Should You Be Doing Your Own Market Research?

Market research is the bread and butter of a budding company, propelling small businesses into a new era of customer understanding and profitability. However, conducting a thorough job can take time, money and effort. Small businesses may need to expend many resources or outsource the responsibilities to other trusted experts.

Here are ways to unravel priorities and determine if self-obtained market research or delegating to a third party is suitable for a company’s situation. There are various factors at play, and small businesses need to consider them all to make the right decision for them.

How Is Each Kind of Market Research Performed?

Take time to understand the different styles of market research before determining the leader and venue. A small business could choose to conduct its research for some analysis methods and outsource others, depending on available funds and resources.

Every method of analyzing customers or competitors has nuance, providing varying degrees of qualitative and quantitative data for small businesses. However, every type of market research will answer some burning questions a small business must uncover, like the target audience and industry trends.

Some market research initiatives can be broad, while others could focus on more niche market aspects, such as what customer behaviors drive sales. Regardless, a small business should choose the intention behind its study so the results carry more meaning. Companies may focus on minimizing customer complaints or creative ideation to fill gaps in their competitors’ catalogs.

These motivations will determine how the party performs market research. Here are some of the most popular and influential types of market research businesses and third-party experts turn to:

Focus groups: Market researchers will have preselected participants who provide opinions or test products. Researchers will hear testimonials and ask questions to understand the chosen topic. These have a high ROI because the participants are willing and usually compensated.
Surveys: Numeric, text-based or verbal responses are products of surveys. Market researchers hand these out as pen-and-paper questionnaires, email them or conduct in-person interviews. These are inexpensive yet can have poor returns if there aren’t many respondents.
Observation: Businesses can watch customer behaviors or competitors in their home environments to compare operational performance. It’s often inexpensive yet time-consuming, and observer perception drives the interpretation of results. Therefore, bias could be a concern.
Desk research: Rummaging through censuses, newspapers or libraries could reveal mountains of information regarding a small company’s industry and clients. Though it may take time and effort to uncover what’s relevant, staying informed through modern news outlets can also improve market analysis.
Segmentation: This technique requires prior market research since it outlines customer or competitor markets by demographics, psychographics or firmographics. Small businesses can collect and segment ages, values or industry sizes to gain more insight into the market.

These are only a few options for market researchers, but they all consider the sector’s current state as information funnels. Small businesses must have a wide-angle perspective over cultural and societal influences — global and community-based — that could influence collected data. Otherwise, it won’t matter who conducts the research.

What Are the Pros and Cons of Self-Conducted Research?

Now that the business understands the types of market research, it can understand the pros and cons of performing analysis without outside assistance. Taking time to reflect on these variables will pay off in the end.

Pros

Small businesses will save money performing research, which is the most impactful benefit. Though it may require other investments, it will likely cost less than hiring another company.

Another benefit of self-conducted research is that small businesses get even more facetime with customers and competitors. Time like this is invaluable because it’s multipurpose — customers feel deeper loyalty toward a brand that’s attentive to its customers, and familiarizing with businesses could foster significant B2B relationships and collaborations.

Additionally, small businesses will trust their process. It’s challenging to leave such vital research in the hands of a company with no oversight. Performing self-conducted market analysis allows for accountability and self-awareness. Small businesses can’t be sure if a third party utilizes their resources for customers to obtain the maximum benefit for their financial investment.

If there are process improvements to make or ways to be more accurate and efficient, a small business could begin implementing them immediately instead of waiting for potentially skewed data. Here are some of the applications of well-obtained market research:

Changing product or service prices to be more competitive
Predicting the company’s growth
Creating new offerings to seal gaps based on customers’ desires
Developing resilience against potential setbacks within the sector

Cons

The most notable drawback of self-motivated research is bias, which couples with a potential need for more expertise. Small businesses that can’t hire experts must rely on self-educating and trusting they won’t obtain data without personal influence affecting collection. Confirmation bias is notable because companies may place greater emphasis on results reinforcing pre-chosen beliefs.

The other disadvantage is time. Some companies may need more staff or capabilities to juggle yet another responsibility. It could cause unnecessary stress, influencing results. However, choosing less time-consuming market research methods could mitigate this slightly.

What Are the Pros and Cons of Outsourcing Research?

Outsourcing is another valid option if small businesses are capable, despite some crossover with the benefits and drawbacks. What may be worthwhile for one company may be a deterrent for another.

Pros

Small businesses could receive additional press and attention by having credit for instigating original research. It’s the easiest way to become an industry influencer and thought leader. Publications revealing sector analytics notify others to divert attention to that business for consulting or feedback. The opportunities are almost limitless.

Another benefit is infrastructure and tools. Market research agencies have staff and industry-specific resources to obtain analytics efficiently. Some even employ AI to expedite processes, fueling the industry even more by adding to the well of data sets that strengthen technologies’ future capabilities.

Customers and competitors may respond more genuinely to a third party to keep their identity anonymous. When speaking to the business directly, the responder may sugarcoat or provide unhelpful information. Responders will likely be more honest if another company performs research because they know it must maintain confidentiality. It also offers more significant variances in responses instead of extremes of high praise or scathing criticism.

Cons

The highest pro of performing self-conducted research is cost efficiency, so the hefty price is the largest con. Small businesses may need help to prioritize market research over other necessities. However, they can justify the costs because the investment will have a quality return over self-motivated research.

Third-party organizations should also be concerned about bias. It’s impossible to watch them perform research with constant vigilance. Therefore, small businesses must trust their industry expertise tops any potential for confirmation or sponsorship bias to influence results.

The Never-ending Benefits of Understanding the Industry

Market research could be the answer if a small business wants to understand consumers or rivals more. No matter the number of funds a company has, it can engage in data collection to understand its products, customer behaviors and competitor successes more thoughtfully.

Every ounce of information solidifies a bolstered marketing strategy and well-intentioned budget to maintain gradual success. Small businesses that know the types of market research and choose a considerate way to obtain the information will find the time and financial investment worthwhile.