How is Marketing Research Used?

Marketing research can be used to meet nearly all the marketing information
needs of the small business person. Every area from developing a business
plan to designing an effective advertising program can benefit from the use
of carefully planned and executed research. Specific examples of how
marketing research can guide and assist small business people include:

Developement of Business Plans:When you first sit down with that blank
piece of paper and dream of owning your own business, you should be asking
yourself questions such as: What am I going to sell? Will people buy what
I sell? How much should I charge? Where should I locate? How much
competition is there and who are they? Questions such as these should be at
the heart of any effective business plan, and marketing research can help
you answer them.

     Let's say, for example, you've decided to turn your passion for
fishing into your livelihood, and open your own tackle and equipment store.
You feel there is a need for such a service, and are ready, willing and
able to jump at the opportunity. One of your first steps might be finding
out how many other tackle shops are in your area to get a feel for the
level of competition. A quick glance through your local Yellow Pages would
readily supply you with this information. Congratulations! You've just
completed your first marketing research project. As the questions become
more difficult to answer, the marketing research must become more
sophisticated. For example, although you might be able to partially
determine the demand for a fishing tackle shop by talking to your neighbors
and your "fishing buddies," this won't tell you how all the people in your
area feel (and you know how those fisherman lie!). A better approach would
be to commission or conduct a scientific survey of a representative sample
of all local consumers.

     Much of the background information necessary for a useful, working
business plan can be collected using marketing research.

     New Product of Offering: Many new product lines or special offers
("10% Off!") are the results of careful marketing research, which can
determine customer needs and wants and allow you to supply them with just
the "right" product or service. Research can be used to determine the
impact of special sales programs, discount offers or even introducing a new
product before the expense of doing so is incurred.

     Pricing: Pricing is a crucial marketing element in all businesses,
whether large or small, and marketing research can supply precise
information for pricing decisions. Well designed research can determine the
true trade-off between price and the amount of sales before committing to
a specific sales program.

     Advertising: Many small business owners are very concerned with the
promotion and advertising of their businesses. Considering the cost of
advertising today, their concerns are well founded. One of the most
frequently asked questions is "how effective is my advertising?" This can
be determined with many types of formal and informal research techniques.
For example, a separate telephone line with a number that appears only in
your Yellow Pages ad can be installed. By placing a tally sheet next to the
phone, a count can be recorded every time a call comes in on that line. By
the end of the month, you will be able to tabulate exactly how many calls
are generated by your Yellow Pages ad, and can then determine its
effectiveness.

     These are just a few of the many possible applications marketing
research has for small businesses.