Are you just starting an online store or want to introduce new products to your customers? If so, market research can help you refine your strategy and determine the steps needed to ensure you reach your business goals. In this post, we’re going to give you the advice and tools you need to conduct market research for your next business idea.
What is Market Research?
Market research is the analysis of a business’s ideal consumers. As an online store owner, market research would allow you to learn more about the needs and preferences of your target market – the people most likely to purchase the products you plan to sell. Market research will allow you to analyze your online store’s potential to make sales, become a viable business, and help you achieve your goals as an entrepreneur or small business owner.
When to Conduct Market Research
Businesses that are in the conceptual stage as well as those that are considering expansion or other major changes will want to conduct market research prior to making any decisions that cannot be easily changed. If you are ready to achieve any of the following goals, you are ready to start the market research process.
- Open an online store.
- Introduce a new product to your existing store.
- Increase your online store revenue.
- Duplicate your online business offline.
- Compliment products with professional services.
- Change product or shipping prices.
- Choose new vendors for shipping and handling.
In other words, if you plan to change any part of your business that may affect your online store’s potential to generate revenue, you will want to conduct market research to determine if your new idea or change is a viable business opportunity. If the data analysis doesn’t support your idea, that doesn’t mean the idea is a flop. It just may need some modifications.
Why Market Research Matters
While most businesses only conduct market research to complete their business plan as a part of the funding process, market research matters to anyone who wants to generate revenue through product sales – online or offline. The information you collect during your market research will allow you to solidify four crucial decisions for your business.
Products – Market research will help you choose the right products for your target market based on data about their needs, wants, and buying habits.
Pricing – Market research can help you establish competitive product pricing and additional fees for shipping & handling, restocking, and returns when applicable.
Placement – Market research will show you how to make your products available to your target market, from selling in an online store to delivery via economy shipping.
Sales Promotion – Market research will reveal the advertising, marketing, and sales messages and strategies that will drive your target market to your online store.
As you can see, these are aspects of your business that you will have to understand in order to be successful. The better you understand your target market, the more likely you are to successfully find them, introduce them to your products, and convert them into paying customers and loyal supporters for your business.
What Market Research Should Cover
Once market research has been completed, you will have a comprehensive profile of your industry, your customers, and your competitors. You will know with confidence that your industry is profitable, that your target customers want the products you have to offer, and that you stay competitive with competitors who offer similar products. As a result, you place yourself in the best position to achieve your business goals.
Let’s say that you want to sell pop culture products and clothing in your online store. The following is an example of the market research portion of a business plan published by Entrepreneur Mag. It shows a detailed description of an online store’s target market. Their customer’s wants and purchasing habits, along with competitor analysis notes and industry growth potential.
In this sample plan for a clothing e-commerce store from Bplans, you can see the specifics about who the business plans to market and advertise to. While they could focus on a general audience of outdoorsy women, they instead choose to define specific target markets and how those markets will help them grow their business over time.
Even if you don’t go into great detail about your industry, just defining your customers as shown in this business plan for an online hockey supply store.
But if you do want to describe your industry, and you find a lot of encouraging data, you can share it in the text or put it in a visually-appealing graph or chart, as shown in this business plan for a store selling organic baby food.
The ideal market research summary should ultimately allow you to describe your industry (current size, growth rate, and trends), how you will set your online store apart from your competitors, how you will reach your target market, and how you will meet the needs of your customers. The formatting of your market research isn’t as important as the content itself – especially if you are just compiling the data for yourself and your colleagues. Just make the information as useful and applicable to your business strategy as possible.
Data Sources for Market Research
Are you ready to start your market research? Here are the top sources of market research data and tactics you can use to glean the insights you need into your industry, market, and competitors.
Already have customers for your business? That’s great. Start by asking them what they want. Survey customers after they’ve purchased products to see if there’s anything you could have done to increase the size of their order in relation to product selection, pricing, and other options. You might find out that your target market is interested in buying additional products from you. Free and paid survey tools like SurveyMonkey, Fluid Surveys, and Google Forms allow you to survey your customers to learn more about their shopping experience and how you can make improve the buyer’s journey for future online shoppers.
If you have already have an email list of potential customers, such as a list of newsletter subscribers from your blog, you can use survey tools to ask them about the products you plan to sell as part of your email marketing strategy. Asking their opinion may open the door to following up with them once you start selling new products they suggested, converting your email subscribers into customers.
Anyone in your business that engages with customers through advertising, marketing, sales, and service should have insights into the wants and needs of your target market. Have everyone involved with your customers think about the things customers ask for. More products? Lower shipping costs? Getting these insights will allow you to optimize your website for conversions, increasing the rate of conversion from website visitor to paying customer.
No customers or employees? No problem. Focus groups are groups of people that represent your target market. You can ask focus groups specific questions about the online store you plan to launch and the products you plan to offer to see how your target market responds. The questions should help you determine if your online store idea has the potential to be successful.
To find people for your focus group, you can utilize the power of Facebook groups to find people who match your target market and ask if they would be interested in participating in a market research study. You can also rely on market research companies and consultants who can connect you with focus groups who fit your target market demographics.
Public Data Sources
Public data sources provide information that entrepreneurs and business owners can access. This information will provide insights into the current size, growth rate, and trends for specific markets and industries. Depending on the products you sell and your budgets, you can utilize one or more of the following resources for free and paid access to publicly-accessible industry and market research.
- BuiltWith – Free and paid membership access to website technology profiles.
- comScore – Free data about online commerce, marketing, and advertising insights.
- Consumer Barometer – Free data from Google helping businesses understand how consumers use the internet.
- Facebook Audience Insights – Free data about global consumers based on Facebook user’s public Facebook profile data and their shopping habits as measured by Facebook technology.
- IBIS World – Paid access to highly detailed US and global industry reports.
- Industry Statistics Portal – Free economic data for a user-selected industry from the United States Census Bureau.
- Marketing Charts – A hub of marketing data, graphics, and analyses. Free graphs and paid reports.
- Pew Research Center – Free information compiled through public opinion polling, demographic data, the analysis of media content and other research within the social sciences.
- SimilarWeb – Free and paid access to traffic data for most websites. See how much traffic competing online stores receive to see the size of your potential target market.
- US Small Business Administration – Free statistics from various US government and organizations about the US economy, markets and industries.
- Statista – Free and paid access to over one million statistics and facts about consumer and digital markets worldwide.
Google can also help you find business plans and market research from top brands and retailers. Do a search for brand name business plan filetype:pdf to see if you can get details about your target market direct from the makers of products your online store will carry.
If you have competitors, chances are they are selling the same products as you intend to, or very similar products at the very least. Use the review section of major online retailers like Amazon as well as others to see popular specific products are to your target market based on their category rankings and reviews. You should find definitive evidence of whether the products you want to offer in your online store will be well received with your target market.
Market research should be an essential part of every online store owner’s business development and growth strategy. When you learn more about your industry, target market, and competitors, you gain the insight needed to make sure your online store can go head to head with online competitors of all sizes. Use the resources listed above to collect data about your ideal customers to ensure that the products you intend to offer or introduce into your existing store are the products that will help you generate revenue online.
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