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Developing a Business Plan →
Market Research
Finding customers is the most difficult part of running a business. So it is vital to research your
market, identify potential clients and have a strategy for attracting them before you invest your
time and money in a new venture.
Only about half of new small businesses will survive 5 years. Here are some of the factors that
often contribute to a new business’s failure;-
Quality, professional market research helps you to ask the right questions for your business.
Good market research reports will use a mixture of primary and secondary research to provide
accurate information and conclusions.
Primary research is information gathered through surveys, interviews and other direct contact
with industry experts and participants. For example by contacting industry leaders and
canvasing their opinions.
It is a good plan to carry out both Primary and Secondary research. Then you should check out
competition and assess your potential consumer base. This should give you a fair idea of the
viability of your business.
If you commission professional advice, you can expect a report that will cover the following
points;-
Context/Background: This is a review of the recent history of the market; how it has
developed into its current size and shape. It will also consider the market in the context of
factors such as the economy, social and cultural changes, globalization, and technology, and
consider how these factors are affecting the market.
Detailed Market Data: While context and analysis are critical, this section will look at
hard numbers. It will use whatever data is available.
Competitor Information: Players, products, profiles, competitive analysis and other
information on the market.
Trend Analysis: This will look at what the data indicates about the health of the market
and opportunities for future growth. It should cover emerging markets, and new forms of
competition.
An understanding of the market potential should be gained from the information above. The size
of the market and its possible growth will determine the viability of opening up a business in the
sector.
So from this report, or from your own research, you should be able to consider the following
types of questions.
Market research should answer key questions, expose risks, and will probably throw up other
questions. Professional analysts who study markets, products, industries, sectors, and
consumer demographics are trained to provide unbiased factual information, clearly stating the
risks associated with a market.
If you plan to conduct your own research rather than commissioning a professional Market
Research project, be careful that you don’t seize on information and data to back up what you
are hoping to find – that your business is a great idea!!
But take care to be open to market realities and factors that may even enhance your business
plans. Keep a look out for niche markets that may present better opportunities than mainstream,
where there is more competition.
Carefully assess market factors. There are many factors which can affect the size of a market
and its pace and direction of growth. They include:
Make sure you know as much as possible about who will be buying from you.
For example, if you’re marketing to consumers:
Then you need to consider marketing and advertising .How will you attract consumer’s attention,
get them to purchase your product, and come back to you for repeat purchases.
Social media advertising, blogging, and use of other online social forums, has rapidly become
one of the biggest platforms on which to advertise your business.
What type of advertising will work best for your business depends on who you are trying to
reach, your budget, and your product. You need to find the most cost effective method for you.
All of this information will be valuable in formulating your business plan, which we will discuss in
another lesson. Having all this information at your fingertips will give you an edge over your
competitors, an understanding of your client base and will improve your businesses chances of
survival.