Small businesses can benefit from market research (MR) is many of the ways that big business can but they don’t. On the one hand, the industry is not well set up to serve these clients. On the other, we have not made the case very well that these businesses can leverage market research to build their business.
Most small businesses (except perhaps the micro business) have all of the same challenges that large businesses do. They have a brand to manage, products and services to introduce, stakeholder relationships to address, and a product/ service relationship with consumers.
It is worth considering how the industry currently serves or does not serve them. As a caveat, it should be noted that there is a natural tendency for large companies to primarily serve other large companies in all industries.
This reflects the reality that large companies have higher overheads and must charge higher rates. But do smaller agencies provide much market research services to small and medium-sized companies? I believe the answer is no.
The easy answer to why small and medium-sized businesses do not do much market research is the cost. We tend to think of these enterprises as particularly cost conscious and we think of MR services as outside the affordability of smaller organizations. The first point is, perhaps, simply a myth. Although there are no doubt organizations that fail to make the right investments to further their business, this is unlikely to be concentrated among the smaller companies. The real question is not cost but value. How much Return on Investment (ROI) is there from an investment in research?
ROI in the area of market research is an under developed area in the industry and this reflects our focus on larger organizations where the MR budget is relatively small relative to the cost of making the wrong strategic decisions – especially when it comes to new product development and advertising expenditures.
Of course, cost is still an issue. Market research services usually involve primary data collection plus professional services costs. Unfortunately, the cost of a project is often the same regardless of the size of the client. Smaller boutique firms are often more affordable when it comes to professional fees (because they have smaller overheads) but the data collection remains a potential barrier.
As a consequence, the primary way that smaller businesses are likely to access market research data is through other third parties like advertising agencies. For example, most media outlets can tell you the audience that the advertising in their media will reach. Some of this information is in the form of syndicated MR insights (e.g. the Prizm segmentation from Environics). While there is value in this information and its use, small and medium-sized companies are not getting the full value of the MR toolkit.
It is important to realize that across a number of business issues, an investment in MR can pay significant dividends. Coming soon…. Some ideas on how you can leverage the MR toolkit to answer these and other questions.