How to Conduct Market Research the Right Way

How to Conduct Market Research the Right Way |A&C Accounting And Tax Services

Starting a new business? Before you open your doors, you need to know who your customers are, what they want to buy, and what part of town they like to shop in. Use this advice to be sure you conduct good market research in advance.

It takes a lot of money to start a small business and a huge investment of time and even more money to maintain it. Making decisions not grounded in data is a potentially catastrophic mistake but too many small-business owners do it.

Near the top of the list are market decisions. How did you decide what stocks your shelves? How did you decide the type of customer you wanted to target? How did you pick the location of your business? These are only a few of the market decisions you have to make as a business owner. These are the decisions that have a large impact on the future success of your business and your revenue.

What is Market Research?

You’ve likely heard the term before but the definition is often incomplete. What we think of as market research is the time you spend before starting your business where you analyze past market trends to decide if your product or service has enough demand to make it worth your while.

That’s certainly true and it’s an important first step but market research should never stop. Before making a big business decision, you should conduct market research. Let’s say that you found a new location with more favorable lease terms. Should you move based on price alone? How likely are your current customers to follow you?

Market research also looks into the future. When Apple invested into the development of the iPad, it already knew that consumers wanted a smaller, lighter computing device. It knew that if it could make the iPhone larger, consumers would purchase the product. This was all thanks to the company’s market research.

Market research should look to the past, present and future to study consumer trends. Here’s how.

Look at the Economy

Maybe you’re not an economist but with a little research, you can learn to read and understand reports outlining economic indicators, income and earnings data, and employment statistics. If the economy is weakening, the demand for high-end products and services may lessen. If average income remains low, consumers will demand high value at lower prices.

Invest in Industry Publications

Regardless of the type of business you own, there are trade groups that compile industry statistics that are important to your business. If you’re not a member of your industry’s trade group, join today. Not only does the group advocate on your behalf, they likely publish detailed industry statistics that are essential for making business decisions.

Some of those reports are expensive but it’s far more expensive to invest in an idea that fails. Also, look for research firms that follow publically traded companies related to yours. If you own a sporting goods store, look for Wall Street analysts that follow companies like Dicks, Nike, Lululemon, and Under Armour. Along with their research of the company, these analysts also compile industry data that applies to every business—large or small—in the space.

Finally, do a good old fashioned Google search. Check industry blogs, trade magazines, and any other high quality information you can find. Much of what you uncover will be useless but some will be highly valuable. That material deserves a bookmark in your browser.

Look Internationally

If you are a typical local business without any sales taking place internationally, you still have a use for market research outside the borders of the United States. An electrician probably isn’t traveling overseas to work but the price of copper on international markets could affect the price of wire. A farmer knows that international demand for grains affect domestic prices, and a Realtor knows that global real estate markets may drive more foreign buyers to American soil.

Those in retail or e-commerce might sell to global markets. They have to know the state of the global markets. Look at the Trade Compliance Center or for more information.

Pound the Pavement

Finally, ask the public. Conduct an online survey, ask your customers for their opinion when they purchase from you, call past customers, ask a question on social media or hire a firm to conduct the research for you. If you’re looking for direct feedback on a new product you’re planning to develop or a new service you want to add, the best way is through direct, personal research. It’s tedious but it will yield results.

Bottom Line

If you’re making decisions, your thesis should be largely based on objective data. Your gut instincts may carry a little bit of weight but companies that conduct complete market research quickly learn whether an idea is worth the investment of time and capital.

© 2013 Attard Communications, Inc. All Rights Reserved. May not be reproduced, reprinted or redistributed without written permission from Attard Communications, Inc.


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Meet Success: Business Profile of Sylvia Acevedo, Communicard Owner

Sylvia Acevedo needed a break from her technology job so she bought an old Victorian house to remodel into a bed and breakfast. “Being an engineer working in technology, I really felt I didn’t do a lot of tangible work. But with the bed and breakfast, at the end of the day, I felt like I had actually done something.”

And, of course, she had—because as she renovated the house, she transformed it into a beautiful B&B. She had no problem communicating with the construction crew, who were mostly Hispanic, because she grew up speaking both Spanish and English. “My mother was from Mexico and all of my grandparents lived there,” she says.

“People would see me talking to a crew of workers and I literally would have contractors stop and hand me the phone, asking me to translate for them,” she says. That’s how she realized communication between Hispanic construction workers and non-Spanish-speaking supervisors was really a problem.

Being a software engineer, Sylvia’s mind immediately went to solving the problem. “I think it’s because I’ve always been an innovator and I see things maybe in a way that provides a side-door solution. I don’t just look at the situation and say, ‘Okay, it’s a bottleneck’. I try to look at new ways to solve the problem. And in this particular situation, the problem was communication.” But she didn’t follow through on her ideas for a few more years.

After two years of renovating and running the B&B, Sylvia was ready to get back into the technology field, so she hired a manager for the bed and breakfast, and started a software development company with three others. A few years later, Sylvia and her partners later sold the software company.

“That was really interesting,” she says, “because we sold it for stock and then the stock market crashed. But that was an important learning lesson because I learned a lot about creating a company that supported intellectual property and taking it from literally concept to actually building a company.”

By this time she had also sold the B&B for a tidy little sum and was ready to solve the communication problem she saw a few years before. She realized there were a lot of non-Spanish-speaking people in the United States who were hiring people who only spoke Spanish for service jobs. “And you have a challenge because how do you direct the work that needs to be done?” she says.

