As an entrepreneur, you’ve probably had that ‘eureka’ moment where it feels like you’ve just come up with the next big thing. These moments feel fantastic, but there’s a process that needs to be followed to properly ensure your business idea is viable. In this article, learn more about how to use market research to evaluate your business idea and set yourself up for success.
Evaluating Your Business Idea Using Market Research
Market research is an entrepreneur’s best friend. You can use it to discover common characteristics and preferences of your customers, who your competition is, and the current and future trends that could affect your business.
By thoroughly researching your customers, industry, and competition early on, you can make an educated assumption as to the viability of your business idea. A great way to get started is by using our Evaluate Your Business Idea checklist.
Methods of Research
Here are the two categories of market research:
1. Primary Research
Primary research is information you gather yourself. This could include questionnaires, surveys, focus groups, and even field testing. The main advantage of this type of research is that you can ask questions to address exactly what you need to know.
Primary research gives you an intimate understanding of your customers, but it’s often time-consuming and labour-intensive work.
2. Secondary Research
Secondary research is when you pull existing data and information from reports, books, or online sources. Websites like Statistics Canada can help you make informed decisions about your business.
Finding the Data You Need
The good news is that the data you need is readily available, you just need to know where to look.
Your Target Market
A target market is a group of people that share common characteristics such as age, income, education, lifestyle, and values, among others, and that are most likely to buy your product or service. When you think of your target market, you should concentrate on the characteristics for the majority of your customers, not all of them.
You should also consider ranking characteristics in terms of “likelihood to buy from you.” For example, among your target market, age may be more important than education, and income may be more important than occupation. Maybe your target customer is a post-secondary student living away from home for the first time, or a middle-aged, upper-income homeowner. When marketing your business, each type of customer requires a different message to draw them in.
Once you’ve listed important characteristics of your target customer, you can search for information on where they’re located and what trends are going on within your target group. You can find more demographic information on local, provincial, and federal governments websites.
Your Competition
You must research your competition in order to understand how to get your target market to buy from you and not others. For example, promising better service to your target market is not going to increase your sales if all your competitors are promising the same.
By researching what your competitors are doing for their customers, you can work on differentiating yourself. You can also broaden your sales by offering products and services that your competitors aren’t providing. Use company directories, the Internet, or licensed databases to identify who your competitors are, where they’re located, as well as their advertising strategy, product lines, and web presence.
Industry Trends
You must be aware of the current and the long-term trends that could impact your business. Use online sources like Springwise or Trendhunter to research industry and societal trends. You can also search licensed periodical indexes for relevant magazines and newspaper articles. Plus, your local city hall’s planning department can provide information regarding density and future developments.
Need More Guidance?
Market research helps remove the guesswork from business decisions. Make sure to download our Market Research Checklist and check out our article, How To Identify Your Target Market. And, take a look at our Market Research Services for one-on-one assistance.
Small Business BC is Here to Help
SBBC is a non-profit resource centre for BC-based small businesses. Whatever your idea of success is, we’re here to provide holistic support and resources at every step of the journey. Check out our range of business webinars, on-demand E-Learning Education, our Talk to an Expert Advisories, or browse our business articles.
