Part 2: Conducting Market Research for your First Business using Questionnaires

Hello, I'm Hari, a student in Grade 11. In my previous post, I explained how you can write a successful business plan, and why it is necessary. In today's post, I will be explaining how to conduct market research for your first business.

If you are a beginner, don't worry. I'm assuming that you have no prior knowledge of what I'm about to explain. As I clearly mentioned in my title, I will be focusing this post on the Questionnaire strategy. However, I will explain the other strategies too, just for some context as to why I chose Questionnaires.

What is Market Research?

You may already know that a business's primary goal is to satisfy a customer's needs and wants. So, to release a new product into a market, a business needs to conduct some prior research to understand the tastes and preferences of the customers. This process of obtaining information to assess the tastes of the consumers is known as Market Research. This can be conducted in the following ways:

• Surveys (using Questionnaires)
• Product tests
• Focus Groups
• Interviews

So how do I choose which strategy to use? Well, that depends on several factors. A few are mentioned below:

• The budget allotted for market research
• Resources available to conduct research
• Famous brand?

If your budget is limited, which is the case for every first-time entrepreneur (unless he is wealthy), product tests would not be feasible. You might end up wasting too much money creating samples for customers. Moreover, a new business isn't famous, so product tests cannot be effective, as most customers would not know about the business, and could be reluctant to take a sample. However, a small number of customers would agree to try a free sample.

Based on my knowledge and calculations, I was able to conclude that the Survey strategy was ideal. Why you ask? I have two reasons for my conclusion:

1. While you're conducting a survey, you could promote the brand to the customer directly. This would help build a relationship with the customer, which would get you more sales.
2. Making use of technology to make a questionnaire cuts printing costs, making survey questionnaires one of the cheapest ways of conducting market research.

Market Research Strategies Explained

Survey (using Questionnaire)

Surveys can be of different sorts. There are customer satisfaction surveys, market research surveys, and others too. However, we will be discussing only Market Research Questionnaires in this post.

A questionnaire is usually designed in MCQ format so that the customer can quickly respond to it. The questions must not ask for personal information, such as the name, exact age, etc. Therefore, careful planning is required when designing the questionnaire. Luckily for you, I will be giving you tips on how to avoid common mistakes when making questionnaires later on in this post!

Product Tests

As the name suggests, a product test is when a sample of the product is offered to customers to obtain feedback. One major drawback I discovered during research was that a bad sample could damage the growing reputation of the new business. Therefore, the sample must be created with utmost care.

Another flaw of this strategy affects start-ups and small businesses mostly: finance. Usually, start-ups have a very limited source of finance (again, I said usually, not certainly). This is one reason why start-ups would find it hard to allocate too much money to conduct market research.

Focus Groups

A focus group is a small group of customers selected to represent a larger number of similar customers. This strategy helps curb market research expenses, but It is extremely hard to pick the most appropriate focus group. Therefore, it may be difficult to conduct your research using the focus group strategy. 

Interviews

This strategy is pretty self-explanatory: you conduct a Q&A with your customer, asking structured questions to get appropriate responses. However, a start-up that is conducting market research for the first time cannot use this strategy, as their brand may be unheard of, and some customers would decide not to cooperate. This doesn't mean that the interview is a bad strategy. Interviews are useful to businesses with a good reputation, as many customers would be interested to give feedback to a brand they know and use.

So, how do you conduct a survey?

The process is tough and time-consuming, but the results are really worth it. I myself conducted surveys to analyse what the market was like. A lot of preparation goes behind conducting a successful survey. I will try my best to make this process less complicated and foreign to you.

There are many ways you can go about designing a good questionnaire for your survey, but I would suggest you make a plan first. List out what information would be necessary so that you can base your questions around this list.

Selecting what sort of survey you want to conduct

Once you have identified what information you want, decide whether you want to conduct an online survey or a physical one. A hybrid, a "physical e-survey", which combines qualities from the online and physical surveys. I conducted a "physical e-survey" and an online survey for my project, but I used the same document for both surveys. How would you choose between the options? Here are some facts to consider when making your choice:

• Do you have allotted expenses for printing and distributing questionnaires? If you do, bear the following in mind before deciding to print your questionnaires: 

• Most customers would just ignore the questionnaire, so you wouldn't get as many responses. A go-around would be physically asking them the answers to the questions, but that is almost similar to the interview. They share similar advantages and disadvantages.
• Customers wouldn't want to share personal information, so some relevant data could be inaccurate. A go-around would be to physically present the questionnaire and make mental notes about the person's gender, average age, etc.

