Small businesses are important contributors to economic activity in the U.S. and in southwest Missouri. Small specialty retailers comprise a significant portion of those businesses. Most owner/operators would recognize marketing research as an important business tool to understand the target markets they serve. What is marketing research? It is the collection and use of information to make good business decisions. Sadly, many business retailers do not conduct marketing research because: 1) they think it costs too much; and, 2) they think it takes too much time. In this article, I will describe some quick, inexpensive common-sense techniques for marketing research.
Let’s use an example of a small hobby shop specializing in model railroading supplies. As a specialty retailer, the owner focuses on a limited number of complementary merchandise categories: that is, items for the model train enthusiast. The store is probably small, with a deep but narrow product assortment, and an owner who is possibly a model railroader himself and has a lot of knowledge about the products and a desire to help his customers. As customers likely seek out the store via phone book or the internet, a prime retail location is not necessary. So, how can the owner do quick and inexpensive marketing research?
Observationcan be and is a critical and useful tool, and most small retailers use this form of marketing research without even realizing it. Small specialty retailers must know their customers: who they are, where they’re from, what they do for a living, and what they typically purchase. For instance, our hobby shop owner wants to know what scale of model trains most of his customers shop for and purchase. Do most buy kits to assemble, or materials to construct unusual models not commercially available? If a business owner categorizes the departments or product categories his sales come from, he can make good inventory decisions and provide his customers the products they want. An owner can do this through a simple inventory/sales tracking process.
Another source of customer information comes from something as simple as how payment is made for purchased items. Some specialty retailers take credit in the form of layaways and take cash and personal checks. Owners can gather information about the customer (name, address, phone number, etc.) from these transactions. Then, with minimal effort and investment, the owner has the start of a customer database/mailing list.
What about other customer information? By simple observing, the retailer can make guesses about a customer’s age, marital status or family composition. This information can provide the owner with clues about his customer base. Casual interaction and conversation with customers might provide other clues that help the owner know his market. Another way to get customer information is to ask them to sign up for a newsletter, which the owner can then use to provide coupons, new product information, promote sales, etc. Finally, some retailers use drawings for contest “giveaways” to gain additional customer information.
The key for small specialty retailers is to observe and collect useful facts and information, about their market, that are readily available and inexpensive to obtain. The type and amount of information is limited only by the small business owner’s imagination. To better understand their customer base and to determine what products and services to offer, small specialty retailers can use marketing research — which should lead to customer satisfaction that equates to repeat business and increased sales.
Ron Coulter, Ph.D. is a professor of marketing and marketing department head at Missouri State University. He is also interim department head in the merchandising and fashion design department. His areas of specialization include multivariate marketing research data applications and small business research.
This article appeared in the February 4, 2017 edition of the News-Leader and can be accessed online here.