To run a successful business, it is critical that you understand your market, particularly if you are engaged in direct marketing or value-added production. You need to know about market trends, your customers (their needs, desires and preferences), your competitors and prices. Thorough research is necessary to gain the confidence that people will buy your product. And if they will buy it, will they pay an adequate price for you to make a profit? Market research can help you gather this information.
For example, see the profile of Good Natured Family Farms, a Kansas City-area cooperative whose members conducted marketing research to learn more about consumer preferences regarding meats and other products they had to offer.
Market research involves qualitative methods (e.g., interviews, focus groups), quantitative methods (e.g., surveys that provide numerical data) or a combination of the two. However, with limited time and resources, you might want to consider whether primary research is required, or if secondary research will suffice. Primary research involves collecting new data through market surveys, personal interviews or focus groups. You might do this work yourself, or hire someone to conduct the study on your behalf. Secondary research involves gathering pre-existing information from published sources and databases.
If you decide to conduct your own marketing research, consider the following steps:
- Take advantage of what others have learned through market analysis. Contact other producers who specialize in your product, publicly held companies that post earnings statements and government agencies. Search libraries for books, reports and journals. Contact agricultural Extension offices and search the Internet.
- Be precise about the question you want to answer. The narrower your question (e.g., “What cut of beef would sell best at a farmers’ market?”), the more efficiently your research can answer it.
- Quantitative research, such as surveys that ask people to rate the importance of various product characteristics to them or the likelihood they would buy your product and the price they would pay for it, will offer information that you can extrapolate to a larger population as you attempt to determine the size of your market and your profit potential.
- Qualitative research, such as focus groups and semi-structured interviews, can help you understand consumer preferences in more depth and figure out the right questions to ask in a structured survey. In-depth discussions can also help you determine the underlying reasons behind consumer choices, which can help you devise marketing and branding strategies for your product.