Basic market research techniques can help you obtain information essential to your business's success.
The main reasons for carrying out market research are to:
Your market research sources will be different depending on whether you have been in business for some time, or whether you are just starting out. However, in both cases you need to know:
There are three basic levels of market research:
Your customers: To understand what customers want, you need to find out everything you can about them that is relevant. You can do this by telephone, email or face-to-face canvassing. You must, however, ensure that you are not contravening any data protection laws by making unsolicited calls. See the MRS standards and guidelines for more information.
Your market: To know how business is done in your industry, how products are usually sold and delivered and what discounts and credit arrangements other suppliers offer.
Your competitors - to find out what you can about your competitors:
* Please bear in mind your obligations under competition laws. For further information please refer to the following websites: the Office of Fair Trading and the Competition Commission.
Get feedback. Talk with your customers and prospective customers. Everyone who deals with customers should gently seek feedback from them. Also talk to retailers and distributors. You also need to put in place a system for recording and capturing feedback - then make a decision on whether to act on that feedback. No matter how big your business becomes, always handle a few customers personally to keep your finger on the pulse.
Be alert for problems. Notice the slightest hint of dissatisfaction. People do not like to complain, so the first you know of a dissatisfied customer may be when they become an ex-customer.
Ask customers what they would like in an ideal world. For example: "If there were one thing you could change about the product/service, what would it be?" Then see if you can move towards providing it.
Use complaints. Complaints are pointers to opportunities for improvement.
Carry out surveys. Survey your customers from time to time using email or postal questionnaires. Offering the chance to win a prize and making surveys anonymous and short in length may help improve response rates.
Study your sales records. Put in place a structure of management accounts that keep you informed of what is happening within your company. Compare year on year, month on month. Are there other seasonal trends? Are these short term or long term? Or is a product in long-term decline? Consider reasons why they are the way they are.
Review data regularly. Set a fixed time every month to review what you have learned - from talking to staff and customers, from your books and your sales figures. Talk about it with your key staff. What conclusions can you draw? Are there trends? Document all actions and make sure the points agreed are carried out.
If you're putting together a business plan, you may want to carry out some formal market research or employ a professional to do so.
Economic research: You may want to put economic research in a business plan to show that you have accounted for the possibility of a recession or boom over the next few years. Concentrate particularly on those trends that apply to your own industry.
Population research: You can get statistics on the population, their spending power and consumption patterns. This is important when it comes to identifying target segments of the market.
Other research relevant to your market: Look for facts and figures that apply to your own particular market. If you sell air conditioning, use statistics that show temperatures. If you sell industrial machinery, get statistics on industrial production.
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