Market research questions every small business should ask
Posted: Mon 26th Feb 2024
Imagine opening a charming tea room in a bustling market town, only to find that the locals prefer their afternoon pick-me-up at the pub. Or launching a cutting-edge eco-friendly product, only to discover that your target audience isn't willing to pay a premium for sustainability.
These scenarios, while fictional, highlight a critical truth for small businesses: Market research is not an option, it's a necessity.
With competition being so strong, every pound counting for more and consumer attention spans shortening all the time, flying blind is a surefire recipe for disaster.
Market research provides the compass and roadmap you need to navigate the choppy waters of the business world, ensuring you're sailing towards success rather than drifting aimlessly.
This blog sets out some of the key questions you need to ask when doing your market research. By understanding your customers, your market and your competition, you'll be well placed to make informed decisions, reduce risks and increase your chances of thriving.
Key market research questions for all small businesses
Whether you're a budding entrepreneur or an established business owner, these fundamental questions will guide your market research efforts:
Customer needs and wants
1. Who are your ideal customers?
Be specific! Consider demographics (age, location, occupation, income), psychographics (lifestyle, interests, values) and online behaviour.
2. What problems do they face?
What challenges, frustrations or unmet needs do your ideal customers experience in their daily lives?
3. What solutions are they currently seeking?
How are they currently addressing these problems? What products or services are they using?
4. What are their pain points?
What aspects of their current solutions are they dissatisfied with? What could be improved?
5. What are their expectations for customer service?
How do they prefer to be communicated with? What level of service and customer experience do they expect?
Market size and opportunity
1. How large is the market demand for your product or service?
Estimate the total number of potential customers in your target market.
2. Is the market growing or shrinking?
Research key consumer trends and economic forecasts to understand the direction the market might be going in.
3. Are there any emerging market trends?
Identify new technologies, consumer behaviour or regulatory changes that could have an impact on your business.
4. What are the key market segments?
Divide your target market into smaller, more manageable groups based on shared characteristics.
Competitive analysis
1. Who are your main competitors?
Identify both direct and indirect competitors.
2. What are their strengths and weaknesses?
Carry out a SWOT (strengths, weaknesses, opportunities, threats) analysis for each competitor.
3. What are their current pricing strategies?
Research their pricing models and compare them to your own.
4. What marketing channels do they use?
Analyse their online presence, advertising campaigns and public relations (PR) efforts.
5. What is their customer service like?
Gather customer reviews and testimonials to understand their reputation for customer service.
Industry-specific questions for market research
The UK has a diverse economy with a range of thriving industries. Here are some industry-specific questions to consider:
Hospitality
What are the peak seasons for your business? Consider factors like tourism, local events and weather patterns.
What are customers' expectations for dining/staying experiences? Research reviews and feedback to understand what your target customers value most.
What are the local competition's unique selling propositions (USPs)? Identify what sets your competitors apart and how you can differentiate yourself.
How can you take advantage of local tourism trends? Consider partnering with local attractions, offering seasonal packages or promoting your business to tourists.
Food and drink (not including restaurants and hotels)
What are the most popular food and drink products in your local area? Identify potential market opportunities for your products.
What are the biggest challenges that food and drink businesses in the UK currently face (such as strict food safety regulations, competition from supermarkets or rising costs)? Develop strategies to overcome common challenges and make sure your business is in a healthy position for long-term success.
How can you ensure the quality and safety of your food products? Prioritise food safety and quality control to maintain customer trust and keep to the relevant regulations.
What are the most effective channels for selling your food and drink products (for example, local markets, online platforms, wholesale)? Explore various sales channels to reach as much of your target audience as possible.
How can you build a strong brand and reputation for your food and drink products? Develop a strong brand identity and build a positive reputation through marketing and customer service.
Retail
What are the most popular shopping areas for your target audience? Consider factors like foot traffic, accessibility and local demographics.
How can you attract foot traffic to your store? Explore options like window displays, in-store events and local partnerships.
What are the latest retail trends? Stay informed about the latest trends and consider how to incorporate them into your business.
How can you compete with online retailers? Consider offering unique in-store experiences, personalised service and convenient online ordering options.
Trades (like plumbing, electrical, carpentry and so on)
What are the most in-demand trades in your local area? Identify areas of high demand and specialise your services accordingly.
