One area of importance that is often overlooked by small business owners with too much on their plate, is Market Research – to get a good grasp of their competitors, their target customers, their geographic market areas, and their industry. As a result, many small business are operating in the dark – functioning on the ‘gut instinct’ of small business owners or their staff. While that may work for a period of time, pretty quickly it becomes evident that you don’t know enough about what your competitors are doing, who exactly your most profitable customers are, and where exactly you can find those most profitable customers.
Having such information can help a cash-strapped small business owner specifically target potential customers that are most likely to be interested in his product or service, and to keep costs manageable since you won’t be spending money directing advertising/marketing efforts to groups that are unlikely to have interest in what you have to offer. Knowledge of your market area allows you to know exactly where to find those highly profitable customers. Being aware of what your competitors are doing allows you to find opportunities they may be missing and take advantage of them, and Industry knowledge allows you to insure that your company is ‘keeping up’ and that consumers needs will be met by the use of your product or service – as well as ways others in your industry are approaching their customers.
We at Strategic Growth Concepts are strong proponents of utilizing cost-effective ways to conduct Market Research to enable small businesses to gain every advantage possible. We have developed a variety of tools to enable small businesses to capture the information they need, and are always available to assist you in this endeavor. Should you have interest in learning ways that Market Research can help you more cost-effectively market your business, please contact us via our website or via email at info@StrategicGrowthConcepts.com. In the meantime, please read the article below from Forbes for some excellent information and resources.
Kern Lewis, 07.17.09, Forbes
Free data? It’s out there, if you know where to look.
Small business owners can be forgiven for shying away from projects without an immediate payoff. Cash is tight, customers are hurting and the future is uncertain.
Still, when it comes to understanding your customer base, the education process can’t stop. Tastes change, markets morph. If you rely on the same dusty old data that once anchored your business plan, you’re finished–maybe not tomorrow, or three months from now, but soon enough.
I’ll grant you that the returns on continuing market research are hard to measure, another reason that task gets pushed to the back of the line. The good news is that there’s a wealth of free information out there for those willing to pound a few hundred key strokes to find it.
This topic is so important that I will be dedicating two columns to it. This first one focuses on actionable data–the kind that you can truly put to work, as opposed to the stuff that’s merely “nice to have”–and where to find some of it for free. We’ll discuss the stuff you pay for (but not too much) in the next column.
What constitutes actionable data? Here are three main categories:
Demographics. You can’t sell to people if you don’t know who they are, where they live and how much they have to spend. Demographics determine how to spend precious marketing dollars–for lists, advertising, direct mail, keyword testing (for online campaigns), and on and on.
I learned this lesson back in 2005 when I launched a new cash-flow-based loan product. I simply didn’t know which customers would be likely to leap at these loans. After a number of months and many thousands of wasted marketing dollars, we surveyed our new customer base and revised our original profile (turned out our core base were not just “wealthy households,” but more specifically, self-employed small businesspeople at least 45 years of age). Understanding those demographics honed my marketing strategy and boosted the return on those efforts.
Measurable preferences for specific product attributes. You can’t offer every bell and whistle. You have to know what matters most to customers.
When Allstate markets auto insurance, it picks one benefit to emphasize, such as “accident forgiveness.” In a separate ad it might focus on “peace of mind.” Each effort is targeted, not cluttered with a kitchen-sinkful of selling points. You need to know which benefits will resonate with your customers. Good research that answers that question is crucial to performance.
Behavioral trends. Once you know who your buyer is and what they want, you then have to know how they like to buy it.
Younger people tend to be more comfortable buying product and service online, for instance, while older folks still appreciate personal interaction with a salesperson. Conclusion: If you target Generation Y, you had better have a killer Web site, a presence on social networks, etc. If most of your customers use Twitter, you better use it too.
Now that you know what you’re looking for, how to find it for free?
Step one: Cast a wide net. Start searching the Web by name of industry and add qualifying terms like “market size” or “competition.” (Remember to put quotes around multi-word phrases.) Don’t just use Google; tap other search engines, including outliers like www.cuil.com and Microsoft‘s new www.bing.com. You’ll be surprised how different the results are.
Two research-focused sites I like are www.marketresearch.com and www.quirks.com. Quirks has a glossary of market-research terms, lists of vendors and a library of 2,500 articles searchable by topic. I recently looked for articles on telephone interviewing and came up with over 100 worth browsing. (Some of this material was behind a free registration wall, a minor inconvenience.)
Keep your eyes open for helpful material that you may not have been expressly looking for. While sussing out my competition (by typing in “marketing consultants” and “San Francisco” in the search box), I came across an article about what the average marketing consultant makes in the Bay Area. (I am doing better than I thought!)
Step two: Check government databases. The portal www.fedstats.gov is the gateway to multiple federal data sources brimming with demographic data. The mother lode, of course, comes from the Census Bureau, which presents detailed population and housing data, such as place of birth, education, employment status, income, value and age of housing units. The full data set, compiled every 10 years, is getting a bit long in the tooth, but to find specific neighborhoods that match your desired profile, it can’t be beat.
The Bureau of Labor Statistics has gobs of useful stuff, too. Thinking about selling frozen filet mignon through the mail and want to know how much the average household earning at least $150,000 spends on beef? Check out the BLS “Consumer Expenditure Survey.” (The answer is $339 a year, by the way.) Just choose the demographic category most relevant to your product or service. You can also access regional breakdowns under the “Geography” tab in the left-hand navigation bar on the main page.
Step Three: Mine the trade associations. Some associations are better data trackers than others, but be sure to browse what they do have. I’ve used information compiled by the Yellow Pages Association to advise my clients on the relative merits of advertising in print or online Yellow Pages.
The bottom line about market research: It takes time and tenacity, so get to it. And I’ll be back in a bit to tell you what information is worth paying for–and what isn’t.