Good Market Research makes for good business

For entrepreneurs, doing market research is as important as doing a business plan. In fact, market research is the foundation for both the marketing and the business plan. Whether you’re starting a new business or own an established one, you need to know about your marketplace to make good business decisions and avoid bad ones that can lead to the risk of business failure. Brad Poulter is the manager of business services and communications for the Northwest Territories Business Development & Investment Corporation (BDIC), an agency that helps small to medium-sized businesses in the NWT. He says market research provides information about the major components of the market, often called the four “P’s” of marketing – product, price, promotion, and place. “What can the customer afford? What kind of product [or service] is desirable to customers? And there’s a promotion – what kind of messaging will appeal to your customers? And distribution – how do you get your product to the customer?” You need to find out,” Poulter says. “Businesses need to know this kind of information.”

Gathering information on your product’s design, customer service, branding, advertising, and sales can help you develop or adjust your marketing and business plans and also help to measure the success of your current activities. If your sales numbers are falling, for example, market research can show you why. Perhaps your advertising isn’t reaching your target market, or maybe the purchase price is too high, or there could be new competition in the market that is drawing away your sales. There are two major sources of market research: primary and secondary. Primary research is information gathered through your own efforts or by a market research professional by observing, experimenting, or asking direct questions of your customers in your market. Secondary research gives a high-level overview of market opportunities and is gleaned from information already published about consumer demographics, industry trends, and market share found in books, newspapers, magazines, and online.

Business consultant Mallika Kazim, writing on the Business Development Bank of Canada website, says there are many benefits to primary research. “It gives you control over the type of questions you ask and information you gather,” she says. “Before you begin your primary research, be sure to map out exactly what you want to learn. Ask yourself the following questions: What business decisions do I want to make from this research? Who should we talk to? If I could get an answer to only one question, what would it be?” Kazim says primary research can be time-consuming and expensive. There are several tools you can use for market research – direct mail surveys, online surveys, telephone surveys, focus groups, and in-store customer contact and observation. These methods require specialized skills to develop the right questions and the technical capability to implement them, reach large numbers of people and provide analysis of the results. Kazim recommends using a market research professional company. As a small business owner, hiring a professional is likely beyond your budget, but you still need to get direct customer contact and ask questions. Mark Walker, business development manager for Futurpreneur Canada’s Yellowknife office, advocates for simple ways to do market research, such as a direct customer questionnaire. “You can go to the YK Chamber Spring Trade Show set up a booth, display your product and have a little questionnaire with no more than 3 or 4 questions,” he says. “You’ll likely get at least 100 people to reply and it will give you a good idea if your new product will work.”

However you gather it, you must analyze the information, Walker says. “You need to tabulate the information you have gathered in some way. You can lay it out on a spreadsheet or use some of the easy tools online that are free such as Survey Monkey.” Many Yellowknife businesses resort to community-based market research, says Poulter. “Networking is key to determine how a community does business. Talking to business associates, family members and colleagues will help determine what the wants and pain points are. The main thing is to start networking and begin researching.” All of this helps you understand your target market better, and in turn, will assist you in making better-informed decisions about how to manage and promote your business. 

That is exactly what the NWT Brewing Co. owners, Miranda and Fletcher Stevens, did before deciding to open a brewery and a brewpub in Yellowknife. They both knew that market research would play an important role in introducing this new concept to the North. “We did tons of research,” says Fletcher. “If you don’t, you can set yourself up for a really bad failure.” They split the company into two businesses, the brewery, and the brewpub, and evaluated each marketing concept separately. Their primary research consisted of discussions and brainstorming sessions, checking out similar businesses in southern Canada and assessing the range of restaurants and pubs in Yellowknife. “We looked at the gaps in the market within our community and the territory and felt there was a real opportunity to fill that void,” says Miranda. “On top of being the only brewery, the idea to open the brewpub was in part to help support the brewery operations and get our product out there for people to try. But also, because there was a real need for quality food establishments that offered fresh food with a gastro-pub feel.”  

Location research played a big part. The Fletchers wanted to get the right place to attract various target markets, from locals to visitors. “We were very adamant that we did not want to build a place downtown where there were already a number of food establishments that catered more to the working lunch crowd,” Miranda says. “We wanted to be a ‘destination’ for people to check out. Our customers include locals and tourists ages 19 and up.” It was apparent early on that a historical locale was just the ticket. “We knew right away that we wanted to be in the Old Town neighborhood. After looking at the types of food establishments uptown and downtown specifically, we figured our concept wouldn’t work there. Not only did we need a place big enough for the brewery operations, but we also needed to accommodate the restaurant as well. Old Town fit the theme and vibe of what we wanted to do, especially when you look at how many tourists visit the neighborhood.” There are some pitfalls to doing primary research. “Friends aren’t necessarily the best people to ask about your business – they might not give you the straight goods about your ideas and how marketable they will be,” says Futurpreneur’s Walker. “Rather, look for broader samples of people in the community where you will be marketing your product.”