01_CH01_The Small Business Handbook Second Edition s2

MARKET RESEARCH Market research is the process ofcollecting information that will assistyou to gain insight so you can betterunderstand your market, customersand the environment in which your business operates. 1 MARKET RESEARCH



WHY DO YOU NEED TO DO MARKET RESEARCH?To make informed decisions! To improve your understanding of your market and customers It helps you to identify new and potential customers The data collected should help you to operate your business better It allows you to get to know and understand your competition To decide what prices, promotions and marketing activities to use It can save you a lot of money later on, as you: • Will have a better idea of what your customers want; • Can test new markets before entering them; • Can test beforehand if an idea is viable or not.THE POSITIVE IMPACT YOU CAN EXPECT, DO YOU KNOW YOUR CUSTOMERS (TARGET MARKET)?IF YOU CONDUCT MARKET RESEARCH:Conducting market research isn’t a one-off task. As your business Before you start any research, you need to ensure you knowgrows and changes, you will need to constantly review the data who your customers are. Business is about your customers.on your market, competition and customers as these are always It is not about you or the product. Your business has a betterchanging. You need to stay on top of the trends and changes chance of succeeding if your services or products are designedto ensure that you are not left behind. The impact of doing this to meet the needs of your customers. You can do this by:correctly should deliver the following results: 1) Interacting more with your customers • You develop the right service or product, that best meets 2) Understanding their likes, dislikes, wants, needs and the needs of your customers problems • You place your business in the most appropriate location 3) Conducting research • You create an effective business model • Your pricing is more accurate • You deliver a superior customer experience and service DEFINITION: TARGET MARKETA specific group of consumers at which a business aims its products and services source: small business encyclopedia 3 MARKET RESEARCH

HOW DO YOU GO ABOUT DOING RESEARCH? There are two ways to collect information. You can conduct either Primary Research or Secondary Research!WHAT IS PRIMARY RESEARCH? This is new research, conducted from ‘scratch’, which is done to collect answers to specific questions, or to make new discoveries. This type of research requires you to go out to interact and engage with your target market or subject matter.HOW DO YOU DO PRIMARY RESEARCH? When the information you require is not available you may have to do your own primary research. Primary research can be done in a number of different ways. The method you choose will depend on what kind of information or answers you are searching for, as well as the budget you have available. 1. MARKET RESEARCH QUESTIONNAIRES What do you do when you want an answer to something? You ask a question. We ask questions every day, but as small business owners we often don’t ask enough questions that will help us to understand our customers better, or provide us with answers to enable us improve our business performance. Questionnaires are an important and effective way of gathering information from current or potential customers. That is why they are the most commonly used method in research. A questionnaire allows you to get information on various topics, for example: - How to price a product or service - Whether people would use and pay for a certain new product or service - How people currently deal with a certain problem or issue – which you may be looking to solve Questionnaires are used in face-to-face interviews, focus groups and telephonic interviews, or via online, email or written surveys. 4 MARKET RESEARCH

2. ONLINE MARKET RESEARCHWhy should you use online sites? Cost: The cost will vary, depending on whatIt allows you to reach many people and in different locations. you want to do and your budget. ButIt is budget friendly: the cost is minimal compared to traditional online market research is significantlysurveys. less expensive than traditional waysIt enables you to focus on your specific target market – depending on of doing research.which social media sites you use.You can receive instant results and analytics because some sites pro- Time involved:vide graphical analysis of the responses received. Time to create survey questions andIt is suitable for the use of either simple surveys or longer question- then posting them on email or social media sites.WWWnaires. Some great tools to try out: SurveyMonkey: www.surveymonkey.com Free Online Surveys: www.freeonlinesurveys.com Google Forms: www.google.com/forms/about Zoho Survey: www.zoho.com/survey 5 MARKET RESEARCH

