Market research must be used in each of these six steps to help define your business for your customer's interests, not your own. It is the process of learning what customers want or need and determining how to satisfy those wants or needs. It is also used to confirm whether the customer reacted to a marketing program as expected. The benefits of market research include:

• Learning who your customers are and what they want.
• Learning how to reach your customers and how frequently you should try to communicate with them.
• Learning which advertising appeals are most effective and which ones get no response.
• Learning the relative success of different marketing strategies, thus improving return on investment.
• Learning how not to repeat your mistakes.

The dilemma for the small business owner is that, properly done, market research is quite expensive, takes time and requires professional expertise. Acquiring all the necessary data to reduce the risk to your venture may cost so much and take so long that you may go out of business. The answer is to find a quick and inexpensive way of getting enough data to help you make the right decision most of the time. Some obvious pitfalls are:

• Using a sample that does not represent the total market.
• Asking the wrong questions.
• Not listening to the responses.
• Building in biases or predispositions that distort the reliability of information.
• Letting arrogance or hostility cut off communication at some point in the marketing process.

If you have a limited budget, develop the skills to hear what your customers and potential customers are telling you. Some techniques worthy of consideration are:

Advisory board - Occasionally convene a group of local people, whose opinions you respect, to act as a sounding board for new ideas. Choose your group with extreme care; one or two negative thinkers can distort the thought process of the entire group.

User group - Gather customers together to discuss new ideas. Their opinions can help you keep your business on track. Pick a neutral setting where the people will talk. Be sure to reward the participants and share the credit for good ideas.

Informal survey - If you seek feedback from customers by simply asking, How was everything? you can be seriously misled. Most people, even those with legitimate complaints, are reluctant to speak out because they are afraid of appearing foolish. This tendency is probably more widespread in smaller communities, where friendships often stand in the way of critical review. Also, if your attitude is such that customers feel complaining will not do any good, you may be antagonizing customers without even knowing it. One solution is to take a few customers aside and ask them some sincere questions about how your business met their expectations and where it fell short. If the customer appears uneasy, do not press the issue - you will only force him or her to give you pat answers to escape the situation. If you get a good response, take notes. Follow-up letters thanking the customers and telling them what you plan to do with their suggestions will bring you friends for life.

Suggestion box - A suggestion box is a simple idea that works, but only if you do the following:

• Read the suggestions on a regular basis.
• Do something about the suggestions you receive.
• Reward those who give you good ideas by posting their names, writing letters to them or rewarding them with money or other things of value.

The principle at work is: If you reward good results, you will get more good results. If you do not reward them, you will end up with an empty suggestion box and the mistaken idea that everything is fine.

Sample survey - Canvass the neighborhood to gather data. If you wish to remain anonymous, line up some marketing students to perform the survey or engage a local marketing agency. Be sure you establish a technique for getting a random sample as most people naturally attempt to attract respondents with whom they feel comfortable. Be sure to test your questionnaire to see that the questions are easily understood and are meaningful.

Focus group interview - Get 10 to 15 people together in a relaxed setting and encourage them to talk about products or services they like or dislike. Use a moderator who can lead the group discussion without inhibiting the thought processes or limiting the expression of ideas and opinions. Tape record the session for later analysis.

Brainstorming - This is a variation of the focus group, in which participants are encouraged to freewill in their thinking to produce as many suggestions as possible without analyzing them. Again, a trained moderator will obtain the best results.

Complaint analysis - Encourage your customers to contact you directly if they have complaints. Respond to every complaint with a courteous letter assuring that you will correct the situation. A few disgruntled customers can be harmful. If your customers feel that they can work with you to solve their problems, you are sure to be successful.

Comparison shopping - Arrange with someone in a similar business located out of town to come to your town to shop your business and several of your competitors. Then return the favor and compare notes. This will avoid the danger of your becoming complacent about your premises and overlooking things that may be annoying or confusing to your customers.

Customer analysis - Tabulate information about customers regularly to determine such data as:

• Age.
• Size of buying group (family, household, etc.).
• Sex of the decision maker in the group.
• Geographic location - Sort checks and sales slips by ZIP code, or ask customers to mark their home on a map with a colored pencil. Tabulate visitors versus local residents.
• Average amount of purchase.
• Coupon usage.
• Response to recent advertising.
• Radio station listened to.
• Newspapers read.
• Response to mailings.
• Full price buyers versus those who respond to sales or specials.
• Special populations in your area, such as college students, military personnel, senior citizens, hospital visitors, convention attendees, sports spectators, fair attendees, farmers, seasonal workers, car pools, pet owners, home owners, boat or recreational vehicle owners and athletic participants. The more you know about your customers the better you will be able to satisfy and even anticipate their needs.

Customer want list - Keep a notebook at your cash register and write down every request you receive for items you do not carry or have in stock. Periodic review of the list will give valuable clues about sales you are losing or new products and services you should consider carrying. You may learn of fad items, products being heavily advertised or items and services your competitors have dropped. Your customers may be telling you they are dissatisfied with your competition and would prefer buying from you. You will be able to tell if other businesses in the area are in trouble, even before they know it themselves. You may also discover ways to make additional income by adding new departments or product lines or by developing a special-order business if your customers are willing to pay the added shipping costs and wait for delivery.

Industry analysis - On business trips or vacations, visit businesses similar to yours. Take pictures of signs, storefronts and displays, and talk to the owners to compare notes on new products, services and marketing techniques. Subscribe to trade journals and attend trade shows to keep current on marketing developments in your industry.

Sales representatives - Representatives who call on other similar businesses in your area can provide valuable information on business trends, new items and changes in the industry. Be sure the information is reliable.

Advertising notebook - Each ad that you run represents an investment. To make sure you maximize your investment, cut out each ad and tape it to a page in a three-ring notebook. (For a radio or TV ad, write a short description.) Enter the date, medium and cost of the ad. Record the results of the ad in sales, inquiries or coupons redeemed.

Divide the cost by the results to get a cost-per-inquiry factor that you can use to compare your ads and the media in which they appeared.