Market Research – A Guide to Progress

Does the term “market research” sound sophisticated and costly? What is market research? Is it necessary in a small business? Let’s learn about market research for small businesses!

Farmco: A Case Study

Mike at Farmco set out to create a new set of sell sheets for his various product lines of cattle feeders, hay wagons and horse feeders. He was looking not only for a fresh design theme, but also for better organization of his products and product options. During the project planning process, a few questions came up for which we did not have answers.

  1. Do we have good customer testimonials to use?
  2. How do the products compare to others in the market?
  3. Should the sell sheets be printed individually per product line, or should they be combined into a multi-page catalog?
  4. What is important to the farmers who buy these products?
  5. Why do customers choose the Farmco brand?

The printed items needed not only to be liked by Farmco’s dealers, but also to have the power to sell farmers on Farmco products; therefore, these questions had to be answered correctly. Mike agreed that market research was necessary.

We developed a survey for Farmco dealers, and Mike gave us a list of dealers to call. The list included large and small dealers from scattered locations across Farmco’s market area. Some sold all of Farmco’s lines regularly, while others sold primarily one line or another. We called these dealers and walked them through the questions. Of course, we collected testimonials in the process. The dealers willingly shared their time to help us make a better catalog, appreciating the opportunity to influence the development of the marketing materials they use to sell Farmco’s products.

We also developed a survey for farmers who bought Farmco products and called them for their feedback as well.

Over a two-week period, we learned a lot about the industry, Farmco’s strengths and weaknesses, and how farmers like to do business. Answering the survey questions took about twelve minutes, but some dealers were so eager to help out that they spent half an hour giving us insights into their sales challenges. After we finished the survey calls, we sorted the information into meaningful groups. We then wrote a summary of important points and condensed the general consensus into a few sentences.

One thing we learned which really surprised Mike is that the dealers strongly preferred a complete catalog instead of separate sell sheets for each line. That was good news because catalogs cost the company less in the long run and will help to cross-sell the product lines.

We used the information to make key improvements to the catalog. We added product and delivery schedule information to answer common questions from farmers. We put all the products into one catalog instead of separate sell sheets and included farmer testimonials. This resulted in a marketing piece that saves time for everyone, sells more product, and lowers marketing expense. Did the research cost something? Yes. Several thousand dollars. But cost is not the most important issue. The most important issue is the value that market research brought to Farmco.

What is Market Research?

Market research is the process of collecting and analyzing information that will help you make better marketing decisions. This often includes information about your customers, your competitors, your industry, and even your own company.

Is Market Research Important?

Many times businessmen make assumptions based on their personal frame of reference. This can lead them to believe things that are far from reality. Market research provides a more realistic picture of the situation.

Market research can help you understand your customers, your competition, and your own company. It can help you understand which products or services are in demand, learn how to provide superior value to your customers, know how much people are willing to pay for your product or service, reduce business risks, spot upcoming problems, and identify sales opportunities.

When Should Market Research Be Done?

There is hardly a bad time to do market research. Your market is constantly changing. Some important times to consider doing market research are when starting a new business, when you have problems with a product or service, when developing a new product or service, when setting prices, when planning your marketing strategy, when sales are falling off, and even when sales are going strong. Market research should be considered whenever you could make a better business decision if you knew what others know.

Consider market research whenever you could make a better business decision if you knew what others know.

How is Market Research Carried Out?

You can hire a professional company to perform market research for you, but it can often be done in-house by either you or your employees, sometimes with very little additional time investment. Market research does require careful thinking, however. To get the greatest benefit from your research, follow the basic process outlined below.

Four Basic Steps of Market Research:

  1. Determine what information you need and how you will use it to improve your business (e.g., identify market potential, set prices, solve a problem).
  2. Create a plan to collect the information.
  3. Execute your collection plan.
  4. Analyze the information and write a meaningful summary.

Let’s take a step-by-step journey through these points.

