Will it sell? This is the question every business owner asks themselves whenever they think of a new product idea. With a local market research though, they can take the guesswork out of the equation.

There are many types of market research, and you may need more than one to craft an effective marketing strategy that’ll help you expand your customer base, gain a competitive advantage, achieve an impressive return on investment, and boost your overall chances of success. In this post, we’ll explain the process to help you uncover the right information for a thriving business.

What is local market research?

Local market research is a study of the supply and demand in the local area that allows you to understand your target segment. This process yields information on existing and potential customers, current suppliers, price levels, and possible gaps and niches that are yet unclaimed.

Companies that invest in market research are more profitable and acquire more engaged and loyal customers. Meanwhile, failure to research a market is among the most common reasons for business failure. By studying potential buyers, brands get to know their needs, requirements, and pain points so they can position their offerings more precisely.

Why do you need to conduct local market research?

With thorough local market research, you can gain valuable insights into its current status and even predict its future behavior. In more actionable terms, local market research brings a number of benefits:

• Definition of the local market size and potential: Learn how many potential customers you can actually attract.
• Evaluation of the competition: Determine if any competitors already operate in the market, as well as what niches you can fill.
• Adjustment of your business plan: Research figures can help you refine the estimates in your business plan and prepare a better presentation for your investors.
• Validation of a new product development strategy: Local market research is essential for planning a new product launch, showcasing opportunities, and pinpointing challenges. A product development plan supported by market data has a higher chance of success.
• Marketing strategy creation: By outlining your buyer personas, you learn how best to set up your marketing activities to achieve the most precise targeting, what content to create (such as knowledge base articles), and how to configure SEO tools for the most website traffic.

How to research the local market

Your local market research plan will largely depend on the product you intend to release, the industry you operate in, and current circumstances. However, we’ve compiled a few techniques to help you begin to study your local market and make your advertising efforts more fruitful.

Define your target market

The first step is to determine the size of the area you want to serve. That highly depends on the type of product or service you’ll offer, as it affects how far customers will travel to reach you. For example, if you sell unique equipment, your area of operation may be fairly large, since people who need your goods likely won’t find a similar business nearby.

On the other hand, if you’re about to open a preschool creative center, you’d need to target the immediate vicinity, because parents of small children will only travel so far to drop them off and pick them up.

The local market size forms the basis of the rest of your research, as you’ll conduct all your studies within that area.

Outline your target audience

Find out how many potential customers you have. Once you pinpoint your geographic area, turn to official sources to learn the population there. Then, estimate how many people in that number might need your services.

Think about your ideal target customer and outline their profile, defining characteristics like:

• Age
• Profession
• Education
• Family status
• Income
• Pain points your product can resolve

Assess what portion of the total population fits this persona, and that’s your approximate target audience. This analysis can help you achieve a higher ROI from your marketing campaign costs. In fact, “targeted ads are 58% more effective than untargeted ads,” so it’s important to research your audience beforehand.

Study relevant economic factors

To fine-tune your analysis, research the overall economic situation in the area you defined. The following factors influence buyer engagement and spending capacity:

• Unemployment rate
• Salary or income levels
• Price levels
• Rate of job market growth or decline

This knowledge allows you to adjust your estimations. In a rising market with positive trends, you can expect more customers with a higher lifetime value than in a depressed one.

Research the competition

Start your competitor research by listing your competition in the area you defined using business aggregators, such as G2, and studying market reports. You can enhance the list by researching social media and simply Googling keywords relevant to your target sphere of business.

When you’ve completed the list, study your competitors’ websites to better understand their offerings and the possible gaps in their services that you can fill. Also note other details like location, pricing, special offer strategies, or vision statements and see how you can stand out from them. For instance, if your competitors have a robust online presence, you can leverage competitive intelligence tools to discover where they fall short and so stay ahead of the game.

The more information you collect during your competitive local market research, the better you can position your business in your target market.

Conduct customer surveys

While studying your local target market, don’t rely solely on statistical and official data; you can also learn a lot from your current customers. Prepare and run buyer surveys to delve deeper into the consumer market you aim to serve, asking questions about:

• Main pain points
• Preferences in your area of operation
• Brands they currently do business with
• Opinions on your product or service

These questionnaires can be offline or online and should include participants from various groups — that is, those who’ve purchased from you, those who’ve bought from your competitors, your social media subscribers, and even your employees’ personal acquaintances. Alternatively, you can implement a customer service chatbot on your website to guide customers through a survey. In either case, you receive a more or less complete picture of the vox populi.

