Market Research should begin long before the Business Plan is written. The results of that research will help to not only define the potential customers for a product or service, but how to design, price and sell it. Moreover, market information is invaluable when approaching funding sources.
“Copycat” or “me too” products are profitable only when there is a very large demand and not enough product to meet that demand. That usually happens only with new markets that have not yet been saturated, and that situation won’t last forever.
Five Key Parts
There are five key parts to sound Market Research:
- How many people might want or need your product or service?
- Who else is offering what you intend to sell?
- How does the competition define itself in terms of uniqueness, product/service features, price, etc…?
- How much of the market does the competition control?
- How can you use that information to better focus your own business?
Answering these questions will help in defining, designing or focusing a product or service.
- Do you simply want to grab a share of the major audience? If so, what can you do better or less expensive than the others?
- Do you want to find a ‘niche’ that you can specialize in? Then, what can you offer that others do not?
Doing the Research
There are two types of Market Research best suited to business plan development, and the choice depends on the scope of the business, its budget, and the time available:
- Primary Research
- Secondary Research
Primary Research is data that you gather on your own. You might build a list of competitors and prospects simply by searching the yellow pages, polling people in your business area, and so on.
Or, you can pay to have it specifically done for you by an independent research company. This can be expensive, especially to a small, startup business.
Self-help books can guide you through a professional research approach.
Secondary Research involves using data that has already been accumulated. This data might be found in newspapers, trade journals, business directories, or census and demographic data, for example.
You can also find this information in pubic libraries, through the Chamber of Commerce, and through government data – usually available at your local library.
Select Greater Philadelphia provides city-wide data.
Depending on the size and scope of the business, local, regional and national trade associations and trade publications can be an excellent source of industry-specific data.
Remember, attention to Market Research leads to a better Business Plan. It will also continue to add value throughout the life of the business.