Create a company without making a market study It is one of the biggest mistakes an entrepreneur can make.. Doing so is like starting to walk blindfolded.
A business can fail from the beginning without a market study. Whether your business aims to sell makeup door-to-door, open a sportswear store, operate a franchise, or open a restaurant; It is vital to do a market study.
Why is it important to do a market study?
A market study will allow you to learn about your potential customers and the competitive environment. In addition, it will give you a 360-degree view of the industry you want to enter and help you map out a better strategy to ensure success.
Finally, a market study looks for the answers to help develop your business plan.
What areas should I focus a market study on?
The best and most efficient use of your market research time will be to investigate the following areas (which coincide with the typical outline of a business plan):
- Industry: trends, threats, major players, growth rates, sales data.
- Competition: competition profiles, characteristics, products.
- Ideal customer (also called target market): demographic data, geographic location, profile, how your needs are met or not.
- Products and services: description of your offer, how it will be developed, produced and distributed.
- Operations and management: How to plan the structure of your business.
With this clear, let’s see how to do a market study in 2 stages:
How to do a market study.
Market research consists of two separate information-gathering strategies: primary and secondary research.
1. Primary research.
Primary research is basically information that currently does not exist. This is new research designed to answer specific questions you have about your business or market.
If the product or service you are offering is completely new, you will need to use primary research to find out the viability of your business.
This is where you sit and write all the questions related to your business. In addition to the doubts that you have and you cannot find in other sources.
For example:
- How will your potential customers respond to your company name?
- How much are your potential customers willing to pay for your product or service?
- Who is your potential client really, what profile does he have?
How primary research is conducted
Personal interviews: They can be people you know or you don’t know. Friends, acquaintances or friends of your friends. Find a small group of people who represent your ideal client.
Focus Group: A group of people is brought together to give their opinion of your product and highlight its advantages and disadvantages. The entire meeting is recorded on video to be analyzed later and see the reactions of the participants.
Online surveys: There are many online survey services available to help you create an electronic survey. For example, Google forms and Surveymonkey are great options.
The key is to disperse the surveys to those people who represent your potential customer base or target market.
Telephone interviews: Outside of normal phone interviews, consider underhanded methods (ie, calling a competitor and posing as a customer to get their rates).
Carrying out primary research can take you out of your comfort zone. This can discourage you from seeking interviews with suitable objectives and cause you to interview family members and close associates.
Your friends and family are not always a representative sample of your market. To get the most useful and accurate information, you need to search for the right type of leads; to know their needs, desires and expectations.
Now that you understand the basics of conducting primary research, it’s time to look at how to use secondary research to gain even more insight into your industry and customers.
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2. Secondary research.
Secondary research involves finding and reviewing information already published on the Internet, industry reports, and media publications.
Sources like Amazon or Google trends can provide you with key information. You can also search for studies from government institutions; such as national statistical offices. This source provides great insight into the size of the market and demographics.
Company reports and websites are easily accessible and contain a limited amount of information; especially for public companies.
Consider doing a Google search for similar companies in your area. This should list those who are close to you and offer contact information.
Once you find different competitors, research how they get found in search engines. With this information you will be able to find many keywords that will help you position yourself in Google and better focus your communication with the client.
To get it, simply type your competitor’s URL into this tool. (Do not forget to choose the country)
Also search press releases and associations.
What information can secondary research provide?
- Size of your market and its growth potential.
- Industry outlook, where it is going and what threats it faces.
- Government restrictions.
- What is the customer profile of the industry.
- Who are the competitors, their best products and their prices.
Using the Internet and local libraries will give you access to already published information that may be useful to you. Exhaust your various searches on Google and other search engines.
Don’t rely solely on the published work of others to give you the complete picture. It’s a great place to start, but the information you get from secondary research may be out of date or just plain wrong.
Don’t use the Internet as your only source of research. When you use search engines like Google, their search results may not be relevant to you. For broader and more specific information, consider visiting your local library or nearest university.
Conclusion.
A market investigation will provide the necessary information for your business to start on the right foot. It will also be invaluable when writing your business plan.
Get in the habit of studying your market regularly 🙂
And remember, if you are really interested in creating your own business, you can read our book “How to create a company while working: Discover how to manage your time, manage your money and motivate yourself while creating a company and working for another” , where you will find all the information you need to found your own company, without having to leave your job.
