Step 3: The Market Research
Market research will either support or refute your business idea. It will allow you to validate consumer needs, to foresee the demand for your product or service, and to understand trends in the market. Finally, it will allow you to pinpoint your potential direct or indirect competitors.
A. Who can do market research?
- A consultant
- A private firm
B. Is there a market for your product or service?
Analyze the global market:
- Follow consumer habits
- Look at market trends
- Observe the economic and social environment, etc.
C. Who is your product or service aimed at?
Analyze your target market:
- Conduct surveys by mail, over the phone, or in person.
- Meet with one or more focus groups.
- Consult statistical directories, data banks, and existing market studies.
- Contact companies and read business reviews related to the field.
- Analyze and compare businesses that are similar to your own.
D. What should you analyze?
When a potential client is a PRIVATE INDIVIDUAL, look at his or her:
- Profile: age, sex, status, annual income, profession, hobbies, renter or owner, level of education, preferred language, etc.
- Buying habits: frequency, percentage of budget allotted, etc.
- Product or service used.
- Current level of satisfaction.
- Needs and expectations related to the product or service you are proposing.
- Criteria that the consumer looks for in this type of product or service.
When the client is a BUSINESS, look at:
- Its field of business.
- The type of business (service, commerce, manufacturing).
- Its unique needs.
- The name of the Purchasing Manager.
- Its prices and purchasing criteria.
- Its purchasing volume.
- Its current suppliers and degree of satisfaction.
- Its motivation to change suppliers.
- Its interest in your product or service.
E. Who are the “players” in your target market?
Analyze the competition:
- Examine the strong and weak points of the competition to help your product or service stand out in the market.
- Consult competitors’ websites.
- Visit their places of business.
- Consult statistical directories and data banks.
- Test products.
- Read reviews related to the field.
- Report on the competition.
- Read the annual reports of competitors’ businesses.
- Meet the suppliers.
- Attend shows, exhibitions, and commercial fairs.
What aspects of the competition should you analyze?
- Price strategy (sales price, discounts, quality/price, profit margins).
- Market share (target clientele, appraisal of the current and future market).
- Advertising strategy (positioning, message, where and how).
- Distribution network.
- After-sales service, customer satisfaction.
- Warrantees offered.
- Range of products or services (wide or restricted).
- Strong and weak points of the product or service
F. What market share will your business occupy?
- What is the current dollar value of the market?
- How many clients will you need to make your business run?
- What are the opportunities for the future?
- What sales figures are you aiming for, keeping in mind your prices, sales area, and capacity to produce and/or serve your potential clientele?
- Your market share will depend on the capacity of your product or service to meet the clientele’s expectations (originality, price, service, added value, location, and how efficiently you reach your target market).