Market research often helps define who wants to buy a product or service, who can afford to buy a product or service and who actually spends the money on a product or service. You may find in a survey that nearly everyone may want a trip to Hawaii, for example. That question narrows the field considerably. Again, the field of potential buyers vs. real spenders is funneled down to a smaller pool of individuals. You need to know how large your potential pool of customers will be, their ability to pay for your product or service and the history of spending that indicates the likeliness that your product or service will sell in the marketplace.
Big corporations spend millions of dollars annually to study the marketplace.
The small business has an edge. As a small business owner, you are closer to the customer. Market research informal as with in-store observances or formal via a survey or focus group can provide valuable information. Market research gathers, focuses and organizes information about your market. It reduces your business risks by making your business more responsive to the market, so you can keep them coming back to your store.