Market research is defined as the study of consumers' wants: the gathering and analysis of information about what people want or like or what they actually buy.
You need to learn all about your customers, your competition and economic conditions of your specific marketplace.
When you do market research, you are compiling all the above information and then deciding if there is a need for this business in your area. It also gives you an idea on who you will advertise to and may even show you how you can be different from your competition.
Remember one thing: Market research and Marketing are two different things, even though they go together. Marketing is merely another work for advertising. The research you do to understand your target market will help you when you are ready to "market" your product or service to your potential customers.
Market research is something you need to do frequently to grow your business. If you do not, then you and your customers can grow stagnant. Your business will change as it grows and your customers will change with the economic times. For example: finding another use for your product can open up a whole new market of potential customers. Then you will need to research to find the best way to approach this target audience.
Think of your ideal customer and what an average day would be like for them. Make a list of their qualities, shopping habits, lifestyle, age group, income level, how the product or service will be used, geographic location, etc.
Now think of how your idea can work for them and how it would fit into their lives. Keep this information handy when writing your ad campaign.
Visit SBDCnet.org - "The Small Business Development Center serves as a resource providing timely, relevant research, web-based information, and training to SBDC counselors and their small business clients."
Click on "Demographics", scroll down to "Demographics by Geography". Spend some time researching your local area.
Try "Small Business Trends" to find what other businesses (potential competitors and partners) are in your area.
You will also find a link to your local Small Business Development Center on home page.
The SBA.gov is the United States Small Business Administration and they offer lots of market research information. You can even sign up for regular updates.
MarketResearch.com will help you understand your target audience and explain demographic research.
The Bureau of Labor and Statistics publishes information about market trends and demographics. The "Consumer Expenditure" and "How Americans Spend Their Time" is valuable information for businesses.