Market ResearchJul 26, 2021
The most important action that any business should undertake is to understand the market in which it operates. Market research tends to be neglected by small businesses who assume they don’t need to do it because their ideal client is like themselves. However, you are not your customer.
Market research is necessary for understanding what customers want. It should reveal the different needs in the market so you can group together the customers with similar needs and categorise them into groups whose values and behaviour are alike. Identifying your potential buyer groups by their similarities helps you to better meet their needs.
Doing some research is always better than none, and it does not have to be expensive or complicated. For example, you might glean valuable insights into a problem or opportunity and how the market sees an issue by doing Google research. By looking at what competitors are offering you will better understand the problems that exist, which you might address.
Market research terminology
Here are some terms you might come across as you do market research:
- Primary data is data you collect yourself.
- Secondary data is collected from another source, such as from surveys conducted by another company, or by viewing tables.
- Quantitative data is hard numbers and provable facts. How many people, where from, are they female or male or other, etc.
- Qualitative data is less about hard facts and numbers, and more about feelings and opinions. Does your target market like your product? Do they have any fears or worries?
How you approach research depends a lot on your product or service. Often a small business owner will glean valuable qualitative data from talking to prospects and customers or observing them. So, consider interviews, surveys, or focus groups to better understand how customers feel about product features, or what they experience using your product or service. The insights gleaned into people’s feelings and perceptions can help in many ways, including in developing more empathy for customers.
Secondary data sources can be invaluable for gleaning industry trends or shifts, noticing changing consumer needs and preferences, and gaining insights that might shape where your business chooses to focus its efforts and resources.
The need for research might come up at various junctures in your business journey, and much depends on the stage you are at in your business.
If you are creating a new product or starting a new business, your objective is to find out what problems you should aim to solve based on what is a pressing need for customers.
Once you have identified a problem to solve with your product or service, it makes sense to target the group of potential customers that is most likely to buy from you. You do this by segmenting customers.
Segmentation involves looking at the market as a whole as if it were large ‘pie’, and metaphorically cutting it into pieces or segments, based on the individual needs of the various segments. Once you have divided potential customers of a product or service into these smaller groups, you can decide which one or more of those niche groups to target.
Targeting comes after you have done initial market research to segment the market. Once the market is segmented, you would do further research (or draw from existing research) to decide which segment or segments to target with your product or service.
Having identified your segment, you might then conduct more in-depth research to get to know them better, find out what their wants and needs are, and identify how to solve the problem for them. The objective of segmentation and targeting is to define and focus on the customers who really want what you are selling; those who will most rapidly buy your product or service.
Difference between Segmentation & Targeting
Segmentation and targeting are not the same thing and should not be lumped together. They are two separate exercises: segmenting is purely about creating different groupings of the market and categorising them based on their different wants and needs. Targeting comes afterwards when you choose one or more segments to market to.
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