What Is Market Research?
Market research is how you check that real people want what you plan to sell, and learn how to win them. The U.S. Small Business Administration explains it simply: market research helps you find customers, and competitive analysis helps you make your business unique (SBA).
Two Kinds of Research
| Kind | What it is | Examples |
|---|---|---|
| Direct research | You collect the information yourself | Short talks with possible customers, a simple survey, watching how busy a competitor is |
| Existing data | Information someone else already published | Your country's national statistics office, local government reports, business associations |
How to Do Market Research in 6 Steps
1. Describe your ideal customer
Who are they, where are they, and what do they want? Be specific: "office workers aged 22–45 within a 10-minute walk" is much more useful than "everyone".
2. Talk to real people
Speak with 10 to 20 people who fit your customer description. Ask about their problem, what they use today, and what they would change. Listen more than you talk, and do not try to sell.
3. Find what stops people from buying
Price, trust, distance, habit? Knowing these buying barriers early helps you plan your offer and marketing.
4. Estimate your local market
Make a simple estimate: how many possible customers × how often they buy × how much they spend. It does not need to be perfect, but it must be honest and explained.
5. Study your competitors
List the businesses your customers use today — including different kinds of solutions. For each one, note their strengths, weaknesses, and prices. Visit them, try their product, and read their customer reviews.
6. Write down your sources and trends
Note where every number comes from, and list a few trends that affect your market, such as changes in prices, habits, or local building projects.
Simple Market Estimate (Illustrative)
From 20 short talks, about 4 in 10 buy breakfast on the way to work → about 800 people.
They buy about 3 times a week and spend about 2.50 each time.
800 × 3 × 2.50 = about 6,000 a week spent on breakfast in the area.
This is the whole local market, not what the bakery will earn. The bakery then plans what share of it it can realistically win.
Common Mistakes
- Asking friends and family only. They want to be kind. Talk to strangers who fit your customer.
- Using a huge national number as your market. Start from the customers you can actually reach.
- Saying "we have no competitors". Customers always solve their problem somehow today.
- Not writing down sources. A number with no source is hard to trust.
Where It Fits in Your Business Plan
Your research goes into the Market Analysis section: customer profile, buying barriers, local market estimate, trends, where your numbers come from, customer groups, and competitors. It also shapes your Marketing Strategy. For a quick check of your own position, try a SWOT analysis.
Sources
- U.S. Small Business Administration — Market research and competitive analysis (checked November 2026).
Frequently Asked Questions
How do I do market research for a small business with no money?
Talk to 10 to 20 possible customers, observe competitors, read their customer reviews, and use free public data such as your country's national statistics office.
What is the difference between direct research and existing data?
Direct research is information you collect yourself, such as customer talks or surveys. Existing data is information someone else already published, such as government statistics.
How do I estimate the size of my local market?
Multiply the number of possible customers you can reach by how often they buy and how much they spend each time. Explain where each number comes from.
How many competitors should I list?
List the main ones your customers use today — usually three to five is enough for a small business plan.
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