Do you know YOUR CUSTOMERS?
W
hether you are starting a new business, growing an existing company, or just trying to recover from a pandemic, knowing your customers is vital to success. If you don’t understand your customers, you won’t know whether your product or service solves their problem or is something they actually will spend money on. And you won’t know whether your marketing messages and channels will be effective in reaching them.
BY Paul Smith
Conducting market research provides key insights to help answer those questions. Yet, as I assist clients in developing business, marketing and financial plans, one of the most important yet often neglected steps is market research and analysis. Sure, doing effective market research requires some time. However, doing market research
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up front can save a lot of time, money and headaches later on.
What is market research? Market research is simply the process of gathering, analyzing and interpreting data about your target market and the industry as a whole. It helps you identify and define your ideal customer, their problems, buying habits, potential market size, competition, overall industry trends and conditions which may impact your business. Market research generally consists of primary and secondary research. Primary research is the collection of direct first-hand information from your potential or existing customers. This is the type of research you should do when validating your business idea. Primary research includes interviews, focus groups, brand awareness and customer satisfaction interviews. Secondary research essentially covers everything else. It includes internal sources of information such as financial statements, commercial sources such as industry reports and public/government sources such as census data.
Neither primary nor secondary research is better than the other; they simply serve different purposes. To get a complete picture, a mix of primary and secondary research should be used. When you’re first starting out, focus on conducting primary research to validate your business. Compare those findings to secondary resources such as industry trends and local market reports.
How to do market research? 1. Identify your target market Your target market is simply your “ideal customer:” someone who has the problem that you solve and is willing to spend money on your solution. Ask yourself these questions: Who are they? What common traits do they share? These might be demographic traits such as age group, gender, income levels, or locations. Or they might be psychographic traits or groups of people who have similar interests or spending patterns. In reality, your business may have several potential target markets, but it’s usually
