Using market research to make better decisions for your small business

Key takeaways

• Market research helps small businesses make informed decisions by better understanding customers, competitors and industry trends.
• Get started with free resources like Google Trends, government research or social media and customer reviews.
• Regular updates and objective analysis will ensure your business strategy stays relevant and responsive to market changes.

Understanding your customers – who they are, what they like and how they act – is one of the most essential parts of running a small business. That's where market research comes in.

But market research for small businesses doesn't have to involve lengthy interviews or high-cost surveys. It can be as simple as tracking Google reviews and social media or getting to grips with industry reports and data from the Australian Bureau of Statistics.

In this article we'll explore how to use market research to inform your decision making and explore some of the ways you can use existing research, online tools and your own insights to better serve your current customers and start talking to new ones.

What is market research and why is it important?

In a nutshell, market research is literally the act of researching the market you want to be part of and usually involves asking questions like:

• Who are your customers?
• What sort of products do they like?
• What kinds of messaging makes them more likely to purchase?
• What trends are shaping the industry?
• Who are your competitors and what are they doing differently?

There are several benefits of market research for small businesses. By better understanding how people think about your product or service you can make data-driven decisions for your business, reducing risk and helping you more precisely identify your target audience. By analysing industry trends and the activities of your direct competitors, you can better identify your unique selling point and make that a focal point for your marketing.

Helpful ANZ resources:

• Define your competitive advantage
• Small business marketing strategy

Different types of market research for small businesses

Market research can be split into two categories: primary and secondary.

Primary market research is probably what you're picturing when you think about market research. As the name suggests, primary research is all about hearing direct from the customer. This can take the shape of surveys, feedback forms, focus groups, one-on-one interviews or even just online comments and reviews.

Primary research can be very valuable but requires more effort and expenditure to do well. However, when starting out or launching new products, hearing directly from the customers you're hoping to serve provides deeper and more easily actionable insights.

Secondary research is about reading and analysing existing information. For example, you might access industry reports to better understand the trends affecting your market, or you could conduct an in-depth analysis of your competitors' product and positioning.

While the amount of information available to you can feel overwhelming, you can now use ChatGPT and other artificial intelligence (AI) tools for market research. As always, provide a comprehensive prompt and clear instructions as to the output you expect, and make sure to fact check the output before making it the cornerstone of your market research.

However, used well, AI can provide comprehensive surveys of particular industries and locations, forecast trends, recommend messaging frameworks for your marketing campaigns and even offer hyper-local targeting suggestions.

Helpful ANZ resources:

• Using AI for your small business
• Do market research (business.gov.au)

Affordable market research methods for small business

While secondary research is, by its nature, less likely to address your specific business needs, most of the material you're looking for should be freely available.

To understand how people are searching for products and businesses like yours, experiment with Google Trends or Semrush. Spend time tracking keywords and hashtags on Facebook, TikTok, Instagram, Etsy and other social media platforms to see what kinds of products are getting traction.

When it comes to industry trends, it can be helpful to subscribe to relevant industry publications or request info from trade associations. You can find demographic data using the Australian Bureau of Statistics or local government websites. AI tools can also be used to synthesise the relevant data or point you in the direction of further information sources.

While primary research can be more costly and time-consuming to conduct, there are still ways to affordably harness these insights.

• Email your customer database asking them to fill out a short online questionnaire. Google Forms is a good place to start.
• Reach out to loyal customers directly and ask if you could talk to them about why they've chosen your business (perhaps with a voucher as incentive).
• Run your online reviews and comments through an AI platform to identify strengths and weaknesses and how they compare to competitors.

Helpful ANZ resources:

• Getting started with digital and social media advertising
• Guide to small business email marketing

Making the most of your market research

Collecting market research is just the first step – here's how to ensure you're using it effectively.

• Be objective: make sure you're not ignoring or underemphasising data that goes against your existing business plan. Changing your strategy can be difficult in the short-term but may help to set you up for long-term success.
• Check your assumptions: the purpose of conducting market research is to ensure you're making data-driven decisions for your small business. Go through your business plan with a fine-tooth comb and ensure you can point to evidence to verify any assumptions you've made.
• Update your research regularly: market conditions can change fast, so it's important to set up regular times to go through your research document and check if there are any relevant updates to make.

How small businesses can use market research to grow

At a basic level, market research is about making informed decisions that help your business grow. Whether you're talking directly to customers or reading government reports, the insights you gather will help you better understand your market and stand out from competitors.

Start small, stay consistent and remember that even simple research can make a big difference to your business success. The more you know about your customers and industry, the better positioned you'll be to meet their needs and build lasting relationships.