What are the biggest challenges that tradespeople in the UK face (such as competition, finding qualified employees or managing cash flow)? Develop strategies to overcome these common challenges.
What are customer expectations for service quality, professionalism and value for money? Exceed customers' expectations to build a strong reputation and attract repeat business.
How can you build strong relationships with local businesses and homeowners? Develop strong local partnerships and build a loyal customer base.
What are the best marketing channels for tradespeople to reach potential customers? Work out the most effective ways to reach your target audience and generate leads.
Hairdressing and beauty
What are the latest trends in hair and beauty in the UK? Stay up-to-date with the latest trends and offer services that people want.
What are customers' expectations for hygiene, customer service and the overall salon experience? Make sure your salon provides a clean, comfortable and enjoyable experience for clients.
How can your salon offer something different from the competition? Develop a unique selling proposition (USP) that will give your business a competitive advantage.
What are the most effective marketing strategies for attracting new customers? Explore various marketing channels to reach potential clients and grow your customer base.
How can you build customer loyalty and encourage repeat business? Put strategies in place that will help with your customer retention and allow you to build long-term relationships.
Childcare
What are the most in-demand childcare services in your local area? Identify the types of childcare services that people use (or demand) most in your community.
What are parents' expectations for childcare providers (for example, in terms of safety, affordability, quality of care, educational value etc.)? Meet and exceed these expectations to build trust and attract new clients.
How can you create a safe and stimulating environment for children? Prioritise child safety and provide a stimulating learning environment.
How can you build trust and confidence with parents? Develop open communication with parents and build strong relationships.
How can you comply with all relevant childcare regulations and guidelines? Make sure your childcare business operates in full keeping with all the relevant rules and regulations.
Practical tips for doing market research
Now you have a list of questions, it's time to put them to use. For practical tips for gathering valuable market research data, read our blog, How to conduct market research for a small business.
Taking action with your research
Organising your findings
To make the most of your research, create a simple spreadsheet or document to record crucial insights. For example:
Columns: Question | Finding | Action plan
Example: "What do my customers need?" – Customers prefer eco-friendly products – Stock more sustainable items.
Using the questions as a starting point
The questions in this blog are just the beginning. Combine them with customer surveys, social media polls or focus groups to gather even deeper insights.
Why market research matters
The UK business landscape is dynamic and diverse, which presents both exciting opportunities and unique challenges for small businesses like yours.
Competition is fierce, with established players and agile start-ups vying for the same customers. In this environment, market research levels the playing field.
Understanding your customers
At the heart of every successful business lies a deep understanding of its customers. Market research helps you uncover valuable insights into their:
demographics – age, gender, location, annual income, education and other key characteristics
psychographics – lifestyles, interests, values and motivations
needs and wants – the problems they face and the solutions they seek
purchasing decisions – how they research, compare and buy current products or services
Armed with this knowledge, you can tailor your products or services to precisely meet your ideal customers' needs and cater to their preferences. This is an effective way to build customer loyalty.
Identifying market opportunities
The UK market is constantly evolving, with new trends and opportunities emerging regularly. Market research helps you do the following:
Spot emerging trends: Identify shifts in consumer preferences, advancements in technology and changes to rules and regulations changes that could affect your business.
Uncover untapped markets: Discover new customer segments or geographic areas with high potential.
Develop innovative products and services: Gain insights to create offerings that are truly unique and meet unmet customer needs.
By staying ahead of the curve, you can position your business for growth and capitalise on new opportunities.
Reducing risk
Launching a new product or service, expanding into a new market or making significant changes to your business strategy comes with its share of risks. Market research allows you to do the following:
Validate your business idea: Make sure there's sufficient demand for your product or service before investing significant time and resources.
Identify potential pitfalls: Uncover potential challenges and obstacles that could hinder your success.
Make data-driven decisions: Base your business decisions on facts and insights rather than assumptions or gut feelings.
By limiting any risk, you can protect your investment, reduce the likelihood of costly mistakes and increase your chances of long-term success.
Summary
Market research is an ongoing process rather than something you do once then forget about. Regularly review your findings and adjust your strategies based on the new insights you gather and changing conditions in the market.
By continuously learning and adapting, you can make sure your small business remains competitive and successful.
Remember: Market research is an investment in your business's future. By taking the time to understand your customers, your market and your competition, you'll be well equipped to make informed decisions, reduce risks and achieve sustainable growth.
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