Much attention has been given the emergence of Artificial Intelligence (A.I.) as a disruptive technology that is transforming the manner we look at information and how we can integrate the use of information into daily business operations. Many businesses are looking at A.I.  to build efficiencies and profitability through lowering costs of doing business. A belief that A.I. is a cure-all due to the fact it is technology-based is now pervasive. However, it is not the existence of technologic improvements that matter, rather it is the application of these innovations that make a difference in our daily lives. The evolution of A.I. into the form it takes today has made it a tool that is now accessible and understandable for small businesses to use to advantage. 

A.I. and Market Research

One area A.I.  has proven useful is in market research. Understanding the limits and uses of A.I. is a portion of a good market research plan. Using A.I. as a part of a comprehensive data-based market plan is a very strong tool to have available to help direct scarce resources towards productive outcomes. Many businesses think that the use of A.I. and other data tools help distill the ‘universe’ of market potential to a small section that their business may obtain. This initial narrowing the target market from an amorphous ‘universe’ of possible market segments can be reduced to a simple form, such as:

Total possible market x 0.20 (my industry) x .15 (my geographical reach) x .25 (the possible population of individuals with the characteristics that make them potential customers) x 0.10 (the income level of potential customers) …. etc.  until you arrive at the described accessible target market population. 

(Please note the percentages in the formula above are illustrative only)

It is not unusual to start with millions of potential customers and after reducing the potential customer population according to factors you derive, end up with hundreds of potential customers in your geography. If you only are able to convince 10% of those target customers to become your customers, then multiplying that number by their likely expenditures with you per year will result in your potential income for that year. This is a great start to quantifying what your business’s potential revenues might be in a certain market. A.I. can help you derive the figures that are pertinent to your situation and do the math for you.

Going Beyond the Surface

Market research goes way beyond a simple calculation of potential market reach. A good market research plan will contain information from multiple verified sources, not just from any A.I. source. One limitation of A.I. is that it is unable to discriminate between fact and crud and oftentimes accesses and reports information from unreliable root sources. It takes experience to understand whether the information an A.I. engine or Agent gives you is credible.

A few areas a reputable market research report can assist you in understanding the market dynamics a business operates in are:

Industry Reports: Having information regarding the industry a business is in helps to understand the issues an industry. Oftentimes this information includes how the industry is trending and what the outlook is for the industry in the near future.

Financial Benchmarking: Comparing your financial statements against your peers operating in the same industry to understand where your costs are higher or lower than they are, or to highlight areas of improvement that can be made in operations.

Understanding your Customers: Psychographic information is extremely useful in understanding who your likely customers are according to their demographic characteristics, such as age, sex, income level activities that are enjoyed as well as a number of other characteristics.

Mapping Tools: Using mapping tools to identify where consumers who are likely to be your clients are living can help reduce the costs of advertising with focused, targeted campaigns. This includes understanding how much traffic a location has, both vehicular and foot traffic, depending on the source of the traffic data.

Supply-Chain Partners and Competitors Lists: Obtaining lists of potential suppliers and of competitors can be a very strong tool for controlling costs, for strengthening supply-chains, and for gaining understanding of the strength of the competition is a market.

Where the Magic Is

Any one of the tools in the list above can provide excellent information in areas of market development and marketing planning. Many of those tools are available through subscription from reputable companies who check the sources of information they use before issuing reports or compilations of data for commercial use. The reliability of the information from many of these sources is high, but it does take some experience to understand which sources offer consistent, accurate and verifiable data.

The same is not able to be said for Artificial Intelligence searches over the internet, as A.I. indiscriminately scrapes data from many sources which were developed over time or for specific contexts, and meshes that mix together. If you are using A.I. to research topics, then ask for the sources of the recommendations or conclusions you are receiving so that you can go back in and independently verify that the source material is accurate and verifiable. There is nothing more disappointing than to rely on written materials to guide your decision-making then find that the materials are not worth the ink used to print them. In fact, more harm than good can be caused by the indiscriminate use of A.I. without verification.

The magic comes into play when a business uses a combination of verified sourced reports and data, coupled with A.I. usage in areas that actually help the development of verified solutions to problems or can deliver output with trusted guidance. The combination of this level of information and guidance is remarkably strong and efficient for assisting in high-quality decision making for businesses. Please consider how you use data and information in your business and verify that the information you are relying on to make decisions is accurate. You will be glad you did.

Southern Oregon University Small Business Development Center

541.552.8300                       sbdc@sou.edu

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Oregon Small Business Development Centers are funded in part through a cooperative agreement with the U.S. Small Business Administration, and by the Oregon Business Development Department. All opinions, conclusions or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the SBA.