The solution? The CommuniCard, easy-to-use Spanish/English communication cards. There’s a deck of housekeeping cards with pictures of the tasks and English/Spanish translations, and several accordion-folded, laminated pocket cards for the construction industry showing tools, tasks and translations, and a similar pocket card for the lawncare industry. This allows the supervisor to merely show the card to the worker to communicate. For instance, one of the cards shows a person cleaning a big window with a spray bottle in one hand while using a squeegee in the other. The wording below the illustration says, “Clean the windows. Limpia las ventanas.” So if the worker cannot speak English, or even read, it is clear what is being asked.

Before putting it into production she tested it extensively, first in Texas, and then across the United States. “I went to Northern California, Southern California, New Mexico, Colorado and across the South and Texas. I found the biggest needs were in construction and housekeeping,” she says. She began by interviewing the people who hired these workers—everyone from Junior Leaguers, to people in office settings who hired workers, to companies and construction firms. She also began to go to day-labor sites and construction sites to interview the workers. But the supervisors weren’t appreciative of her being on jobsites, even if she only spoke to workers while they were on their breaks.

“So I would approach them at bus stops, churches, and schools.” And what she learned was very informative. “We began to get a lot of feedback and the product changed dramatically as a result,” she says.

All in all, she spoke to over 4,000 people. After the informal research, it was time for something a little more elaborate. “We’ve done many focus groups, and we do them on all the products,” Sylvia says. The interviews are conducted by a professional, trained moderator who’s bilingual.

“And that’s a very important issue,” she says. “When you have a vision for a product, you really need to get customer input. But there’s also a fine line between getting too much input and not enough. I didn’t want to go into analysis paralysis or information overload.”

One of the important outcomes of the focus groups was that one person in the first focus group had such a huge need to solve the communication problem that he approached her about investing in the company. She accepted, and for a stake in the company, he paid for the initial production of the cards.

The company is now in the middle of its second year and sales are increasing. So far, they’ve sold thousands of the cards, but it’s slow going. Sylvia originally thought the product would be sold through retail stores, but she found that her previous distribution experience was no longer valid.

“My experience was dated. It was years before Wal-Mart had taken over and many of the people that I went to call on in the industry were no longer there. In fact, the businesses were gone.”

Finding a roadblock in the path to retail distribution was a big disappointment, but the company simply adjusted its thinking and found another way. Now, instead of selling through national retail chains as she had hoped, CommuniCard products are sold through trade associations and the company’s website, as well as through a few local retail stores.

To promote the innovative product, Sylvia doesn’t use traditional advertising. She has found that public relations works best because it’s such a new product that requires too much education and explaining.

It’s a low-price-point item, with the housekeeping cards selling for $15.95 and all the others selling for less than $10, so Sylvia has found that tradeshows are not particularly effective, either. “You’re competing with so many giveaways at tradeshows that I found it really diminished the value of our brand. People would say, ‘Gosh, they just gave me this really cool saw that’s worth 30 bucks and you’re not going to give me this for $10?’ So I found it to be very expensive and unproductive,” she says.

Nevertheless, in its first year of business CommuniCard — found at [] — sold well over 5,000 units of the housekeeping cards, and somewhat less of the others, generating just under a $100,000 in sales.

The company has branched out into consulting as well as product sales because there’s a need for the expertise Sylvia has acquired through all her research. “Most marketing firms focus on selling consumer products to Hispanics,” she says. Instead, she focuses on solving problems. For instance, the bus company hired her to find out why so few Hispanics ride the bus.

Sylvia was also recognized in 2004 as the National Businesswoman of the Year by the U.S. Hispanic Chamber of Commerce.

CommuniCard recently introduced a new set of cards for law enforcement, and police departments have had great interest in them. Sylvia offers to customize the cards with the police department’s badge, and this requires an order of hundreds, which customers are readily doing.

The company has also been researching other languages to see what new products might be developed, but so far they haven’t found the right match. “When we tested the (original) cards in Chicago, people wanted cleaning cards in Polish. But that’s such a small market. We’d only be able to sell those in New York, Chicago and maybe Boston. Whereas the housekeeping cards in Spanish/English are selling across the country,” she says.

One of the things that Sylvia made sure to do was protect her idea. She has a patent pending and, of course, everything is copyrighted and trademarked. As a result of her software engineering background, she knew how important this was. She says she often urges other women inventors to protect their assets, and she has helped several either copyright or trademark their ideas.

One of the things that has surprised her is people need these products so urgently they are willing to pay FedEx delivery charges to get them overnight. “I bet we get no less than three orders per week where people want the product so fast that they’re willing to pay more in shipping than the product costs,” she says, which leads her to wonder if the product is correctly priced. “We’re constantly evaluating,” she says.

Lois Carter Fay, APR, is a 30-year veteran in the P.R. and marketing field. She works with women business owners and small business owners to help them improve their marketing and business success. She now produces three marketing ezines, Brainy Tidbits, Brainy Flash, and Success Secrets of Women Entrepreneurs. All are free. She’s also the co-author with Jim Wilson of “Sales Success! Strategies for Women,” a quick-to-read ebook containing 52 easy-to-implement sales tips. The ezines and ebook are available through her websites.

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