Market Research is Your Best Friend

Market Research is Your Best Friend

Posted in Marketing by on

It takes a little digging to know who your buyers are, who your competition is, what product possibilities are out there, and what next steps you should take.

Re-searchin’ for the one, have you seen her?

Market research is an invaluable tool that every person who sells anything should use.

Market research refers to all of the information you gather related to customer preferences surrounding your products. It can help you develop a business plan, and make data-driven decisions along the way as your business changes and grows. This kind of research can also help validate decisions made through guesswork and intuition.

What can I look for?

So what kinds of things can you learn from market research? Here are a few objectives you can have when starting out your investigation, Sherlock.

Product-market fit

Product-market fit refers to how good of a match what you sell is with what your buyers are looking for. It can be the biggest difference between a flop and a success. Read our guide to researching product-market fit right here.

Product viability

Product viability is a measure of how well your product will sell and grow, and you can learn how viable something is based on both market-based criteria and product-based criteria. The same can be applied to a niche or collection of products, instead of an individual product. Here’s a snapshot of some viability questions to find answers for.

 Market-based viability

  • How many people are currently buying this product?
  • How many people have the potential to buy this product (potential market size)?
  • Is this product a fad that will die out soon or an actual trend that will grow for years?
  • Where is this product generally available? Not available?

Product-based viability

  • How much does it cost to acquire this product, and how much are you able to mark it up?
  • How easy is it to store, ship and transport? Are there any issues with size, shape, weight or shelf-life?
  • Is it elastic or inelastic (will people decide not to buy it if the price goes up)?
  • Are there easy substitutes for your product?

The ideal customer

Knowing who wants to buy your product and who you should be catering your brand to is one of the most fundamental pieces of creating a viable business. You’ll be able to retain customer loyalty better if you can successfully understand how your customers think and what they are interested in. It’s important to look not only at your existing customer base, but new target markets as well. Building customer personas through market research is a great way to get started - read our guide to researching your ideal customer.

Scoping out the competition

Knowing who else is grabbing a market booth next to you can help you get better at your business. First of all, it’s important to know what the major players are and what market share they have. Your competition refers not only to your direct competitors (everyone who sells the same thing as you) but your indirect competitors - everyone who sells products that people substitute for when your product is unavailable or too expensive. If you sell olive oil, your competitors are not only other olive oil makers, but anyone making cooking oils or even kitchen supplies more generally. There are a lot of tactics to learn from your competitors, whether it be how to improve on the pain points their customers have, or what mistakes you can avoid making because they’ve already done the homework.

Researching your competitors can also mean looking for formal associations, legislation or regulations that affect your industry. Are there markets you aren’t allowed to sell in? Or that have lower or higher barriers to entry? As an e-commerce retailer, you have the flexibility of launching your store in a location with less outright competition..

Research Methods

The Old Fashioned Survey

Surveys are a staple when it comes to doing your own market research. All of the questions you can’t get answers to by just looking at your company data - they go in a survey. You can directly ask about customers’ process for choosing one product over another, how they heard about you, what would make them buy or not buy your products, and what they expect from your overall brand.

You can distribute surveys in many different formats. On the street in a popular area, on your website, or even as part of your loyalty program. Read our guide to designing and implementing the perfect survey here.

Giveaways and Testers

A great way to get an idea of how a product is going to be received is to give out little samples in crowded areas or as part of an affiliate marketing campaign. This gives you an opportunity to get get feedback right away, and see the rate at which people came back to make other purchases.

Focus Groups

Focus groups are an excellent, cost-effective way to workshop a product or research a customer base in a short amount of time. Get a handful of people in a room, give them a few questions about your product, and use a skilled facilitator to make sure everyone has a chance to share their opinion. Part survey and part brainstorm, focus groups are a great way to gauge consumer preferences and reactions.

Sales records

If you’ve been making sales for a little while, you’ve already got a heap of data that’s ready to dig through. Be sure to check out Shopify Reports, or go more in-depth with Google Analytics to find out when customers are shopping, what items they’re buying together, who’s making purchases and how they’re using your website.

Make more data-driven decisions

Elkfox can help you learn more from your sales data and push forward with your market research. Whatever your research goals are, we’re here to make them easier. Contact us.

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