hidden demand for such items, and lead you to introduce the new product line in a test market.
If you’re considering market research on a budget, here are two ideas that won’t break the bank.
- Use publicly available information. This is known as secondary market research. It’s a low-cost way of pulling together data that’s readily available from public sources. Trade journals, government publications, surveys conducted by other companies — these can provide valuable insight into your market and target demographic. Many of these sources are available online. The downside of secondary research is that it may be unspecific, outdated, or biased. So proceed with caution.
- Conduct your own research. This might include interviews, online surveys, or focus groups. Start with current customers and if they show significant interest in your idea, expand the sample to other potential customers. Primary research is often more valuable than research from public sources because it tends to be more specific and current. But be sure to talk to real customers (not just your friends and colleagues), and try to avoid leading questions that will tend to bias the results.
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