3. FOCUS GROUPS Why should you use a focus group? The cost will vary, depending on what you want to do and your budget. But online market research is significantly less expen- sive than traditional ways of doing research. Cost: Focus groups come at a cost and this will vary depending on whether you, for example, need to rent a venue; provide the group with some sort of remuneration; and use the services of a professional researcher.Time involved:Focus groups come at a cost and this will vary depending on whether you, for example, need to rent a venue;provide the group with some sort of remuneration; and use the services of a professional researcher.How do you go about running a Time involved:focus group? Focus groups come at a costStep 1: Set a clear objective for the focus group discussion. and this will vary dependingStep 2: Develop questions to ask in the session. Keep these to 5 or 6 questions. whether you, for example, nStep 3: Plan the session properly by establishing the: to rent a venue; provide the- Date, time, length: Choose a date by consulting with the participants so that group with some sort of remthey will be able to attend. The length of the session is important: generally one-and-a- neration; and use the servicehalf hours is suggested as suitable. of a professional researcher.- Venue and setting: Choose an appropriate venue, ideally with audio-visual aids,that is quiet, and where people will feel relaxed. Don’t forget to provide refreshments.- Agenda: Ensure you have a clear agenda, and share it with the group before youstart. Include timelines per agenda item to ensure you keep to schedule.- Ground rules: Be upfront about the ground rules you set – it will encourageeveryone to participate. Be respectful of others, remain focused, stay on topic and stickto the schedule.- Number of participants: Rather than large groups, have smaller groups and holdmultiple sessions. The suggested number of people per group is between 6 and 10.- Budget: Set your budget upfront as this will determine how many focus groupsyou can hold. Among the costs to account for is the provision of a stipend or small giftfor participants.Step 4: Identify participants for the focus group and invite them.Step 5: Find a co-facilitator.Step 6: Decide how to collect or document the data. Ideally, use a voice recorder. 6 MARKET RESEARCH

4. SURVEYSWhy should you conduct asurvey?Surveys are ideal when your business is already opera-tional and you want to get feedback from your custom-ers about their experience of your product or service.I’m sure you’ve noticed how some apps and ISPs ask youalmost immediately after you have used their service torespond to a survey about the experience.Cost:Surveys can also be relatively inexpensive, dependingon what type of survey you conduct, how long it is, andwhether you do it or hire other people to execute it.Time involved:If managed well, it should take very little time as a surveynormally does not involve many questions.How do you conduct a survey?This can be done in a number of ways: online, socialmedia, email, text messaging, telephonic or directinterviews, or customer-feedback forms. 7 MARKET RESEARCH

5. OBSERVATIONSObservation is another way of conducting a survey. It is a simple and cost-effectiveway of gathering different kinds of information about your clients, customers orcompetitors – without directly interacting with them. WHY WOULD YOU GO ABOUT OBSERVING SOMETHING? It is ideal when you need to observe a social habit or behaviour, or you want to count something. Such as the number of people wearing certain types of sneakers or driving a certain type of car. Or to find out how people shop – or even how a certain business operates. COST: The cost is minimal as this would normally involve either yourself or employees to sitting and observing a particular activity or behaviour and recording the observations. TIME INVOLVED: It is ideal when you need to observe a social habit or behaviour, or you want to count something. Such as the number of people wearing certain types of sneakers or driving a certain type of car. Or to find out how people shop – or even how a certain business operates. DIFFERENT OBSERVATION TECHNIQUES Location Scouting: ideal when you are looking to open a business in a certain location. You can go to a location to determine whether it has high or low foot-traffic. Mystery shopping: a method used in the retail space, involving a fake customer who observes certain behaviours or assesses specific operations. 8 MARKET RESEARCH

