Thoughtful Thursdays – On market research

It is exciting to take an idea and start a new business. It is also very easy to get caught up in the excitement and develop strategies that are not based on solid research. I have seen start-ups spend a lot of their financial resources to early in the process and have preventable difficulties.

There are four areas that are important to research and profile before developing your strategies.

• Industry
• Competition
• Customer
• Suppliers

Here are a few thoughts to consider regarding each of the above.

Industry

This is the industry that your business operates in, not the one your customer is in. A common classification is the North American Industry Classification System (NAICS). You can search the Statistics Canada NAICS database here. Information to gather includes:

• History of the industry – how long has it been around; how did it start and where is it heading.
• How large is the market potential as it relates to your idea?
• Current industry trends
• Is it growing, shrinking or mature?
• What are the internal and external factors and potential consequences that might impact your business?

Customer

Develop a profile for your perfect customer based on research findings.

• B2B, B2C or a combination?
• What are they looking for?
• Why do they want it?
• What are they buying now to meet their needs?
• Are there demographics and/or psychographics in play?
• Are purchases cyclical, seasonal or one time?
• Why would they buy from you?

Competition

You can never know too much about your competition.

• Who are they?
• What are they good at?
• Why are they successful?
• Who is their target market?
• Why to customers buy from them?
• Are there gaps in the way they provide their goods and services?
• If you can not find direct competition, what does that tell you?
• Who the indirect competition?

Suppliers

All businesses have suppliers.

• Who are they?
• What do you depend on them for?
• Why do you buy from them?
• Do you have second or third sources?

Primary research is the best source for information. This is conducted specifically for your business idea. It is often conducted in the form of interviews.

Once information is gathered, use it to develop insights, What is the information telling you? Is it relevant to your business idea?

Your gut feeling is a good start, but it can be risky to let that be your only source of information.

Once you are satisfied with the research findings, you can think about how you are going to position your business in the competitive marketplace. From that point you will be able to choose appropriate marketing strategies.

Good selling,
Richard

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