When you decide to start up a business, the furthest thing from your mind might be conducting research. But this is actually one of the first and most important steps you should take before your idea takes flight.
You´ll first need to research other businesses that sell the products or services that you hope to sell. If you´re opening a neighborhood business-a restaurant or hair salon, for instance-you might visit the competition, scan their prices, check their design of menus and services and furniture arrangement, and compare what they offer to what you hope to offer.
If you are offering products or services that have a more national scope-selling clothes or, in my case, designing diaper bags and baby accessories-you´ll probably conduct research a bit differently. The Internet is a handy tool for locating information on the competition as are bulletin boards that cater to your focus group. And, of course, visiting national chain stores that sell the items you are planning to manufacture can give you much needed information about the competition’s products.
This type of research is important for many reasons. First you´ll determine your competition in the area. Second, it will help as you define your businesses niche. Lastly, you might find that your original idea has been taken and that by making just a few changes to your product or service you’ll have a better chance of standing out from the competition.
As for my business, the first step my girlfriend and I took when we began discussing the idea of creating a new line of diaper bags was to visit boutiques and stores that sold them. We observed the materials and patterns, noting what we liked and didn´t like about each. We compared the prices. We then went online and read reviews of our competition´s products, and we even conducted an online survey asking mothers what they liked and disliked about their current diaper bags. All of this research went into the design of our first prototype, so that the end result was of a new, unique product that will hopefully fit into its own niche in the small business arena.
Yet this is only one type of research that needs to be conducted before opening a business. You will also need to collect and analyze information about the consumers that your product is targeting. This step is called market research.
Market research can be a long and possibly costly step in your business venture, and one that many business owners decide to skip over if they feel they lack time and funds. However, a good market research plan can actually increase the success of your business. Spending a little time and money up front to research information about the consumers and what they are likely to buy can improve your profits in the long run. So while the idea of market research seems daunting, the reality is that you quite possibly can´t afford to forgo this step of business development.
An article on allbusiness titled Market-Research Techniques (http://www.allbusiness.com/articles/SalesMarketing/1287-26-1818.html) gives excellent examples on how to conduct market research for your business. According to the article, there are numerous ways in which you can collect information about consumers who might purchase your product, but there are 5 basic methods: surveys, personal interviews, focus groups, field trials, and observations.
Surveys can be conducted in numerous ways: online, in person, over the phone, or by email. While in-person interviews can generate great results, they can also be costly. However you can set up an interview in a high traffic area that attracts your targeted consumers (in a shopping mall, for instance) and ask them questions that relate to your product. You might also decide to hand out samples and feedback cards. It is much easier to get a response when you conduct a face-to-face interview than it is when you attempt to contact consumers on the phone or via email.
Focus groups and field trials are both set up using open-ended questions. Focus groups can last up to four hours while field trials generally take an hour or so. Unfortunately these two types of market research do not always generate the best results as they don´t necessarily represent a large segment of the population.
A great way to get your product out into the hands of the consumers is by using a field trial. This is particularly helpful for small business owners who are just breaking into the business. Field trials consist of giving your product to a store that sells similar products and getting consumer feedback. Contact local or online stores that sell similar products to see if they would be interested in trying to sell your product as well.
Lastly, observation can be a great way to determine what consumers are purchasing. I´ve used this a lot, by observing mothers as they are out in the park, at the beach, taking classes with their children, and running errands. I´ve looked at the bags that they are carrying and taken note of what fashions seem popular and how the bags are being used. Observation is free, but it really doesn´t tell you whether the consumer likes the product or would buy it again: for this you need a more in-depth method for gathering information. Combining several of the market research methods will get you the best results, and there are ways to do this without costing your business a large amount of money upfront.
For additional resources on market research, check on these sites:
Conducting Market Research for less money: http://www.entrepreneur.com/article/0,4621,283535,00.html