A guide to market research and competitor analysis for your business

Market research

Defining and researching your business’ target audience is crucial from day one of your business and throughout your entrepreneurial journey. 

Market research is useful for analysing whether a new business is viable, as well as taking other steps such as adding a new product or service to your offering and starting to sell in another country. 

You can use primary market research, which is the collection of data yourself, and secondary research which involves using existing statistics collated by other organisations.

There are various ways to carry out primary market research of your target customers. They include:

• Face-to-face interviews and focus groups
• Online surveys, polls and questionnaires
• Social media conversations
• Product trials and beta launches

For secondary market research, look for surveys, reports and studies conducted by other companies and organisations. This could be data related to interviews with potential customers or wider studies of the sector or industry in which you operate.

Accessing market reports can be expensive but you can use many of them for free at the British Library Business & IP Centre which operates in libraries across the UK.

If you have the budget, you might want to employ the services of a professional market research company. If you sign a contract with a research agency make sure you provide them with a detailed brief that outlines what you want the research to identify and how you will use the data.

You can find a directory of professional researchers on the Market Research Society website.

Understanding your competitors and how you are different is a key part of researching your market. See the section below for more advice on identifying your competitors.

Knowing where your business fits in the market, the gap you are filling and your unique selling proposition are important factors to include in your business plan.

The plan is important for keeping you focused on your business objectives, and you’ll need a convincing plan if you decide to look for business funding or attract investors. Your accountant can help you to create a business plan.

Identify your competitors

Knowing your competitors is key to building your business. It means you can take steps to ensure your product or service stands out, improve your offering, boost your customer service or tweak your prices.

Once you’ve identified competitors, you can analyse factors such as the products or services they provide, the prices they charge and their marketing strategy.

Competitor analysis isn’t a one-off exercise. You should keep on top of your competition in case new businesses enter the market. 

There are various ways to identify your competitors:

Look at search engines and keywords

Type terms you think your target customers use to find your business into an internet search engine. You may get thousands of results, but the first one or two pages will likely identify the most direct competition to your product or service.

You can also use services such as Google Keyword Planner and Microsoft Advertising Keyword Planner to find relevant search keywords and then check to see which businesses are targeting them for their online marketing.

Check social media, review websites and directories

Look at conversations relevant to your business on social media platforms such as Twitter, LinkedIn, Instagram and TikTok. This will help you to see which businesses your target customers are talking about and which businesses are posting about topics relevant to what you provide.

You can also look at online advertising to see which companies are targeting keywords related to your business, and set up Google Alerts so that when certain topics are mentioned online you get an alert.  

Other online sources to use to find competitors include review websites, community forums, business directories and lists of press releases.

Consult your customers

Existing or potential customers can help you to identify competitors.

On sales calls with prospects, ask what other businesses they already buy from or might consider buying from.

For your existing customers, ask them on social media who else they shop with and include a question about competitors in surveys and feedback forms.

Check the media

Read media publications relevant to your business to see which companies are being talked about. As well as editorial copy, look at the advertising.

Attend exhibitions and events

Taking part in events relevant to your business will highlight competitors. Look at who’s exhibiting, check the speakers and view the delegate list.

Business groups

Joining or engaging with business membership groups and trade associations can give you access to lists and databases that include your competitors. 

Segment your customers

Once your business is set up and trading, segmenting your customers can be beneficial to further understanding your market and improving sales.

You can use segmentation in various ways. They include identifying the least and most profitable customers, improving your products or service to meet the exact needs and desires of particular groups and creating marketing campaigns to reach specific customers.

Business-to-consumer (B2C) businesses can group customers into segments such as:

• locations: where they live, work etc
• demographics: gender, age, income, occupation etc
• interests: sporting activities, outdoor activities, travel, watching movies etc
• buying habits: how often they buy your product or service, which features are most important to them, average purchase size etc

Business-to-business (B2B) companies can also use segmentation by grouping clients into areas such as sector, company size, location and purchasing behaviour.

Analyse your sales data

You can improve your understanding of your business’ market by examining the data you hold about your customers in accounting software such as QuickBooks and Xero or customer relationship management (CRM) systems.

Use the data to identify useful details about customer behaviour and buying patterns and your business’ performance such as how quickly you respond to orders and make deliveries.   

You can use this information to enhance your products or services, improve your customer service and increase customer loyalty. 

How TaxAssist Accountants can help

TaxAssist Accountants can help you with the right advice to support your business. While our expertise covers tax, accounting, bookkeeping and payroll, we can also connect you with other providers we work with.

Contact us to find out more about our services and to book a free video or face-to-face consultation.

Date published 23 Mar 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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