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Researching the Market
We offer Support and help for students starting their own businesses Enterprise workshops Office space Access to University resources Contacting us T: The Phoenix Centre
What we shall cover: The power of research Researching your business idea The Competition Defining your market USP’s Your target customer
The Power of Market Research What is it? Market research is a method of looking at the market you plan to enter in an objective, systematic way, allowing you to analyse exactly how you will position your business and predict how and where to place yourself in the market. Business owners then include the data in their business plans to help potential stakeholders gain a better insight into how the business will fare.
The Power of Market Research What do we want to know? the political, social and economic factors around the business. Can people afford it? Likewise, is Kensington the right place for a pound shop? Your potential customers and who they are. Finding out about your customer will help you to decide how to brand the business, how much to charge and where to place it in the market. Who your competitors are and why they are successful. Use competitors as case studies, looking at what has worked and what hasn't, and even niches they've overlooked which you can target.
The Power of Market Research What’s so important? Identify the demand for it. Will help you decide whether to go ahead, work out what volume you will need to produce and what staff you need. Demonstrate your business expertise to others, such as funders. identify your customers, their average age, gender, income, occupation and habits. If your customers are other businesses, it will help you work out how big they are, who their customers are and who makes the procurement decisions. This will allow you to target more specific markets and disregard unsuitable ones how much they are willing to pay, as well as an insight into how your competitors approach pricing will enable you to determine how much you will charge for your offering.
Researching Your Business Idea If you're serious about starting a business, using market research as part of your business plan will help you determine how viable your business idea is, as well as helping to convince potential investors. Market research shouldn't just be used when you're planning your business, though: conduct regular research to gain a deeper understanding of how your market and customers are changing.
Researching Your Business Idea Using market data look at pre-published reports and statistics to find how market is performing. These may be available for free from the government, or for a fee from commercial data companies. Ensure the information is up-to-date! It can take time and effort to find the right information for your business. Try searching: Trade associations or bodies: Your trade association will either have publications of its own or be able to point you in the direction of information. The web: It's an obvious one, but it's surprising how much information you can glean just from getting the right phrase when you're on search. For the best results, put speech marks around specific phrases. The Office for National Statistics: The government statistics website has stats on everything, from UK tourism to tomato growers in the South-East. (this is a very labour intensive task on this website!)
Researching Your Business Idea Using market data Commercial publishers: Companies such as Mintel, Datamonitor, Euromonitor, Visiongain and The Economist Intelligence Unit (EIU) publish extensive, detailed reports - but be prepared to pay for the information. If you don't have a spare £3,000 try the British Library Business & IP Centre, which gives you access to thousands of publications and statistics. Some trade publications also conduct market research. Look at titles from publishers such as William Reed, United Business Media, or B2B International.
Researching Your Business Idea Cold Calling It’s harder but quicker than direct interviews and useful if you want a large amount of data in a short time. More suited to quantitative statistics regarding customers' ages, occupations and habits than for lengthy discussions of your product or service idea and where it might fit into their lives. Make it clear that you're not trying to sell anything to the person on the other end of the line, and ask politely whether they would like to answer a few questions. Keep your calls as short - people don't like being bothered. Simple yes/no questions or multiple choice questions, as long as they are specific enough to provide detailed information, will keep things brief. You can buy direct marketing lists which include telephone numbers, addresses and other contact details from companies such as TLS Data or Selectabase. Search the web for specific groups. Cold calling has a relatively low success rate, around 5% of the people you call are prepared to answer your questions, you're doing very well.
Researching Your Business Idea Conducting Surveys Nothing beats going out with a clipboard and a survey, standing on a street corner, looking your customers in the eye and asking questions. Choose a time and place you know lots of your target customers will be around. For example, if you're launching a cleaning service, busy commuters may be your best market, so try standing near bus stops in the morning, or if you're launching a new variety of baby food, mums will be your best customers - so try to speak to parents returning from the school run. It may be worth offering an incentive to complete your survey. If you can buy them a coffee while you talk to them or offer money off your product or service, they will be more likely to stop and chat. Don't be disheartened if people turn you down, and persevere. Eventually, people will stop and talk. To increase the number of results you get, employ people to help you out - but make it clear they need to be courteous.
