Researching your business idea
If you're serious about starting a business, using market
research as part of your business plan will help you determine how
viable your business idea is, as well as helping to convince
potential investors. Market research shouldn't just be used when
you're planning your business, though: conduct regular research to
gain a deeper understanding of how your market and customers are
Using market data
- A simple way to conduct market research is to look at
pre-published reports and statistics. These will provide
data on how your market is performing, market trends, and may give
you statistics on the average customer in your sector and his or
her habits. These may be available for free from the government, or
for a fee from commercial data companies.
- Always ensure the information is up-to-date.
Statistics for the property market from a year ago will show a
market which was dramatically different to the current
- There's a wealth of information out there, but it will take a
bit of research to find the right information for your business.
- Trade associations or bodies: Your trade
association will either have publications of its own or be able to
point you in the direction of information.
- The web: It's an obvious one, but it's surprising
how much information you can glean just from getting the right
phrase when you're on search. For the best results, put speech
marks around specific phrases.
- The Office for National Statistics: The government
statistics website has stats on everything, from UK tourism to
tomato growers in the South-East. A word of warning, though: the
website is almost impenetrable, so be prepared to spend time
sifting through data sets to find the right figures.
- Commercial publishers: Companies such as Mintel,
Datamonitor, Euromonitor, Visiongain and The Economist Intelligence
Unit (EIU) publish extensive, detailed reports - but be prepared to
pay for the information. If you don't have a spare £3,000, though,
try the British Library Business & IP Centre, which gives you
access to thousands of publications and statistics.
- Trade publications: Some trade publications also
conduct market research. Look at titles from publishers such as
William Reed, United Business Media, or B2B International.
- Although it's never a pleasant process to go through, cold
calling is faster than direct interviews and useful if
you want to get hold of a large amount of data in a short space of
- Cold calling is more suited to quantitative
statistics regarding customers' ages, occupations and habits
than for lengthy discussions of your product or service idea and
where it might fit into their lives.
- Make it clear at the beginning of the call that you're
not trying to sell anything to the person on the other
end of the line, and ask politely whether they would like to answer
a few questions.
- Keep your calls as short as possible - people
don't like being bothered. Simple yes/no questions or multiple
choice questions, as long as they are specific enough to provide
detailed information, will keep things brief.
- You can buy direct marketing lists which include
telephone numbers, email addresses and other contact details from
companies such as TLS Data or Selectabase. Search the web if you're
looking for a specific group.
- Cold calling has a relatively low success rate, so
you'll need to develop a thick skin. If 5% of the people you call
are prepared to answer your questions, you're doing very well. If
you feel yourself lagging or beginning to get frustrated, take a
break and try again later on.
- For customer research, nothing beats going out with a clipboard
and a survey, standing on a street corner, looking your customers
in the eye and asking questions.
- Choose a time and place you know lots of your
target customers will be around. For example, if you're launching a
cleaning service, busy commuters may be your best market, so try
standing near bus stops in the morning, or if you're launching a
new variety of baby food, mums will be your best customers - so try
to speak to parents returning from the school run.
- It may be worth offering an incentive to complete
your survey. If you can buy them a coffee while you talk to them or
offer money off your product or service, they will be more likely
to stop and chat.
- Don't be disheartened if people turn you down, and
persevere. Eventually, people will stop and talk.
- To increase the number of results you get, employ
people to help you out - but make it clear they need to be
Running focus groups
- Focus groups allow you to glean information from
customers' responses to your product or questionnaire,
creating a dialogue which will allow them to build on each others'
- Focus groups are good for getting reactions from
children or other groups whose level of literacy or
attention span may not be robust enough to handle innumerable
- A focus group should be made up for six to eight
participants, all of whom have been pre-invited. Incentivise
people to attend the focus group by offering a financial reward or
- The session should last no more than an hour or
people will start to lose interest. Explain to the attendees
exactly how long the session will last and how it will be run so
they aren't left anticipating an endless stream of boring
- Ensure all the questions you ask are open to
prevent people from giving yes/no answers. Instead, bring up topics
and encourage people to speak to each other about it. If the
participants aren't being particularly forthcoming with their
opinions, invite each person to speak in turn.
- To encourage them to really think about their responses, ask
participants to consider a particular issue or topic for a
few minutes before they write down how they feel about it.
Then, ask each participant to read their response aloud to the
group. This should help stimulate debate and will ensure well
thought-out and structured arguments.
- Keep minutes for each focus group, as well as a brief
profile of each attendee. This will ensure you have a
lasting record of the focus groups and, in the longer term, will
provide you with information on how your market is evolving.
- Use pre-published market data to get statistics on how your
market is performing, market trends, and the average customer and
his or her habits
- Cold calling allows you to gather last amounts of direct
- Direct surveys will allow you to speak to your potential
- Focus groups stimulate dialogue among potential customers
Quantitative research: Quantitative research looks
at statistics: how many customers there are, what their age ranges
are, what their average incomes are, and provides information you
can then present as a graph or table.
Quantitative research: Quantitative research is more
anecdotal: for example, you may want to ask customers why they use
your product or what you can do to improve your service. This can't
be presented in a table or graph format, but may be useful to help
you better understand your customers.
Open/Closed questions: An open question forces the
answerer to put detail in their question - for example, 'How do you
think we can improve our product?'. A closed question generally has
a yes or no answer - for example, 'Is our product useful to
Some information you might want to find out:
From new customers:
- How many there are
- Their age
- Their occupation
- Their background
- Where they are based
- Whether they have a need for your product or service
- Whether they would use your product or service
- How they would use your product or service
- Whether they will have a need for your product or service in
the future - if you are a baby brand and they don't have children,
are they planning a family?
- How much they would be willing to pay for your product or
- What they think of your branding
- What they think of your competitors
- How they would compare your product or service to your
- What sort of service they expect for the price they are paying
- if you are a plumber, would they value a free call-out?
- Whether they would be tempted by an introductory offer or
- If they are a business, whether they have any future plans
which might mean they need your services
- If they are a business, what is the name of the person who you
need to speak to?
From existing customers:
- What they think of your product or service
- Whether they have ever used a competitor. If so, why they chose
the competitor and whether they would use them again
- How they feel about your prices
- Why they use your product or service over your competitors
- What they think of your customer service
- Whether they have any suggestions for your business
- Whether the reason they use your business is likely to change -
are they likely to move from the area?
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