Market Research Is Vital for Small Businesses

A four- or five-figure investment in market research can save you tens of thousands, even hundreds of thousands of dollars in product development expense. It's a likely 10% of your budget for product development and understanding what the customer wants and needs -- and understanding why the industry hasn't delivered -- versus spending 100% of your budget on a product that misses the mark and fails to capture the customer. Which is more expensive?

If this is your first product, you should value market and customer information even more highly than businesses with established products and existing customers.

Another point to make: While social media, Internet searches and all the other online "free" resources can provide windows into issues, they are anecdotal evidence or opinions, not facts. It will not provide you with the broad insights and support that come from fact-based market research. (And don't expect investors to give you money because you saw a single YouTube clip on the issue.)

What you need from market research:

• Facts and evidence about the industry, customer, competition and more.
• Understanding of the players, potential and potential profits.
• Key benefits the customer wants.
• Identification of opportunities by market segments and niches, to know where to introduce your product.
• Trends: product, industry and market.
• Issues and problems with existing products, companies and industry
• Financial information on price, cost, revenues, volumes, discounts, setup costs and so on.

When it comes to designing and launching products, what you don't know can cost you.

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