Market Research 101

Thorough market research is the foundation of any successful business. Strategies such as market segmentation (identifying specific segments within a market) and product differentiation (creating an identity for your product or service that separates it from your competitors') would be impossible to develop without market research.

The information you gather will drive every other aspect of your business: advertising, marketing, financing, sales, etc. Anyone you approach for financing will want to know that you have made an accurate assessment of your market share. You must know who you want to target before you can put together an effective advertising campaign or choose a magazine or television time slot in which to run it. Remember: You don't want to reach everyone-just the people who will buy your product.

Now that you understand how vital market research is to your business's health, how do you obtain information about your market and potential customers? Through extensive research. That doesn't mean you'll have to spend all your free time in the library. A lot of research is already compiled and waiting for you to take advantage of it. Here's how to gather the firsthand responses and secondhand statistics that will help you build strong marketing strategies:
 

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This article was originally published in the April 1996 print edition of Entrepreneur with the headline: Market Research 101.