Large-scale Research for Small Companies

By Dmitry Shimanov, General Director of MAR Consult Research Agency
Also accessible on SIS Worldwide Intelligence Library

One of the common mistakes existing in business circles is that marketing research is necessary only for large companies. As a matter of fact, small businesses require it as much as transnational corporations.
Why? Here are four reasons.

First, in order to expand market share, small companies need to find a suitable niche. This is why market analysis and SWOT analysis of competitors will be required. Second, small companies deal with extreme pressure of competition. They have to keep hold of every client, and to do so, complete information on consumers is necessary (from social and demographic features to psychographic portrait). Third, small companies also have to develop their brand. To this end, it is required to design an optimum combination of its attributes and evaluate its perception by the target audience. Fourth, small business means limited advertising budget, so advertising must be as effective as possible. This is why it is vital to test advertising concepts so as to evaluate their attractiveness. These four criteria are the necessary amount of marketing research for a startup company. Of course, the list of recommended issues may be extended, but this information will be enough to make timely and well-grounded decisions regarding small business development.

Most first-time entrepreneurs try to settle the listed problems by intuition. This approach often turns out to be ineffective because opinions from different people are highly subjective and likely to be incorrect. Why not confidently invest money in a marketing research in the very beginning and be sure that you are moving in the right direction or make timely updates to your business plan?

One of the major obstacles for entrepreneurs is commercial banks’ unwillingness to grant loans to small businesses. This problem may be settled if the company is able to deliver a comprehensive business plan embracing financial performance and marketing strategy, supported by research. This kind of data might be a strong argument in favor of extending a loan.

One more aspect the company should consider, if it is seeking to obtain maximum profit, is what price formation strategy should be chosen to ensure maximum demand. If the price is optimum, investments will pay back in minimum time, which is highly important to ensure regular loan payments. On the whole, price formation issues are so closely related with risk management, that it becomes clear: calculation of price should be based on marketing data. Such examples may be provided: price range for analyzed products and services on the market, competitors’ price policy, price elasticity of demand, expected consumption depending on the price, consumer behavior patterns and buying situations, consumption patterns and structure, and range of substitute products.

One more issue to be studied is forecasting market development. It is necessary to develop long-term strategies helping to promptly react to the changing market conditions. A forecast will help to build a strategy so as to take into consideration possible risks related to the entry of new market players, competitors’ development plans, market indicator dynamics, factors influencing market and segment development and other risks.

Thus, if a first-time entrepreneur considers all possible problems well in advance and tries to settle them before company registration, he or she will be evade numerous risks connected with a lack of information on competitive environment. This powerfully increases the likelihood that all investments in marketing research will pay back soon.

Contributing Company:
MAR Consult Research Agency. Moscow, Russia.
Contact: Dmitry Shimanov. [email protected] +7 (495) 660-82-20.

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