Conducting Market Research: 5 Things You Need to Know

A great new product is only great if customers are willing to buy it. How to conduct market research -- and test demand for your next business idea.

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Target market: The right market research can help determine demand for a new product or service.So you've come up with the best business idea since the Snuggie, and your friends and family think it has potential, too. But before you sink your life savings into a product that could go bust, perhaps you need some opinions from people who are a little more objective. That, of course, is where market research comes in handy.

For aspiring entrepreneurs or even existing business owners, the process may seem daunting. So what's the best way to embark on market research? Here are five things you need to know.
1

You don't have to spend a lot of money.

Of course, you can hire someone like Chuck Rizzo, a marketing coach in Baltimore, who specializes in helping small businesses roll out products and services on the national level. But even Rizzo points out that you can conduct market research at little or no cost. "You can learn a lot about the quality of your idea going through your own social network of business colleagues and customers," Rizzo says.

That said, Shaan Kumor, the chairman of iGlobal Investment Group, an international angel investment and technology incubation firm, points out that "different people are comfortable with different methods of communication, and the best range of data will be collected if it is from the broadest and most diverse sample group possible."

Kumor says you can do this using the usual telephone, e-mail, online survey forms, social media surveys and mobile surveys. The more in-depth you want to go, the more likely it will cost money, but there is plenty of great, free information on market research available online (check out Business.gov's guide to market research, for example).

But if you're going to perform market research on the cheap by yourself, don't rely too much on the Web. Recognize that if you're trying to reach a broad audience, you may miss a wide swath of people if you only rely on e-mail and Facebook.
2

Stick to one or two goals.

Sure, you're curious about your customers and potential customers. You want to know everything about them. But if you're going for a wide sampling of customers, you won't have that luxury. It's one thing to invite, say, 10 regular customers to your headquarters, ply them with free food and soda, then pick their brains. Then, by all means, you have some time to really get inside their heads. But if you're trying to gain insight from, say, 1,000 random people, you can't ask them a million questions -- people have busy lives. So ask away, but don't ask much, lest you drive your customers crazy and have them abandon you midway through the survey. "Keep focused on what you need to know, not what you'd like to know," advises Michelle Lange, a marketing instructor and director of the Walsh Institute in Detroit.
3

Make your survey user-friendly.

If there's an incentive you can offer, such as a gift card or coupon, to get people to answer your questions, that could help your cause a lot -- and help you collect more opinions. If you can't offer an incentive, it becomes even more vital to respect people's time and just ask a few questions. If your list of questions isn't short, don't lie and suggest they'll be done within a few minutes, because you'll just anger your potential customer. If you tell people how long it'll likely to take to answer your questions but thank them in advance and make it clear that you respect their time, plenty of customers may nonetheless say, "See you." But those who stick around will likely take the survey seriously.
4

Use everyday language.

Be careful not to use a lot of jargon or abbreviations in your market research. Remember, we don't all have the same knowledge of your industry, and if your survey uses a lot of industry slang, you could turn off participants who have no idea what you're talking about. On that note, you should have a few colleagues look over your questions before you start submitting them -- in other words, have some market research done on your market research. The last thing you want to do is go to all the trouble of asking questions to your customers and having the public misinterpret what you're asking. Then you've spent all that time and energy on your survey for nothing.
5

Actually use the results.

"The biggest mistake entrepreneurs tend to make," Rizzo says, "is that they are so in love with their products that they become blinded by their own inspiration and emotion and can't be objective." So if your customers are telling you something you don't want to hear, you may not like it, but take it seriously. Lange also points out that if you make any changes based on the feedback you get, "you can say so. People love to voice their opinion, but they love it even more when you listen."

Tags: 5 Things You Need to Know, business ideas, conducting market research, inventions, market research, market research tips, marketing advice, marketing tips, starting a business, unique business ideas

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