The first step is to determine the information you need and how you will use it to improve your business. This may take some careful thought. In the Farmco example, we knew we wanted more effective literature. We carefully crafted some open-ended questions that would allow for a wide variety of answers. We also needed to make a specific decision — to either print individual-line brochures or combine all the lines into one catalog. We asked a very specific question to get a specific answer.

Do not collect information on which you will not take action. You might like to know what colors each of your competitors offers; but if you do not have a decision to make hinging on that information, do not waste the time to find it. Market research should enter the picture if you have a decision to make, but lack enough information on which to base your decision. Always ask yourself, “If I would have that information, what decision would it help me to make?”

The second step is to create a plan to collect the information. Who has the information that you want? What is the easiest way to acquire it? Choose as simple a plan as possible to get what you need. Your plan must be doable or it will never be carried out. Finding accurate information on a few key points is more valuable than getting a wide spectrum of information on many minor issues. Be judicious and boil it down to the basic information you really need to make the big decisions.

There are many resources to consider.

If you are looking for general information, you might be able to obtain it from trade groups, business magazines, university studies, your local chamber of commerce, or data that the government opens to the public, such as

If you want to learn about your competitors’ pricing, products, and services, you might collect their advertising literature and visit their retail stores. You could search online for brand names in order to examine websites. Research similar products on Amazon and eBay. Conduct online searches for reviews about your competitors. Being involved with industry trade associations and subscribing to industry publications can inform you about industry trends and competitors’ actions.

Your customers will tell you a lot if you just ask them. Telephone or face-to-face meetings are best. Surveying your active customers can also be effective, but be careful — good surveys are an art. Craft your questions so that they do not influence the answers. Do not be surprised if only a fraction of the surveys are returned. If you are making mission-critical decisions, it is best to have a conversation with at least a few customers.

You can do a lot of research on the internet, but talking to people remains the best way to gather intelligence. Ask your employees to be your eyes and ears in the marketplace, in your industry, and even in your company’s reception area.

Sometimes outsiders to your industry can provide a new perspective. Just remember that friends and family will be biased.

Let’s say you want to assess the strengths and weaknesses of a product (SWOT Analysis). Here are some ways you can learn a lot with very little cost.

  • Ask current customers for their opinions on specific issues you are considering. This could be chatting in a retail store or calling up repeat customers.
  • Send a sample of your new product to influencers in your industry for their feedback.
  • Get advice from an experienced mentor who knows your industry.
  • Give a sample product to people with the understanding that they will fill out a questionnaire when they have tried it.
  • Participate in shows or expos to get a feel for how your product or service is received.
  • Ask anyone for opinions.

There are many ways to get the information you need. Use the above ideas to get you started.

Planning what to do is not enough. You must also plan who will do it and when. Make sure you schedule the time and budget the dollars to complete this work without jeopardizing your regular operations. Consider what it is worth for you to get this information. How much time and money are you willing to invest in order to obtain it?

The third step is to execute your collection plan. This usually requires some discipline to follow through. You may hit some dead ends. Do not give up. It might be necessary to create plan B, or even plans C and D, to find the information you need.

The fourth step is to analyze the information and write a meaningful summary. Most times you will find one or two recurring themes in your research. It is helpful to group similar findings together. This allows you to see the relative weight of each finding. Summarize these main points in a writing. Writing it out helps you to internalize the message and understand it at a deeper level. There may be some isolated information that is very negative or very positive. This may merit some follow-up to understand what it means.

Once your research is finished, apply the learning to improve your business. You went to a lot of hard work to get the information. Now make sure you put it to good use. Go back to step one and review the decisions you need to make. Armed with the truth of reality, you can confidently make informed choices about how to move your business forward. Do not discount the research findings if you find them hard to believe or difficult to accept. If you conducted your research properly, it is much more trustworthy than your own biased opinion. Act on your research, and just see if it doesn’t prove itself.

About the Author: Adrian Nolt is the Operations Manager. Contact Adrian at