Market research on a budget

Start with the question

business.gov.au suggests deciding first what you want to learn. Most small business research answers one of these:

• Customers: Who are they, what do they need, where do they look for help, and how do they like to buy?
• Demand: Do enough people want this, in this place, at this price?
• Price: What will customers pay, and what do they pay now?
• Competitors: Who else offers it, how good are they, and where are the gaps?
• Location: Is this area right, with enough of the right people and passing trade?
• Trends: Is the market growing, shrinking or changing?

Write your question down, plus what decision it will help you make. Research that doesn’t lead to a decision is just reading.

Choose your target market segment

Before you research anything else, decide who you’re trying to reach. A market segment is a group of customers with similar needs, for example “first-home buyers in Geelong”, “café owners in inner Brisbane” or “busy parents who want healthy dinners delivered”.

Trying to sell to everyone never works. A message aimed at everyone is too vague to appeal to anyone, and a budget spread across everyone is too thin to reach anyone often enough. Businesses that choose a segment can:

• understand their customers’ needs and language in depth
• shape their product, prices and service around those customers
• choose the few channels where those customers actually are
• stand out against bigger competitors who try to serve everyone.

How to choose:

1. List possible segments by type of customer, need, location, age or life stage, industry or budget.
2. Use research to compare them: how many there are, what they need, what they spend, who already serves them, and how easy they are to reach.
3. Pick one main segment (and at most one or two secondary ones) where you can win.
4. Focus your research and your marketing on that segment only. Interview people in it, survey them, check the competitors they use, and design every campaign for them.

You can always add segments later, once you’re doing well with the first. See Writing a marketing plan.

Step 1: Use free data first (desk research)

Someone has often done part of the work already. Good free sources:

• Australian Bureau of Statistics (ABS): statistics on the population, households, incomes, industries and businesses, including data for your local area. Census data shows who lives where: ages, family types, languages, occupations and income ranges.
• Other government data: business.gov.au lists sources such as data.gov.au, Tourism Research Australia, Jobs and Skills Australia and the Australian Institute of Health and Welfare.
• State and territory governments publish economic and small business statistics.
• Your local council often publishes community profiles and economic development reports for the area.
• Industry and trade associations publish member surveys, benchmarks and trend reports, sometimes free to members.
• Austrade has tools for researching overseas markets if you plan to export.

Note the date of every figure you use. Data a few years old can still be useful, but say how old it is.

Step 2: Talk to customers

Nothing replaces real conversations. business.gov.au suggests talking to a mix of your own customers, your competitors’ customers and people who haven’t bought from anyone yet.

One-on-one interviews (in person or by video):

1. Aim for 8–12 people who match your target customer.
2. Ask about what they do now, not what they might do: “When did you last need this? What did you do? What was frustrating?”
3. Ask open questions and listen more than you talk.
4. Avoid pitching your idea until the end. People are polite and will say they like it.
5. Write notes straight after, and look for patterns across conversations.

Good questions:

• “Tell me about the last time you…”
• “What did you try? What happened?”
• “What would make this easier?”
• “How much did that cost you, and was it worth it?”
• “Where would you look for someone to help with this?”

Step 3: Run a simple survey

Surveys work well once you know what to ask. Keep them short.

• Five to ten questions, mostly multiple choice, with one or two open questions.
• Ask about behaviour and priorities, not hypotheticals.
• Send it to the right people: customers, your email list (with their consent), social followers, local community groups, or people at an event.
• Offer a small thank-you if it fits, such as a prize draw (check state rules on trade promotions) or a discount.
• Don’t treat it as statistics. A few dozen answers from your network show direction, not certainty.

Privacy and spam rules: tell people why you’re collecting their answers and how you’ll use them. Don’t use survey responses for marketing unless people have agreed. If you email people to promote your business at the same time, the spam rules apply: you need consent and an unsubscribe. See ACMA’s guidance and Email marketing that people read.

Step 4: Use what you already have

If you’re already trading, business.gov.au points out you probably have useful data:

• sales records: what sells, when, and to whom
• your CRM and booking system
• website analytics and search terms
• online reviews, complaints and customer feedback
• questions customers ask your staff.

See Measuring marketing.

Step 5: Check your competitors

Look at competitors the way a customer would:

Look especially at complaints in reviews: slow replies, hidden fees, poor communication. These are often the gap you can fill. Only collect what’s publicly available, and don’t make false enquiries that waste a competitor’s time on a large scale.

Step 6: Test demand before you commit

The best research is seeing whether people will actually pay.

• Pre-sell a product or a limited first run, with a clear delivery date and refunds if it doesn’t proceed.
• Run a pilot with a few customers at an introductory price.
• Hold a market stall or pop-up to test products and prices face to face.
• Build a simple landing page describing the offer and measure how many people sign up or enquire.
• Run a small ad test comparing two offers or prices.

Be honest in any test. If you take money, you must supply what you promised or refund it. See Online business models that are legitimate.

Step 7: Turn it into decisions

Summarise what you learned on one page:

1. What we found (facts and patterns, with sources and dates).
2. What it means for our customers, offer, price and location.
3. What we’ll do differently.
4. What we still don’t know, and how we’ll find out.

Add it to your business or marketing plan. See How to write a business plan and Writing a marketing plan. business.gov.au recommends making market research an ongoing part of your business, not a one-off.