Researching Your Business Idea Running Focus Groups glean information from customers' responses to your product or questionnaire, creating a dialogue which will allow them to build on each others' opinions. getting reactions from children or other groups whose level of literacy or attention span may not be enough to handle questions. Ideally six to eight participants, all of whom have been pre-invited. Incentivise people to attend the focus group by offering a financial reward or gift. The session should last no more than an hour or people will start to lose interest. Explain to the attendees exactly how long the session will last and how it will be run so they aren't left anticipating an endless stream of boring questions. Ensure all the questions you ask are open to prevent people from giving yes/no answers. Instead, bring up topics and encourage people to speak to each other about it. If the participants aren't being particularly forthcoming with their opinions, invite each person to speak in turn.
Researching Your Business Idea Running Focus Groups To encourage them to really think about their responses, ask participants to consider a particular issue or topic for a few minutes before they write down how they feel about it. Then, ask each participant to read their response aloud to the group. This should help stimulate debate and will ensure well thought-out and structured arguments. Keep minutes for each focus group, as well as a brief profile of each attendee. This will ensure you have a lasting record of the focus groups and, in the longer term, will provide you with information on how your market is evolving.
The Competition Competition is a fact of business - but look to turn it to your advantage. You can stay ahead of the pack by making sure you're clued up on what your competitors are up to and finding niches they haven't yet explored. Even if you can't compete with your larger competitors on price, find a good unique selling point (USP) and customers will be streaming through your doors.
The Competition Why look at it? analysing your competition allows you to come up with a set of USPs and decide how you will differentiate your business from its competition. Looking at where your competitors' weaknesses lie will help you determine where your own business' strengths will be. Looking at your competitors will allow you to work out where they will pose threats. For example, do they have a larger marketing budget or do they hold more sway with certain suppliers or distributors? Conducting an analysis of all your competitors' strengths and weaknesses will help you to determine exactly how and where your product should be placed in the market and how your customers will react to your business. If your product or service is wrongly priced, it won't perform properly. Looking at how your competitors price their goods will give you a good idea of how to price your own offering based on where you decide to place it in the market.
The Competition Why look at it? Whether you want to follow the lead set by your competitors or take an entirely different approach, looking at how they promote their businesses will help you to come up with an effective marketing strategy for your company. Competitors often serve as a useful springboard for innovation. If they have come up with a good idea, ask yourself how you can build on it - or, if they've used a strategy which was totally ineffective, find out why and whether you could improve on their idea.
The Competition Working out who they are Competitors aren't just the Pepsi to your Coca-Cola. Everyone who will detract from your profits is a competitor - no matter how large or small they are. Think outside the box. If you're planning to manufacture socks, don't just look at rival sock manufacturers: think about other footwear companies, designer brands, knitwear boutiques, eBay - even sandal manufacturers will pose a threat. Competitors are everywhere. Consider some of the following to find out about them: Advertising Industry magazines Trade fairs and industry events Networking events Industry bodies Local Chambers of Commerce Newspapers The internet Customers Brochures and marketing literature Companies House Planning applications
The Competition What to find out about your competitors What their customers think of them. Search internet, blogs, social networks to find out what is said about them - set up Google Alerts to be updated each time a news article or blog mentions them. Ask customers directly as well - what are your competitors doing well? What are they doing badly? Are there any gaps they aren't filling? How they are promoting and branding themselves. Looking at your competitors' promotional activities will allow you to differentiate your own - or nab their ideas and build on them. If they're likely to have one, ask a friend or employee to request a brochure or media pack, or just look at their website and advertising to get a feel for how they're promoting themselves. Find out how much they're charging for their product or service and what that cost provides. What special offers, bundles or freebies? What customer service or support do clients receive as part of the price? Is there a premium equivalent? Can you get hold of a price list?
The Competition What to find out about your competitors Find out who their suppliers and distributors are and whether they have signed an exclusivity deal with your competitor. Would they be willing to stock your product or supply to you? If your product is better than your competitors', is there a chance they might ditch them altogether in favour of your product? Arrange a meeting with them and try to glean as much information as you can.
