What’s the best way to do market research for a business plan?
From analyzing market data with AI to relying on third-party SEO tools, here are 16 answers to the question, “What are the most effective ways to do market research for a business plan?”
- Analyze Market Data With AI
- Gather Focus Groups
- Try Direct Mail Surveys
- Study the Competition and Draw Direct Comparisons
- Gauge Interest With a Google AdWords Campaign
- Use Existing Industry Stats
- Repurpose Real Estate Resources
- Conduct Customer Surveys
- Poll Your Existing Audience
- Look for Customer Testimonials
- Build Audience Personas from Interviews
- Understand Your Audience’s Culture
- Fund Primary Research With SBA Support
- Lean into Secondary Research
- Offer a Prototype Demo Plus Survey
- Subscribe to a Third-party SEO Tool
Analyze Market Data With AI
Market research for a business plan involves analyzing customer needs, industry trends, and competition in the market. For example, one unconventional way to do market research is using neural networks and artificial intelligence (AI). This technique uses machine learning technology to analyze data sets and come up with meaningful customer insights.
Neural networks can process vast amounts of information quickly, enabling business owners to have access to an immense amount of data at their disposal. By utilizing AI in combination with traditional market research methods, such as surveys or interviews, businesses can get real-time feedback on their products or services, giving them a better understanding of their target consumers.
Gather Focus Groups
I started my business 15 years ago, and one of the first things I did was create a business plan to make sure I had a good business idea before investing time into it. I did a type of focus group to get a recommendation on whether potential customers would be interested in my product.
Then, I ended up paying for an outside company to do a mock focus group for our products. It was very beneficial and changed how we do business to this day. There are now a lot of companies online that will help you implement a focus group for you, so you don’t have to organize a group of people on your own.
Try Direct Mail Surveys
Directly surveying potential customers with carefully crafted questions provides valuable insights into their needs, interests, and preferences, which makes it easier to create a business plan that meets their expectations.
Direct mail surveys provide an opportunity to reach out to many people without spending tons of money on expensive focus groups and market research methods. An added benefit is that I can analyze the results and quickly make the necessary changes to my business plan.
Study the Competition and Draw Direct Comparisons
No matter how unique your product or service is, understand that everything you’ve created will need to compete with existing competitors that have already made inroads into the market you are only entering.
Acknowledging the head start they have and lining up data and inputs to understand their strengths and weaknesses better will help you prepare your business plan accordingly. Areas where you should make direct comparisons include product or service offerings, potential customer segments, marketing reach, market share, distributorships or resellers, and pricing.
With these details, your business plan will not only seek advantages and opportunities, but will also prepare your brand for prevalent challenges.
Gauge Interest With a Google AdWords Campaign
If you’re trying to put together a business plan, you can leverage Google AdWords to gather market research. With a tiny budget and a simple landing page, you can bid on keywords relevant to your business idea and gauge how interested people really are. If potential interest is high, you’ll have lots of page traffic and form fills. If not, it may help inform you that you’ll need a different approach to your business plan.
Use Existing Industry Stats
As a lender, I need to emphasize that the point of market research for a business plan is to minimize the risk to your business as much as possible. By knowing who your customers are, how much they will spend, and who your competition is, you can be better prepared to enter a market and avoid preventable pitfalls.
If hiring a market research firm isn’t within your budget, I recommend starting with existing sources of unbiased statistics. For example, the Bureau of Labor Statistics or trade papers from your industry that can speak to your industry’s projected growth. The more numbers you have to support your plan, the better! Lenders love numbers, and we love a safe bet, so showing us numbers based on your industry and competitors is a great place to start.
Repurpose Real Estate Resources
One way of doing market research for your business plan is by downloading commercial property sales flyers for properties near your target market. These are usually available as attachments on the listing page of most commercial real estate properties.
These documents often provide detailed market data on populations within a 5, 10, and 15-mile radius. These documents also provide insightful demographic data on the residents in the area. Some of these include household income, ethnicity, and age. As a bonus, there’s often information on the businesses in the surrounding area.
Conduct Customer Surveys
One way to do market research for a business plan is to conduct customer surveys. Surveys can provide valuable insights into customer opinions and preferences and help you better understand the needs of your target market.
