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How To Research Your Market
Although it appears to be a very time consuming and a tedious task,
researching your market prior to setting up your business is very
essential and this task must not be ignored. Every entrepreneur wishes
to succeed in his/her venture. Therefore having a clear understanding of
your potential customer base can help you in assessing the viability of
your project.
Market research is very essential and is done mostly for the following:
Identifying
your potential customers/target market is the first step you need to
take. Starting a business without a defined customer base is bound to be
a failure. For example, a retailer selling costume jewellery would
consider girls and women as their target market.
You should know
'Who' your potential customers are, an understanding of their common
characteristics and who influences their buying decision.
You also need to know 'What' your customers will buy and in what quantities.
The
timing of any business venture is very important and hence you should
know 'When' your customers will buy. For example, Christmas accessories
have excellent sales before the Christmas season but selling the same
accessories in spring won't lead to the same sales.
You need to
have a specific location in mind so you know from 'Where' customers
would prefer to buy. This should be thought of in terms of access for
your customers.
It is important to understand and decipher 'Why'
customers would opt for your products and services and not buy from the
competition. It is here you need to identify your USP- Unique Selling
Proposition.
You must also understand the needs of your customers
and 'How' they buy. For this you must have a thorough understanding of
the present scenario of that particular business sector.
- What you need to know about target customers
- who your potential target customers are and what groups they belong to
- how many potential customers exist in the market territory you are targeting
- how many similar products or services they already buy from your competitors
- what criteria they use when making a purchase
- why should they choose to buy from you over your competition
- when and where they prefer to buy products and services you plan to offer
A few more important factors to be kept in mind for researching your market are also discussed below.
Conducting your research
There are two important research techniques for collecting and
analysing data. They are Quantitative and Qualitative research methods.
The Quantitative Research technique basically provides answers in terms of numerical and statistical data.
For
example, a survey conducted by a sports club developer may find that
70% of the children and 25% of the adults in an area are active
sportspersons and 50% of them combined prefer playing football over
other sports. This may help him/her to decide where to open up his/her
sports club and which kind of sports to introduce.
The Qualitative Research lets people express their feelings and views and you reach your conclusions based on their feedback.
For
example, the sports developer in the above example may find out that a
certain group of people come to play sports in order to make new friends
and socialise. Hence, he/she may add a café and lounge area in the
sports club.
Common mistakes made by new entrepreneurs at this early stage are:
- They do not conduct any market research.
- They do not conduct periodical market research; the market is very dynamic and the situation and preference of customers changes from time to time.
- They don't have a clear idea on what information to collect via the research methods and hence end up with useless and wrong information.
- They try to conserve costs on research by using a small sample or by asking only friends and relatives. This way they end up with misleading information.
- They interpret the results incorrectly.
- They analyse the collected data too optimistically, i.e. believing it is what they wanted when in fact it may be far from the data they require to assess their business's viability.
The full version of the "How To Research Your Market" ebook, available from most book stores, helps you learn how to:
- Conduct your market research
- Interpret market research results
- Consider your competition
- Seek expert
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