How to conduct effective market research for your business
Successful SMEs in Africa can attest to the fact that these days, consumers have a lot of power. They can research your product or service and make purchase decisions entirely on their own. Their needs are also constantly changing and as a result of our ever-increasing reliance on the internet, rather than talking to one of your sales reps, customers today are more likely to ask for referrals from members of their networks or read online reviews on your products before they buy.
With this in mind, it is crucial for owners of SMEs in Africa and beyond to adapt their marketing strategies to complement the way today’s consumers research, shop, and buy. This entails having a deep understanding of who your buyers are, your specific market, and what influences the purchase decisions and behavior of your target audience members. And the best way to acquire this kind of in-depth knowledge is by conducting effective market research into your chosen niche.
Market research is the process of gathering information about your business’s buyers personas, target audience, and customers to determine how viable and successful your product or service would be, and/or is, among these people. It allows you to meet your buyer where they are. As our world becomes louder and demands more and more of our attention, this proves invaluable.
Market research, when conducted properly, provides you with a blueprint for understanding the needs of your market and target audience. It also helps you understand which of your competitors your target audience looks to for information, options, or purchases. What’s trending in your industry and in the eyes of your buyer, who makes up your market, what their challenges are and what influences purchases and conversions among your target audience. By understanding your buyer’s problems, pain points, and desired solutions, you can aptly craft your product or service to naturally appeal to them.
Market research blends consumer behavior and economic trends to confirm and improve your business idea. It’s crucial to understand your consumer base from the outset. Conducting an effective market research takes time and is not something you can whip up overnight. Unlike the big brands, many SMES in Africa can’t afford to splash out on expensive market research – and luckily they don’t have to. To help guide you through your market assessment journey, follow the market analysis steps below.
1. Determine the purpose of your Research
There are many reasons why the owner of an SME in Africa might choose to conduct market research. Asides from acting as a mirror into the needs of your target audience, market research can be conducted for the sole purpose of assessing business risks (e.g., threats), reducing execution issues, or creating opportunities from identified areas where your competitors are lax. It can be for the purpose of looking at past problems to decrease future risks or analysing past successes to see what you need to continue to do in the future.
Before starting any market research, it is important that you figure out your ‘why’. Determine whether the analysis is for internal or external purposes. Internal purposes include things like improving cash flow or business operations. External purposes include trying to convince lenders to give you a business loan.
Your market research is a critical part of your small business plan but the kind of research you conduct will vary depending on your research purpose. So make sure you determine whether your study will be internal, external, or both before proceeding with your research.
2. Identify your target customers or audience
The truth is, not every person will be your customer. And as a business owner, you should know that this is OK. To conduct an effective research into your market, you must determine who your actual and potential customers are. This part of the process is called a target market analysis.You need to fully understand who your customers are and where they come from. Your research should paint a clear picture of your potential customers and the demographic your products are designed for.
Look at things like: age, income, gender, location, occupation, education level, and family status. Once you narrow down who your customers are, it would be easier for you to find out their needs, interests, and personalities. Pinpointing your target market can help you better cater to future customers and market more efficiently. As your business grows, your assessment of your ideal customers may evolve or change. So revisit your target market from time to time to ensure they still fit your business.
3. Employ any of the four common market research methods
There are lots of different ways you could conduct market research and collect customer data, but you don’t have to limit yourself to just one research method. The four most common and affordable types of market research techniques include surveys, interviews, focus groups, and customer observation.
Surveys are the most commonly used methods because they ask users a short series of open- or closed-ended questions, which can be delivered as an on-screen questionnaire or via email. They’re easy and inexpensive to conduct, and you can do a lot of data collection quickly.
Interviews are one-on-one conversations with members of your target market. Conversations such as these are very insightful because any type of in-depth interview will produce big benefits in understanding your target market and customers.
Focus groups bring together a carefully selected group of people who fit a company’s target market. A trained moderator leads a conversation surrounding the product, user experience, and/or marketing message to gain deeper insights. And during a customer observation session, someone from the company takes notes while they watch an ideal user engage with their product (or a similar product from a competitor).
Availing yourself of any or all of these market research methods is advised not only because they are less expensive, but also because you’ll see people interact with your product in a natural setting without influencing each other.
4. Research your competition
To further analyze the market, you need to understand your competition. And, you must know who your competitors are trying to target. Take the time to research what other businesses are out there. Look at things like your competition’s offerings, location, targeted customers, and disadvantages in the market.
Make a list of all of your main competitors. Go through each one on the list and determine their strengths and weaknesses (SWOT analysis). What does their business have that you don’t? Why would a customer pick a competitor’s business over yours?
Do they pose any threat to your business? Once you outline your competitors’ strengths, weaknesses, opportunities, and threats, rank them from most to least threatening. Then, determine your SMEs advantages from a marketing standpoint.
5. Collate and Analyze your findings
After you conclude your market research, take the time to study what you have learned from the entire exercise. Lay out all of your research and organize it using different sections. Include sections for your purpose, target market, and competition.
The work you have done should state clearly the size of the market both in volume and in value, the various customer segments and buying patterns or trends, the competition, and the economic environment in terms of barriers to entry and regulation. Based on your research, you should be able to forecast vital things for your business, such as your cash flow cycle, gross margin, and customers’ buying habits.
6. Put your analysis into action
If done right, you will find that you’ll spend a good chunk of time working on your market research. When you are done with the analysis from your study, don’t forget that the most important aspect of your extensive research is to back what you have learnt up with positive actions.
Take steps here and use your findings to improve your business. If you conducted an analysis for external purposes, be prepared to speak with lenders about your research and conclusions. Don’t just box up your analysis and pack it away for “later.” If your market research isn’t being employed to make any of your business processes more efficient, why then did you conduct it in the first place?
Conducting a market analysis might seem like a daunting task, but your business will thank you for it later. Knowledge is power and regardless of whatever products or services that you’re selling, it pays to know and understand your target market.
If you’re planning to carry out market research, keep it tightly controlled. Concentrate on the key questions that matter to your business, then work out what information you need in order to answer those questions.