• Do you have contacts of people you want information from? If you do:

• Were they obtained appropriately? You wouldn't want to make the customer uncomfortable about the fact that you have their contact details without asking them.
• Are you sure at least 50% would answer the questionnaire? Most people consider things like questionnaires as unnecessary and would ignore them unless urged to do them. Are you in a position where you can urge them to complete the questionnaire? If you are, you're in luck!

Based on my calculations, I concluded that the physical e-survey was the best way to conduct the research. So, I sat down to framing questions for the questionnaire. 

Framing your questionnaire

Now that you have selected what sort of survey you're going to conduct, you now need the questions. The process of framing the questionnaire is complicated, but I am here to make your life easier. Just make sure that you consider the following:

• Most of your questions should require a yes/no so that people would quickly complete the questionnaire.
• Questions that ask for personal details should be strategically presented. For example, if you want to know the age of the person, ask which age group they fit in.
• Try not to ask for information that discloses a person's identity. This way, more people would answer your questionnaire.

Make sure your questions are self-explanatory. You wouldn't want to explain your questions to every customer. Now that you have framed your questions, let's make them more presentable by adding design to the questionnaire.

Designing the questionnaire for the survey

NOTE: If you have a brand colour palette, here's a place it will come in handy. If you don't, use less flashy colours for your questionnaire.

If you are designing a questionnaire to be printed, make sure the response fields are big enough to accommodate the person's answer. All text should be large so that the person can read it clearly.

If you don't want to incur printing expenses, you could design an online questionnaire. Some tools I found useful were Google Forms and Survey Monkey. Both of these tools allow for easier data analysis, but Survey Monkey's free version has plenty of limitations. I used Google Forms to design my online survey form, because it was free to use and had many useful features, such as direct entry to Google Sheet.

While designing your online survey questionnaire, make sure the theme is consistent throughout the document. Use preset colours if you don't have a brand colour palette, but if you do, go ahead and use it there. Use a font that isn't illegible, because you wouldn't want your questions unclear to people.

Here's a look at the questionnaire I designed to conduct my surveys:

Click here to see it in action! 

This one was used for both the online survey as well as the "physical e-survey"

Conducting the survey

Once your questionnaire is ready, it's time for you to obtain the responses necessary to complete your market research. If you chose to conduct the physical survey, you could travel door-to-door to obtain everyone's response. However, you must notify the concerned people regarding your visit at least a day prior, because you wouldn't want to go to a person's house at an ungodly hour. 

Try to spend about 2-3 minutes only at each house. This would allow you to cover more houses in a shorter amount of time. Be sure to explain what your business is about to the people you are surveying because they could be your future customers. For my project, I went to each house within my villa complex, obtaining results from about 80% of the people. 

If you chose to conduct the online survey, you must intimate the concerned people that you're sending them a questionnaire for your market research. You must follow this up with a well-drafted message stating why you need their participation, and how they would benefit from participating. I'm sure that drafting out an apt message would be easy, but here is the message I drafted for your reference.

Hello,

I am Harikrishnan, a student in Grade 11. I have been studying Business Studies since Grade 9. Over the past 2 years, I learnt a lot about starting up, running and managing a business. As a Project, I am planning to start a small-scale business that has its operations within this community only.

To start the business, I need to conduct my market research. To do so, I have decided to send a Google Form to all the residents, as I realised it would be more convenient for people to just fill in a form from wherever they are and whenever they want to. All interested people can support me by filling in the form.

Here is the link to the questionnaire: https://forms.gle/9cFxeKP8K6LbGcBU8

Please take a minute or so of your time to fill in the form, as I would love to have maximum support to be able to complete the Project. 

Thanks and Regards,
Harikrishnan D

Analysing the Survey Data

Once a substantial amount of people have responded to your questionnaire, you must now analyse their responses to come to a conclusion. If you used Google Forms to conduct the survey, pie charts and bar graphs are automatically generated to aid your analysis.

Based on the results, you can identify which product caught the most attention from the crowd. Using this data, you will be able to calculate your production costs and set a price for the product too. The survey data can be included in your business plan too, acting as evidence of your marketing choices. 

After reading this post, I believe you have a better understanding of why conducting market research is important, how to efficiently conduct it and how to analyse the results. 

Next post: https://thebusinessbot.blogspot.com/2021/07/purchasing-equipment-and-supplies.html