Market Research – An important foundation for success
Most people, when starting or running a business, are so enamoured with their idea, product or service that they believe that naturally everyone will feel the same. This is a common mind-set, which to some extent is needed, to fuel the passion and determination that is critical to running a successful enterprise.
However, the drawback of this, is that in the excitement of wanting to start-up quickly, the most ignored aspect of planning for business, is carrying out market research. Quite often the mere phrase strikes terror in the hearts of many, as images of shivering in the local town centre with a clip board are conjured up. This is understandable, as the idea of speaking to complete strangers is daunting enough, yet alone canvassing opinions about a business idea! Be reassured that market research can be a completely natural process and even quite enjoyable – honest!
What is market research?
Market research is the act of collecting data through both primary and secondary means, to determine if there is sufficient demand, in your area, for the product or service you wish to sell. Primary research involves speaking directly with individuals or companies that you have identified as potential customers. Secondary research is information that has already been compiled by larger agencies and is on a larger scale, more about this later.
The term market research is very commonly misinterpreted. I can honestly say that 99% of the time, when I ask a client what market research they have carried out, they reel off a list of other businesses that are already operating in their chosen field, in other words, competitors. This is in fact competitor analysis, which I will discuss in another blog post.
Why is market research so important?
Why is research important? Because the success of any enterprise depends on several factors:
Is there a demand for your product or service? If so, where – is it locally, more regionally or somewhere else altogether? Are your potential customers already accessing similar services from competitors, if so what are there feelings, are they happy or ready for a change? What is the average spend, what are the most popular products or services and how often are they likely to return for repeat purchases?
This is a brief overview, I will shortly be compiling sample market research questionnaires for you to download and adapt, with further support offered if required.
Market research can also help you determine what market share you will need in order for your business to remain viable and to earn a realistic income.
Myth – market research is just for start-ups
Market research is not just ‘homework for start-ups’. It is a fundamental exercise that is the lifeblood of any business. Yes, it is more prudent to get to know your market when you are in the early stages of setting up a business. Yes, through being in business for any length of time you do get to know your customers better – BUT – do you actually listen, take time to reflect and adapt your business on a regular basis? If the answer is no, then maybe it is time to go back to basics and use a more formal feedback exercise to make sure your business is still relevant and not in danger of slipping into a rut. It can happen to anyone, think Woolworths, HMV! Big companies that failed to respond to rapidly changing customer needs and when they did, it was too late, competitors had already jumped in and stolen the show. I will compile a guide shortly for those who have been in business for a while and want to carry out formal feedback
What are the pitfalls of not carrying out market research?
Taking time to talk with people and getting valuable feedback on your business idea is a huge opportunity to save yourself time, money and heartache. This is because it is important that when you start-up that you fully understand your customers, their needs and expectations and behaviours. Without these insights, you do not know who you are talking to, what language to use, how much to charge, where to advertise or how to persuade them they can’t live without your product or service. You may as well stand at the top of a mountain and shout into the wind!
This is why research is crucial.
How do I carry out market research?
I believe that there are three main reasons why people avoide carrying out primary market research:
- Lack of confidence in approaching strangers
- Fear of the likely response
- Simply not understanding how to go about it
Once the mystery surrounding the above is removed, it all suddenly makes sense and many embrace the process and are inspired and motivated by what they learn. I will compile a guide for this shortly that will be available for download to make your research clearer.
As I mentioned earlier, there is also information in the public domain around certain industries, sectors and consumer behaviour, which can provide great insights into the wider arena that you may be hoping to operate within. Here are some examples:
Internet forums – particularly for niche businesses centred around a specific interest or past time, start discussions or read past posts.
Ebay completed listings offers great data on how well certain products are selling
Government statistics for the whole of the UK (www.statistics.gov.uk). The Office for National statistics ONS provides Census data, population demographics, income levels and social and regional trends (www.sns.gov.uk)
To obtain more detailed data you may have to pay, particularly for information on particular market sectors. Two common sources are: Mintel (www.mintel.com) and Datamonitor (www.datamonitor.co.uk).
Trade Journals and Magazines can also offer industry specific information. Also is there an overarching institute or regulatory body for your sector? For example, counsellors can join the BACP, which demonstrates that they voluntarily subscribe to ethical standards and in return they will receive resources, information and training to keep their knowledge up to date. They would also be a great source of marketing information.
Finally, a word of caution
Try and avoid friends and family giving you feedback as potential customers, they may be either too positive or too negative!
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I would love to hear from you, particularly if you wish to discuss any issues this post has raised for you