It’s important to conduct consumer surveys regularly to gauge the demand for your product and catch any negative trends early. Monitor key customer satisfaction metrics to see how well your product or service performs and if any improvements are needed.

Evaluate demand for your product

A critical aspect of local market research, demand calculation encompasses many factors, including competitor data and global economic trends. If there are similar products in the target market, make sure to conduct detailed product research to analyze their sales and try to identify the niches you can fill. If you’ll be the first market actor that sells such a product, you might expect a high demand at the beginning and a decline later on as both customers and competitors get used to your offering.

Knowing the demand allows you to adjust your production and pricing to meet customers’ needs and remain competitive. You can project calculations to future periods and decide if and when you need to increase the inventory to match the demand growth.

Investigate the regulatory situation

Even if you don’t operate in highly regulated industries like finance or healthcare, you still have to abide by various regulations, both national and local. Study them carefully and be prepared to adjust your business procedures accordingly.

For example, if you’re targeting the EU market and plan to collect customer data, you’ll be subject to the GDPR, one of the strictest laws in the world. You need to ensure compliance; otherwise, you may face huge penalties.

In addition, check which permits or certificates you need to obtain to offer your product in its particular market, as well as whether renewals are required. This prep work will save you hassle later.

Monitor local online media

Set up social media listening tools to look for mentions of your business and product, your competitors’ names, and your industry as a whole. Analyze online reviews and note the product features users pay most attention to.

This kind of local market research can reveal all sorts of information, including how customers use your product, what they like or hate about it, what they wish it had, and how they view your pricing policy. In addition, social media monitoring can help you refine your content marketing strategy, as it shows which formats and styles best resonate with people.

You can also join local groups on social platforms to reach out to the local audience and engage in conversations with them. From those interactions, your business can generate more leads, obtain first-hand reviews of your product, and see how it compares to those of your competitors. Post regularly and consistently to establish a noticeable presence, but don’t overdo it — people nowadays know how to avoid spam, and you don’t want to be blocked for being annoying.

Analyze the data you collect

Once you’ve collected data from various sources, you need to study and convert that information into actionable points. There are several common methods for summarizing market research results:

• Five Forces model: This framework focuses on the competition in a chosen sector and its effect on a business. In particular, the model analyzes the following factors:
  • Competition in the industry
  • The potential of new entrants in the industry
  • The power of suppliers
  • The power of customers
  • Threat of substitute products
• SWOT analysis: By gaining a clear idea of your strengths, weaknesses, opportunities, and threats (SWOT), you can craft a stronger strategy and develop a business plan grounded in data.
• PESTLE framework: This model gives a complete overview of the business situation by honing in on political, economic, social, technological, legal, and environmental aspects.

Act on your findings

Finally, it’s time to create new strategies and adjust existing ones based on the results of your local market research. Look into making improvements in the following areas:

• Production: After reading customer reviews and researching your competition, you may decide to add or modify some features of your offering. The market analysis may suggest a totally new product or the addition of a critical component that may drive up profits. Alternatively, it could reveal that your idea isn’t viable and needs a complete overhaul. That may be disappointing, but it’s good to know before you make any significant investments.
• Pricing: You may learn customers appreciate your product but consider your prices too high or restrictive. Compare your pricing strategy to that of your competitors and adjust yours to stay competitive. Or, you could highlight your uniqueness to justify the price difference.
• Marketing and content strategy: Your local market analysis can give you ideas about how to target customers effectively. For instance, you might need to add other communication channels to your marketing network, embrace affiliate marketing, or experiment with new content formats that resonate more strongly with the audience.

Local market research — Take a micro view for macro success

Whether you want to go forward with a new product launch or have a well-established catalog, conduct local target market research from time to time to keep abreast of changes and developments to solidify your business positioning. What worked great at one point may no longer bring results as trends shift and the market environment evolves. Run local market research whenever you feel your business isn’t performing as well as it could to touch base with your customers and gather new ideas for improvement.