research for small business involves applying
some basic guidelines and techniques to ensure
your marketing plan and business decisions
are right on the mark.
with any business activity, your market research
should be carefully planned, written down
and carried out. If your business is already
up and running, you probably do market research
every day in your routine management activities
without even realizing it. Market research
simply makes the process more orderly and
ensures no bias. The eight steps of market
the situation you are facing. For example, many
adults in Allentown go to work every day without
first eating breakfast. There are very limited
food choices, often only sweet pastries, available
at worksites for mid-morning snacks.
define your product or service. For example,
you want to market two varieties of low-fat,
high-fiber homemade muffins: carrot pineapple
and zucchini bran.
the objective(s) of your market research.
What do you need to find out? Think about
what decisions you want to make from the information
you will get. An objective may be identifying
or verifying a target market, identifying
or verifying customer needs and wants, finding
new opportunities and new markets, or estimating
the size of markets.
well-written objective is clear, concise,
complete, realistic and commercially worthwhile.
One objective may be to find out whether working
people in the community are interested in
more nutritious mid-morning snacks. Another
objective may be to learn whether or not your
nutritious muffins appeal to the tastebuds
of these people. A third objective may be
to discover whether the local high school
will sell them in its snack shack.
at the information you already have. Research
may simply mean organizing and analyzing existing
information. Check sales receipts for your Lehigh
Cranberry muffins from the past three years.
They may show a steady increase in sales, indicating
your market is ready for more muffin varieties.
additional information, if needed. Begin by
doing some indirect market research. Find
information that is already available, such
as government or nutrition studies which look
at peoples' breakfast habits, the importance
of nutrition in peoples' food choices, and
the importance of a low-fat, high-fiber diet
for good health. Then, if need be, do some
direct market research. Generate some information
yourself by doing a taste test of your new
muffin varieties at a local supermarket or
be afraid to let the cat out of the bag. You
need to talk to all kinds of people about
your idea as part of your research to help
determine if your idea is feasible. You can
be assured that the advice you get from a
professional consultant or government department/agency
will remain confidential.
and analyze the information collected. Make
sure your research answers the questions who,
what, where, when, and why so you don't jump
to conclusions. Is there anything else you
need to know? Who is your competition? Who
else is producing muffins, breakfast bars,
or non-nutritious snack foods? Information
from every source should be compared, ie.
all similar types of snack foods available
in local and nearby supermarkets.
or gaps in information mean more information
is needed. You may learn that your target
market is interested in nutritious snacks
and likes the taste of your muffin varieties.
However, if you don't know whether they are
willing to pay $1.25 for a muffin, $0.25 more
than a pastry costs, you'd better find out.
decisions based on what you have learned. If
all questions are answered, including customers'
willingness to pay $1.25/muffin, make a decision
to add these two new muffin varieties for a
three-month trial basis.
the results of your decision and learn from
them. If sales receipts and customer feedback
during the trial period indicate that fewer
carrot pineapple muffins are sold than your
other types, you may want to further explore
the reasons for this. The information will help
you decide whether to scrap the muffin variety
or simply make a minor recipe modification.
Steps 1, 2, 3, 4, 7 and 8 can often be done on your
own. Step 5 can often be done at least partly on
your own. Step 6 may benefit from some professional
market research help.
Market research can take many different shapes
and forms. It can be as simple and inexpensive as
going to the local library to do some research,
or checking out your competition at the local farmers'
market. It can also be something more complicated
and expensive like test marketing your product at
a local grocery store, or doing a telephone survey.
research can be divided into two basic types:
is inexpensive and fairly easy to obtain (information
that is already there for the taking or buying,
such as government reports and trade association
is often more complicated, and can be more expensive.
Because it is custom made, it allows you to answer
specific questions and concerns about your business,
and thus make business decisions more effectively
(information you generate yourself, such as surveys
and focus group testing).
are also two general types of information market
research can give you. One is quantitative; information
expressed as quantities, percentages or numbers
(e.g., 4,200 women live in my trading area, and
profits in the Allentown restaurant industry rose
by 7 percent between 1985 and 1993). The other is
qualitative; information about people's feelings
and perceptions (e.g., the main reason men shop
in the Center Mall is convenience). Both types can
look within your business:
To Do Your Market Research
The following process will help you conduct
the nuts and bolts of your market research (i.e.,
complete Steps 4 and 5 above.)
This is very inexpensive, takes place very close to
home, and means doing some indirect research and maybe
a little direct research. Check your records. Look
at sales records, complaints, returns, and receipts.
Check the reasons people returned your potato chips
to see if there is a common denominator. Find out
what your competitor(s) charges for their potato chips
and compare it to yours. Cross reference addresses
on receipts with the type of potato chips bought,
to tell you how effective an ad in a particular newspaper
checking your records, talk to your employees. They
are excellent sources of information on customer
likes and dislikes. They hear the positive comments,
the minor gripes, and the requests for a type of
potato chips or potato-based snack food you don't
carry. From their day-to-day contacts, employees
can give you a good idea of your customer profile.
look outside your business.
by doing some indirect market research.
This will still be inexpensive and fairly close
to home. Government
studies, food industry magazines, business magazines,
newspapers, business directories, demographics,
statistics, computer databases and competitors'
literature are just a few sources of useful information
available at minimal or no charge. Much of this
information can be found at the library, chamber
of commerce office, Agriculture office, and Economic
Development and Tourism office. Staff in these
places can help you find the information you need.
To ensure your indirect market research is done
effectively and efficiently:
doing some direct market research. You may find
this necessary and useful.
Determine what decisions you will make as a
result of information collected.
Decide what information you need.
and find possible sources of information.
usefulness of information found: Who collected
it? When? Why? How?
if direct market research is needed before making
group interviews, test marketing, and observation
are the most common direct market research methods
used by small businesses. Because
this can be fairly complicated and/or require
certain skills and time, this is where you may
see the real benefit and need for a market research
professional. This is especially true if you are
considering making a major decision which will
require a large amount of money.
To ensure your direct market research is done
effectively and efficiently:
Steps 1 and 2 of your indirect market research
action plan. Decide what decisions you will
make based on the information collected, and
what information you need to make the decision.
Decide which method(s) is/are most appropriate
given the objectives.
on the appropriate sample size.
who you will contact for your sample.
questionnaires and letters needed to gather
the method chosen to make sure it is the most
appropriate. Test marketing your muffins at
local farmers' markets may be a better way
of getting information on taste of your muffins
than a telephone survey.
your survey and make changes if necessary.
and analyze the information.
the result of the decision(s).
to good marketing research is neither sophisticated
technique nor reams of information - it's useful
and timely information. So do market research, but
don't overdo it. Anyone considering doing some or
all of their own direct market research should learn
more about the subject before doing it.
Berry, Agricultural Marketing Agent
Penn State Cooperative Extension
to the top.