You can use surveys to gather data about customer satisfaction, purchase history, brand loyalty, and market trends. Surveys can also reveal more about your competitors and identify potential opportunities. Finally, surveys can help you develop a better understanding of pricing and product features that differentiate your business from the competition.
Poll Your Existing Audience
I am a huge believer in primary research because you can rely on the data being true to your specific business context.
An easy way to get started with this research is by conducting polls with existing audiences and customers, hearing firsthand what they feel about your product or service, and how they would improve it. You will not only have data to support your business plan, but you will also have new avenues to explore when developing your products and services further!
Look for Customer Testimonials
A lot of folks don’t know the goldmine customer reviews and testimonials can be for doing market research for your business. I often pop onto different review websites time and time again to understand what our competitors are currently doing or not doing.
This approach is especially helpful if you don’t have enough resources to pull broad-scale market research. The reviews and testimonials help me better understand the common pain points or unmet needs of the customer, which can further fuel our development phase.
Your aim should be to look for patterns in those, such as negative reviews about a particular aspect of a competitor’s product or service. This information can help you understand the areas where your competitors may be weak and where you can focus your efforts on differentiating your business.
Build Audience Personas from Interviews
A vital part of a successful business plan is a powerful set of audience personas. These should give real, human depth to your ideal customers. In order to construct a persona, interview 3-5 people who represent typical members of the group.
A good in-depth interview should last 60-90 minutes and cover a broad range of topics. You should aim to understand their backgrounds, what life experiences have shaped them, their behaviors and attitudes, and how your product or service fits into their lives.
The skill in conducting in-depth interviews is in knowing when and how to probe for more information. A simple, effective technique is to simply continue laddering the question, “And why is that?” until you reach a fundamental belief.
Similarly, projective techniques can help stimulate conversation and non-linear thinking. Consider using mood boards, word associations, personification, or mapping exercises to supplement your audience understanding.
Understand Your Audience’s Culture
Incorporating anthropological methods, particularly ethnography, when conducting market research for a business plan can significantly benefit a company by providing valuable insights into consumer behavior and preferences.
By observing and actively taking part in the culture of the target demographic, companies can gain a more holistic understanding of consumer behavior and decision-making processes. This approach identifies patterns and trends that may not be apparent through traditional market research methods, making it a valuable tool for product development and marketing strategies.
Additionally, ethnography allows for an in-depth understanding of the cultural and social factors influencing consumer behavior, promoting cultural sensitivity and empathy in decision-making. Incorporating anthropological methods into market research can provide a more comprehensive and nuanced understanding of consumer behavior, ultimately leading to more effective and targeted business strategies.
Fund Primary Research With SBA Support
Secondary research is easy to get your hands on, but primary research is historically expensive and tough on a startup budget. Find local options for cheaper research alternatives with the help of Small Business Administrations and Development Centers.
Many will help you develop and collect customer surveys at a fraction of your costs. Many SBAs offer grants to help you along the way. The Federal and State Technology (FAST) Partnership Program, for example, provides startups with training, mentoring, technical assistance, and up to $125,000 for research and development.
Lean into Secondary Research
The best way to start off is by doing secondary research. It involves using existing reports, articles, statistics, and databases to gather information about your target market, industry, and competition.
This quick method doesn’t require a lot of money or effort. It provides you with an instant analysis of the market, and with a little creativity, you can use this information to create your own unique perspective on the industry. It’s small research, but it can give you some valuable data points to start with, which you can use to create a detailed outline for your primary research.
Offer a Prototype Demo Plus Survey
If you have a product prototype, do a demonstration for your target audience and follow it up with a survey. This will allow you to gain direct feedback from potential customers and help you gauge how it will perform in the market.
You could hold your demo with focus groups or organically in the streets. Just remember that you’ll want to have varied opinions from a wide range of participants and not just from a few. As a general rule of thumb, have a sample size of at least 100 people, but aim for more if you can.
Also, ask questions that would give you meaningful insights, such as those related to product features, design, ease of use, and functionality. Note all the feedback that you get from the survey. This will not only help you refine the product, but it will also give you insight into what the market values.
Subscribe to a Third-party SEO Tool
Third-party SEO tools, such as Semrush, can help you get a greater scope of the competitive landscape. With a basic Semrush subscription, you can see what keywords your competitors are ranking for, how many clicks they get from each keyword, and how many backlinks it takes to rank.