Defining Your Market The more you know about your target customers, the more you can offer to meet their needs and desires. And the more you can tailor your marketing and sales strategies - which means, of course, that you can sell more product. Identify your target customers Research their lifestyles Research their spending habits
Defining Your Market Identify your target customers Your target customers correspond with your USPs. Who exactly wants your product or service? Consider gender, age, profession, hobbies, income - a clearer profile will mean you can meet their needs more precisely. Hold focus groups, speak to retailers who deal with the market you're considering and talk to people who fit the target category. Target customers correspond with USPs Research to back up your assumptions
Defining Your Market Research their lifestyles Where do they live, what do they do for a living, how old are they, where do they go on holiday, are they married, do they commute? This will help you tailor your product and marketing. Get demographics info from your local council. Think about where they live and how that would effect distribution of your product. Build up as specific a customer profile as you can Consider how their location will influence your business
Defining Your Market Research their spending habits This is a key decider in how to sell your product. Do customers shop online or in person, impulsively or after research? Prefer independent shops or huge supermarkets? How will they find you? Look at how similar products are being sold to get a feel for consumer habits. Remember to consider less obvious competitors. Identify customers' spending habits Use the information to formulate your sales strategy Consider all potential competitors, not just the obvious ones
Your USP’s Your Unique Sales Proposition (USP) is the thing that makes your business different from anything else out there - the reason customers will come to you not them. Identify and plan at least five clear USPs that define exactly what you offer that the broader market doesn't. Here's how to start: Determining your USPs Product USPs Service USPs
Your USP’s Determining your USP’s USPs must be true to your business vision - and, in turn, everything your business does sticks to your USPs. They can relate to your product, the way you deliver your service or the way you run your business. You might get some ideas from the sections below. Do loads of market research to make sure your USPs are unique. Then talk to potential customers about whether they would be persuaded to buy from you rather than a competitor because of them. USPs must be true to your business vision Do loads of market research on them Check they're sufficient to persuade customers
Your USP’s Product USP’s Your product can compete on price, quality, having a product that makes a process quicker or easier, being smaller, safer, greener, more ethical, better looking, easier to store or set-up and disassemble, be tastier, more retro, approved by certain organisations, more reliable, more durable, longer-lasting, made of a unique material - the possibilities are endless! Your USP might also relate to the way you package your product, or be product related - such as no frills deals, range of products, product finance offers.
Your USP’s Service USP’s If you want to differentiate yourself from the competition on service or the way your business is run, you might like to consider: customer service opening hours green credentials speed of delivery extra services being online, proximity to customers international delivery the gender or age of employees employees' expertise being a social enterprise New service in a new location, offering community-building
Before you can start your business, you need to identify its target market by working out who will be using your product or service and what their habits are. This will allow you to determine how you will price your offering and work out how much you will spend on marketing.
Working out who they are? Think about how your brand will appeal to customers: if you're marketing to teenagers, you'll need to make sure your offering is eye-catching as well as affordable. Once you have collected data about your customers, you will need to break them down into different groups, or segment them by age, income, region and lifestyle. This is called market segmentation work out how you will position your business in the market in order to compete. What will your unique selling propositions (USPs) be? Do you make faster deliveries or better customer service? How will you let your customers know about it?
Working out who they are? You can get information about who your customers are from a number of sources, but try the following: Office of National Statistics (ONS), the government stats agency Figures provided by industry and trade bodies Information from trade fairs and exhibitions Industry and national press Chambers of Commerce The internet Competitors Competitors' annual reports (which can be downloaded from Companies House if they are a limited company)
What to find out? Begin by looking at your customers' demographics - what their profiles are. Look at: Age Income Level of education Gender Race or nationality Family status and size
What to find out? Your customers' behaviour is also crucial to how you present your business. Find out: What they spend their money on What their habits are How loyal they are to other brands What their interests are How often they spend their money, and how much they spend
What to find out? Your customers' location will have a big impact on how much they spend and how frequently they buy. Find out: How far they live or work from your premises What sort of area they live in If it's further afield, what the climate is like