What is Secondary Research?Secondary research involves existing data or research conductedby someone else. As much as it is called secondary research, thisis a good place TO START when looking to conduct research. Thisway, you get to see what is out there without wasting your timeand resources by conducting a study on something about whichinformation is already available. Where can you find existing research? This century is not called the information age for nothing. There is information all around us and it is easily accessible – if you look in the right places or just ask people around you. 1) Start online: Look for online industry journals; publications by consulting companies; company websites; online newspa pers and magazines and university publications. 2) Offline resources: If online is not your comfort zone, then go to the library or bookstore like Exclusive Books or CNA to access books, industry journals, newspapers and magazines. 3) Social Media: If you are like me and spend a substantial amount of time on social media, think about following key publications and organisations on Facebook, Twitter or LinkedIn. I’ve found some amazing research gems – shared by research companies, individuals and companies that I follow.Reliable (inexpensive) sources to look at whenplanning to conduct secondary research:Research is expensive, and most of the time youhave to pay to access information from researchorganisations. But in the next section you will findreliable resources to search for information – which,hopefully, will cost you little or no money. Disclaimer: All the information shared next was sourced in July 2016, and therefore there may be some changes as and when you go to the websites. 9 MARKET RESEARCH

1) Stats SA (Statistics South Africa) • Built environment • Natural resources andwww.statsa.gov.za • Biosciences the environment • Defence, peace, safetyStatistics South Africa is the South • Modelling and digitalAfrican government department that and security scienceis responsible for conducting research • Information andand publishing official statistics for the • Mobile intelligentuse of all who need them – including communications autonomous systemsgovernment departments, businesses • Laser technologyand non-profit organisations. And since • Materials sciences and • Nanotechnologyyou fall under the business category, • Synthetic biologythis is a great place to start when doing manufacturing • Water sustainabilityresearch that relates specifically toSouth Africa.2) CSIR (The Council for Scientific andIndustrial Research) www.csir.co.zaThe CSIR is one of South Africa’s leadingscientific and technology research,development and implementationorganisations. As per its name, itfocuses primarily on scientific research.Its directive is to conduct researchaimed at improving socio-economicgrowth, which, for you, theentrepreneur, should be music to yourears! You can download research here:http://researchspace.csir.co.za/dspace/3) HSRC (The Human Sciences Research 4) Consulting firms – websites:Council of South Africa) www.hsrc.ac.za This is where I always start when I am doing industry and market research – I go to theSolving social problems through research! websites of big consulting firms. They haveIf you are a social entrepreneur looking to create great data, most of it recent and available forsolutions that will positively impact the South Af- free, on industry and business trends,rican or wider African society at large, then the opportunities, and challenges – all from both aHSRC is one place to start when searching for local and global perspectives. Make sure to visitinsight that will help make informed decisions the websites of Deloitte, KPMG, PwC, McKinsey,on what you plan to do. According to its website, Accenture and EY to gain informed andthe HSRC is “the largest dedicated research insti- up-to-date insight that is relevant for yourtute in the social sciences and humanities on the purposes.African continent, doing cutting-edge public re-search in areas that are crucial to development”.The research (unless it’s a confidential report) isavailable to the public for free.

5) Universities: 6) Public libraries:It makes sense to go to a university to access research, The internet is an amazing source of information but sincesince they are the guardians of knowledge. If you’re it’s not easily accessible to everyone, libraries still have astill a student, then you are lucky as you have access to role to play. If you are in a small town, or even a bigthe university’s knowledge base. But if you have com- city – visit the public library. It will have newspapers,pleted you studies or don’t live near a university, it may magazines, journals and other publications that you cannot be that easy. Why not try these three tips? borrow or just read while there. And some provide free1. Activate your alumni card to get access to your uni Wi-Fi. versity’s library2. Go to a conference or forum discussion. Business schools, like GIBS, regularly host events where industry leaders and experts share their insight, and you can network with the speakers and other attendees afterwards3. Or visit university websites, since many universities share articles and publications on business or industry trends and research online.7) Industry publications, journals, newspapers 8) Development agencies and non-profit organisations:and magazines: Organisations like the United Nations and the African Development Bank conduct a lot of research, which canTo stay up to date with what is happening in your be sourced from their websites. Subscribe to their onlineindustry, why not subscribe to an industry journal or publications or follow them on social media.publication? These are normally published monthlyor quarterly, and will keep you informed on the keythings you need to know about the space in which yourbusiness plays. Newspapers and magazines (offline andonline) are also a great source of information and arequite affordable.