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Use available data to determine the supply/demand situation in your market. Perform surveys. Conduct focus groups. Conduct one-on-one interviews. Conduct product/service tests.

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Generally speaking, your business stands a good chance of being successful if it can satisfy a need in the market that is going unfulfilled — that is, you should aim to supply products or services that the market has a demand for. Economic data from government, academic, and industry sources (as detailed in the section above) can help you identify the presence or absence of such needs. Essentially, you will want to identify markets where a clientele exists that has both the means and the desire to patronize your business.   As a running example in this section, let's say that we hypothetically want to start a landscaping service. If we investigate a wealth of market and data from local government sources, we might find that people in one affluent neighborhood of our town have, on average, a great deal of disposable income. We could also go as far as to use government water usage data to estimate the area with the greatest percentage of houses with lawns. This information might lead us to open up shop in a rich, affluent area of town where people's houses have large yards, rather than in an area where people generally have neither large yards nor the money to pay for landscapers. Using market research, we've made an intelligent decision about where (and where not to) to do business. One of the most basic, time-tested ways of determining the attitudes of your business's customers is to simply ask them! Surveys offer market researchers a chance to reach out to large samples of people to gain data that can be used to make broad strategy decisions. However, because surveys result in relatively impersonal data, it's important to ensure that your survey is designed in a way that allows data to be easily quantified so that you can derive meaningful trends from it.  For instance, a survey that simply asks customers to write about their experience with your business may not be the most effective choice, as this requires reading and analyzing each response individually to derive meaningful conclusions. A better idea might be to ask your customers to assign a number rating to multiple aspects of your business, like customer service, price, and so on. This makes it quicker and easier to identify your strengths and weaknesses in addition to allowing you to quantify and graph your data. In our landscaping company example, we might try surveying our first 20 clients by asking each to fill out a small ratings card when they pay their bill. On this card, we might ask our clients to give a rating from 1-5 in the categories of quality, price, speed, and customer service. If we get lots of 4's and 5's in the first three categories but mostly 2's and 3's in the last, some sensitivity training for our employees might improve our customer satisfaction and increase our referral rate. One way to determine how your customers might react to a proposed strategy is to invite them to participate in a focus group. In a focus group, small groups of customers gather at a neutral location, try a product or service, and discuss it with a representative. Often, focus sessions are observed, recorded, and analyzed later.  In our landscaping company example, if we want to consider upselling lawn care products as part of our service, we might invite loyal customers to participate in a focus group. At this focus group, we'd have them receive the sales pitches for some of these lawn care products. Then, we'd ask them which ones, if any, they would be most likely to buy. We'd also ask them how the sales pitches made them feel — were they friendly or condescending? For the most intimate and qualitative market research data, one-on-one interviews with customers can be useful. Individual interviews don't provide the broad, quantitative data sets that surveys do, but, on the other hand, they allow you to dive relatively "deep" in search of relevant information. Interviews allow you to understand why specific customers like your product or service, so they're a great choice for learning how to most effectively market to your customer base. In our landscaping company example, let's say that our company is trying to design a short ad that will run on local TV. Interviewing a few dozen customer can help us decide which aspects of our service to focus on in the ad. For instance, if most of our interviewees say that they hire landscapers because they don't have the time to maintain their lawns on their own, we might make an ad that focuses on the time-saving potential of our service. I.E., "Sick of wasting all weekend stomping through your overgrown weeds? Let us do the work for you!" (and so on). Companies considering implementing new products or services often let potential customers try their product or service for free so that they can iron out any problems before rolling it out. Bringing in a selection of customers for testing can help you determine whether your plans to offer a new product or service are in need of further review or not. In our landscaping company example, let's say that we're considering offering a new service where we plant flowers in the customer's yard after doing our landscaping. We might let a few "test" customers choose to have the chance to receive this service for free under the condition that they discuss it with us afterwards. If we find that our customers appreciate getting the service for free but would never pay for it, we might reconsider our roll-out of this new program.