Using market research to make better decisions

Key points

• Using external viewpoints to guide your business
• Affordable ways to gain insights
• The value of data

In business, trusting your own experience and instincts is a key part of decision-making. But sometimes, it pays to seek independent, external data to confirm or refocus your plans. Market research can be a really practical and powerful way to help map out what to do next.

You can use it to understand the potential of a new business idea, or to gauge customer perceptions of your business and how you might enhance your offering. And because market research is independent and unaffected by the emotional aspects of running your own business, it's useful for enlisting the support of staff, partners, suppliers or financiers for any new venture.

When new technologies, competitors or consumer behaviours create change in the marketplace - or whenever there's economic uncertainty - market research can also help you stay competitive, reduce your risks, and give you clarity when developing your marketing strategy.

The different kinds of market research

If you're looking to survey a hard-to-reach audience, you need a large sample size, or you're testing complex concepts, a professional market research consultant could be the way to go.

However, the good news is you don't always have to incur this kind of expense. There are plenty of ways you can do it yourself.

Try to aim for research that gives you a mix of statistical information as well as with qualitative feedback and opinions – both types of data are invaluable in their own way.

Asking people directly through focus groups and surveys can give you answers to specific questions.

Or you can access lots of existing research data from sources like:

• Libraries, directories or the Internet
• Trade or industry bodies, or Chambers of Commerce
• The Australian Bureau of Statistics
• Local council or government business resources
• Your local Business Enterprise Centre

Using email questionnaires

Email questionnaires are cost-effective and fast, but response rates can be low. Incentives or free products can help to increase response rates.

A few tips. Ask customers for their permission to email them and provide assurance that their personal information will be protected. Give customers an opportunity in every email to unsubscribe and make sure you’re complying with privacy and anti-spam legislation. If in doubt, check with your lawyer about this.

Creating a customer database

Building a customer database for statistics and surveys is an invaluable research tool. Just remember there are rules and regulations around:

• the type of data that can be kept
• how a business can store data
• how long a business can keep customer data.

You can check out the website of the Office of the Australian Information Commissioner’s (OAIC) for further information or speak to your lawyer if you need help.

Capture your own sales data 

Create internal systems to capture key information in the everyday course of dealing with your customers and suppliers.

Then, whenever you need to know something, you'll have a wealth of data at hand. This data can answer questions like, 'What’s the average value of our sales?', 'How often do customers purchase, on average?' and 'Who are our high-value customers?'

Give careful thought to the information that will be useful to you and design your systems from there. 

Gathering general market intelligence

You’re almost certainly carrying out informal market research already whenever you:

• talk to staff and customers
  
• check out competitors
• see what’s in the media

Good entrepreneurs and business owners are constantly watching what’s happening in the market.

The founder of US retailer Wal-Mart was famous for the time he spent at the coalface of his business. He wandered around stores, talked to employees and customers and rode along with delivery drivers.

By investing time this way, he was able to absorb information about the market that he couldn't have found out from his office.

Face-to-face interactions are just as important for gathering market intelligence as your business grows.

Getting the most out of your market research

To optimise your investment in research, make sure you take the results of your market research on board. Feed the information directly into your business and marketing plans, and use it to fine-tune them.

Next steps

Section 4 of ANZ’s Business plan template (PDF 591kB) is dedicated to all things market analysis and strategy.