How To Do Market Research In A Small Town

by Tom Egelhoff

Market Research: What Is It?

Like most of the marketing topics we discuss on this site, small town market research is done a little differently than in large cities. First a quick definition of market research. Market research is gathering, recording and analyzing information about your products or business. Market research can be used to get information about pricing, customer service, delivery, new products and customer behavior and buying habits.



What Will Market Research Tell Me?

  • Who current and potential customers are
  • The demographics of your customers (age, income, education, etc.)
  • Your customers buying habits
  • If your customers want your products or services
  • If your pricing is in line with customer expectations and other markets
  • How your advertising and promotions are working
  • How customers see you as a business (your business image)
  • How you compare to your competition in the eyes of your customers
  • How can I profit from market research?

If it is done correctly and accurately it can prevent costly mistakes. Done incorrectly, it can end your business. Let me show you two examples of how market research can make profits in one case or create losses and damage image in the other. I'll apologize in advance for using two large corporations as examples. I just use them for name recognition.

Example One: In the early 1960's Volkswagen was the leader in small car sales. Until that time most American automobiles had been "small tanks" with fins and lots of chrome. Ford's challenger to Volkswagen had been the Ford Falcon. Ford was concerned because Falcon sales had begun to decline. Ford could have assumed that customers just didn't want small American cars. Two other American manufacturers were experiencing the same kind of sales decline.

Ford turned to market research and found some surprising facts. While Falcon sales were on the decline, young adults were requesting sport options such as bucket seats and special interiors. There was a marked increase in the sales of these options. So market research led a young Ford engineer to design and introduce, in 1965, ... the Ford Mustang. This car crushed all existing sales records up to that time. Who was that young engineer who headed up the Mustang project? Lee Iacocca.

Example Two: McDonalds. What would I do for bad marketing examples if it wasn't for these guys? Do any of the following ring a bell? The McLean burger, salad bar, McDLT, The Arch Deluxe? All were dismal failures. I can't begin to guess what types of market research they were using.

McDonalds market is kids...period! If the kids come so will their parents. They have spent the past 40 years establishing a kids market. Playgrounds out front. Disney movie promotions. Happy Meals with toys. The list goes on and on.

The last major success for this company was the Egg McMuffin breakfast sandwich and possibly the McRib in some areas. Compare McDonald's marketing to Wendy's. No playgrounds at Wendy's. No kids in Wendy's commercials (rarely anyway). Adult fare at low prices. Wendy's has successfully identified its' market (through market research) and is successfully capitalizing on it.



Where Do I Start?

First determine what you want to find out from your research. Here are three areas to consider.

Internal Research - Information available from within your company about your company.
External research - Information available from outside your company. What your competitors are doing. Changes in your industry that may require company changes. Trade magazines and industry associations.

New or Primary Research - If there is no comparable information available and you start from scratch. This is what I did with my book, "How To Market, Advertise and Promote Your Business Or Service In A Small Town". There were no other books on small town marketing available anywhere that I could find. So I had to do my research from scratch.



What Is The Small Town Marketing Research Process?

Here are the types of things you must know to do effective market research.

What is the problem? You must define what your problem is. This is the most important step of the process. Poor customer traffic? Poor sales? High cost of sales? Too much competition?

Is research the answer? Is the answer to the problem in the internal or external information? (See Above) Is free information already available? Have studies of this problem already been done by trade magazines or industry associations? Can you adapt them to your business? Do you need to start from scratch?

What are the objectives of the research? You may have one objective (Who is my target market?) or several objectives (How do customers perceive each of my products?).

What kind of data do you need? Customers age, income, buying habits? Or, where do customers come from, what advertising is working? You must define what you are looking for.

Next, design a sample of questions that will gather the information in a controlled way. Each person must be asked the same questions under the same conditions in the same way for the test to be accurate.

If you live within a close proximity to a larger city then you should also see: "How To Find The Real Target Market In A Small Town."


Here are three ways to gather information

Mail Survey: Expect an average of 15% return depending on what kind of incentive there is to do the survey. In a small town give a discount if they return the survey in person to your business. You can pick up extra information. Keep it short for higher response. Always include a postage paid return envelope. Mail is poor at gathering specifics about your business and finding reasons why people do what they do. Lowest return but least expensive in a small market.

Telephone Survey: Expect about 70% (keep calling until you get it) 100 phone calls equals about 1,000 mailings. Better control of the questioning and more detailed collection of information. Next lowest in cost.

Personal interview: Expect about 80%. Advantages -- longer survey and more detailed questions. You can show the product or service. Customer can sample the product. Products can be compared to competition. This is the best method for finding why customers do what they do. Disadvantages --Most expensive unless you do it yourself. Where can you ask the questions to insure an unbiased "across the board" control group?



What Are Some Low-cost Market Research Techniques I can Do Myself?

Here Are A Couple Of Things You Can Do To Find Out About Your Customer Base.

Check license plates in your parking lot. Here in Montana, the numbering on license plates tell what county the car is from.

Telephone numbers: Gather numbers from checks, credit card slips and delivery information. Phone prefixes will tell cities and sometimes geographic areas of your customers.

Key your ads and coupons: Check the effectiveness of your advertising by using a key in the ad to tell you where the customer saw it. For example: The ad might say, "Ask for Joe". This would mean it came from the newspaper. "Ask for Jim" would mean a magazine. "Ask for Jerry" would be radio.

Communicate with customers: Every customer and every phone call should get a "How did you find us?" Use "small talk" to gather information. Instead of "May I help you?" which invites a robotic "yes" answer, ask "open-ended" questions that can't be answered with a yes or no. "What can I help you find today?"

These are just few tips on small town market research. For more detailed information on how to do a small town or small market marketing plan, order my book, "How To Market, Advertise and Promote Your Business Or Service In A Small Town."


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