How to Research Your Market

Market research is an essential part of any business that wants to offer products or services that are focused and well-targeted. Good business decisions are based on sound market research and intelligence. By thoroughly researching your market, you can minimize risk to your business, identify new opportunities, and communicate better with your customers. Here, we’ve outlined how to research your market in a few key steps.

Stage 1: Target Market

1. Identify Your Target Market

Consider who your paying customers are and how much you know about them. Are you selling to consumers or businesses?

Then, identify your market’s key demographic, geographic, psychographic, and behavioristic characteristics, including:

  • Demographic – Age, gender, income, education, ethnicity, and family size.
  • Geographic – Region, city, and neighbourhood. 
  • Psychographic – Social class, lifestyle, personality, values, and life stage.
  • Behaviouristic – Buying pattern, consumption, loyalty, and attitude.

Visit a local library to access licensed online databases to help you identify these markets. Some resources include:

For more information on the types of unlicensed databases available, refer to the Small Business BC Market Research Resources Guide.

2. Assess Your Target Market’s Spending Habits

Using the information gathered in step one, assess how much your target market is willing to spend on your product or service and how often they will likely buy or use it. Secondary sources, such as Statistics Canada’s findings on Average Household Spending, are the easiest ways to determine this. 

If you’re providing a niche product or service not included in existing data, you’ll need to conduct research with potential customers. For example, asking them how much they’re willing to spend will allow you to make a feasibility statement about your business idea more easily.

3. Identify Your Customer’s Preferences

Identifying customer preferences is a three-stage process:

  1. Find out what issues need resolving.
  2. Create something you think will resolve this issue.
  3. Take the product or service to them and get their feedback before going to market.

Discovering what potential customers like and dislike about your product or service is critical for success. Face-to-face surveys and focus groups will help you increase sales and reduce costs by getting customer opinions straight from the source.

4. Consumption Trends, Past and Future

It’s essential to monitor the trends affecting your target market using the abovementioned resources, such as Statistics Canada. Other sites that can help identify trends in your market include Trend Hunter and TrendWatching. They’re both independent trend-watching resources that allow you to set up alerts for your particular interest area and monitor ongoing activity.

Google also offers two useful tools for monitoring trends:

  • Google Alerts Allows you to set up alerts using key phrases such as the name of your industry or phrases like “consumer trends.” Google will then send you emails with new commentary, blog posts, or news mentioning your industry, product, or service.
  • Google Trends Allows you to view what’s trending online. With data from as far back as 2004, you can research the topics, products, or industries that have been searched for over time. You can search trending topics from a country level and even down to individual cities, with news that caused any spikes in traffic.

5. Project Your Target Market

Check population trends for your target market to assess the number of potential clients for your product or service. BC Stats provides good projections by age and gender, broken down by region.

Stage 2: Competitor Analysis

1. Know Your Competition

Use business directories, web searches, local knowledge, and industry associations to research your competition. Learn about each competitor’s:

  • Products and services
  • Age of business
  • Number of employees
  • Sales 

Other resources, including licensed databases, can be found at your local library. These include:

2. Know Your Competitors Advantage

Routinely monitor your competition and watch for any advertising, brochures, or updates to their website. Use this data to observe who they’re targeting and the techniques they’re using. Also, compile a list of the services, products, and locations they’re serving. Then, list all the areas in which you can and cannot compete.

Consider discretely buying from your competitors and find out what kind of experience you received as a customer and the quality of products or services.

Stage 3: Current and Future Trends

1. Identify Opportunities and Threats

These and other trend concerns should be researched when starting and operating your business. Consider the following questions:

  • Are there technological opportunities for your business in the future?
  • Is social media critical to your business’ success?
  • Are there technological threats looming over the horizon for your business?
  • Are there electronic versions of your product or service threatening your bottom line?

To research and monitor these potential trends, use the following resources:

Refer to the Market Research Resources Guide for a complete list of key resources to monitor.

Stage 4: Operations and Management

1. Assess the Average Costs and Revenues for Your Type of Business

Before starting your business, it’s essential to understand the average costs and revenues associated with operating your business. You should accurately identify and forecast these numbers to stay on top of your operations and achieve success.

You should identify costs and revenues in the following areas:

  • Advertising
  • Rent
  • Wages and salaries
  • Inventory
  • Revenues
  • Profits

The Government of Canada’s Financial Performance Data offers industry-specific income statement and balance sheet data for small and medium-sized businesses nationwide. It allows you to view financial performance averages and estimated operating costs by industry, level of success, and location.

Additional Resources

Market Research helps remove guesswork from business decisions. Take a look at our Market Research Checklist for more in-depth steps and resources. Also, our Market Research Advisory and Customized Research Reports services can provide additional help with the market research process.

Small Business BC is Here to Help

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