Business Market Research

Introduction - business market research is a logical process of collecting and recording and analysing statistics and information regarding a marketplace, competitors and most importantly about customers. Market research forms the basis of a business plan which ultimately will need to put in front of potential investors and therefore the quality of any market research undertaken must be of the highest calibre. All new businesses must undertake business market research in order to understand if there is a viable business opportunity to exploit. You must ensure the size of the market is of a sufficient size, that customers will have an appropriate amount of money to spend and your products and services represent a viable offering to those customers. Market research must also be undertaken on the competitive threats in your chosen market.

Why Bother With Market Research? - Financial backers will be looking for the quality of your market research and how it is linked to your sales and cash flow forecasts. Most free market research can and should be undertaken by you. It is also possible to pay a professional business market research company to carry out the research you require. However, doing it yourself provides that extra layer of credibility when financial backers scrutinise your facts and figures. It also allows the entrepreneur to create a market entry strategy for the business. Market research also helps boost self confidence and belief, by providing based on a confidently and clear perception and understanding of your prospective customer needs and wants with regards to product selection, pricing, promotional methods, markets and sales hooks.

Business Areas to Research - the main aspects of a business opportunity to research and understand are as follows:-

Customers - it is critical to understand what your prospective customers needs and wants in your chosen marketplace. In particular you will need to understand how many customers are in the chosen market and is the market growing and at what rate. It is also important to find out what the average spend per customer per product, as well as the sales channels they use to purchase.

Competitors - it is critical to understand who your competitors will be, and how established their businesses are in your target market. Find out what their key selling messages are as well as their major strengths and weaknesses. Are they failing to meet customer needs in some way and leaving a gap in the market, which you can exploit?

Products and services - your marketing strategy must meet the needs of your target customer by selling the right products or services. A lazy approach could be to analyse what competitors sell and their key sales messages, however this could prove a dangerous assumption, as it assumes their own marketing research is valid. But finding out customer needs and wants directly, products and services can be customised, designed and marketed accordingly.

Pricing - you need to find out what the market prices are already being charged by your competitors in your chosen market. In a recessionary credit crunch, price becomes the primary motivation of many consumers for a whole range of goods and services. However, there can sometimes be a difference between the perception of a value by the customer and the actual price charged by competitors. You must price accordingly to meet the expectations of customers in the chosen market. Don't fall into the trap of trying to beat all match competitors on price. You may be able to charge more for a product that has a higher perceived value in the minds of the prospective customer. To achieve a higher you must research and identify something of value in your business proposition that you can exploit to justify the higher market price.

Advertising Methods - find out what type of advertising medium your competitors are already using to promote their products and small business services. These may include the internet, market news, newspapers, magazines, trade journals, billboards, TV, radio and so on. Try an estimate the size of their advertising budget to gauge a possible barrier to entry. Question whether advertising spend will achieve a return on investment, particularly in areas such as TV and pay per click advertising, (which you can burn money very quickly).

Sales Channels - you will need to find out how customers are currently purchasing products or services. You need to establish the geographic nature and size of the target market in order to plan and budget for the sales function. For instance, are your customers overseas, internet only based, local to a specific area, catalogue driven or purchasing from a range of nationwide retailers? In addition, the distribution channel you identify should also dictate the location of your business premises...

Location you will have to research a suitable workplace business premises for your new enterprise. It must provide local access to customers and business suppliers as well as be convenient for staff to get to and from.

Field Based Primary Market Research - going out and carrying a clipboard to interview large numbers of people, regarding specific market opportunities, product tastes, etc provide invaluable first-hand information on a potential business opportunity. This primary marketresearch usually consists of some kind of face-to-face interview with a prospective customer i.e. someone of the right age, economic background, sex, living in the target area etc. This type of research can also be undertaken using a focus group or discussion group where a group of interested people agree to share their views and opinions on a particular topic, product innovation or customer need. Telephone surveys or an Internet based survey provides a lower quality source of information, with a very poor response rate. Face-to-face interviews usually obtain the best results. For consumer-based products these types of ' clipboard' surveys with passing shoppers can provide an amusing distraction for the shopper. For prospective business customers, a more professional and businesslike meeting must be arranged, with a clear agenda and scope as to the nature of the information required that purpose of obtaining it. With these points in mind, it is sensible to keep any planned question and answer session short and concise. Limit the number of questions and avoid confusion regarding the wording of the questions. Always emphasise from the outset that it is an anonymous survey, so that people do not feel they are giving private information to a complete stranger. You must be prepared to identify yourself with documentation to prove your authenticity. This should be displayed and disclosed at the beginning of any interview. It is possible to generate a larger and more scientific sample using a professional market research firm, who are well resourced and practised at gathering in collecting and analysing information. Working closely with them to create the questionnaire required will ensure your results are not misinterpreted in anyway by the questioner or recipient.

The Market Research Process - you begin your market was it is helpful to write down the objectives what you want to achieve by the end of the process. These objectives could include the level of information to be gathered on each of the categories listed above as well as a timeframe and research method. Your starting point when setting objectives are all based around your business idea and aims to validate and test the underlying assumptions of this idea. Establish exactly what information is required in from the research and how you can to get it. This may include identifying some sample customers to interview, as well as listing a range of desk-based resources to retrieve publicly available information from (see below). Next, allocate a sensible budget and deadline for the financing and undertaking the research. This may include buying information such as company reports as well as paying a external organisation to carry out some kind of sample poll survey. Following collection all available information from as many sources as possible, the final step is to sit down and analyse the data to test how realistic your regional business idea actually is. Your market research results may actually find there is no real and viable business opportunity. Your pipedream would have simply resulted in business failure and a waste of your time and investors money. Hopefully, the results will be positive and the research will help to underpin and design your sales and marketing strategy and tactics.

Desk Based Research - a lot of information about you require is publicly by doing online market research and using marketing research software.. This saves lots of time and money in organising surveys, polls and testing sessions with prospective sample customers. The main sources of research information (and the types of public information available), are summarised below:-

CAROL - on-line service offering direct links to the financial pages of listed companies in Europe and the USA.
Company websites - information on competitors businesses including contact details, location, product marketing strategy, pricing, sales messages and so on.
ICC & Experian & D&B - commercial credit reference agencies and business information providers of business-to-business credit and risk information
Libraries - a specialist books regarding biographies of successful companies, copies of trade journals and historical company information.
The Bank of England - economic start-up and failure figures for small businesses, financing levels for small businesses, export, interest rate and exchange rate information
Companies House - details of company name, type, date of incorporation, shareholders, company directors , company reports, business location and associated directorships.
Mintel & Verdict - hundreds of in depth and high quality industry reports of uk consumer markets and retail sectors.