Market research

It is easy to make the mistake of starting to trade without understanding the needs of the customer. It is essential to find out as much as possible about the market place in which your business is to operate. Market Research is essential when a new operation is launched. A plan will ensure that if the business is suddenly confronted with a change in market conditions, alternative actions will have already been considered Product or Market Led? In a sales or product led business the seller expects the customer to buy whatever they can supply. Successful businesses adopt a market led approach by producing or selling what the customer wants or needs. Think more about the market rather than the product or service.

Consider four key areas:

Analysis of the market place.
Monitoring of the competition
Testing the market
Assessing expansion plans.

Analysis of the Market Place. Most of the information required can be found easily. Make sure that the right products and/or services are offered to the market at the right price, in the right quantity, in the right place and at the right time. To achieve these goals simply ask the right questions:

What exactly is being sold?
Who will buy the product/services?
Why will people buy?
How much will the customer buy?
When will they buy?
What price will the customer pay?
Who is the competition?
What are their strengths and weaknesses?
How reliable are suppliers?
Is the market contracting or growing?
What will be the market share?

It is important to know what is going on locally but understanding what is happening nationally can also help. Even if the business does not need a national sized market to sustain it, national trends can have a significant effect at local level. Find out if the industry is likely to be affected by changes in national legislation or is dependent on another industry which itself is changing rapidly.

Knowing trends has a greater significance. People who launch a new product or service early on often do considerably better than those who start once the idea is established, although early entrepreneurs are exposed to greater risks. Collect easily available statistics such as the population of towns but remember it is necessary to understand the people as well as the statistics.

Having acquired a basic knowledge of relevant trends and the national situation, find out much more about business on a local level. Talk to suppliers about their business problems as well as the benefits of what they supply. Meet people in the same business in other places so that the question of competition does not arise. Talking to business neighbours also helps.