Market research helps you better understand who your customers are, where they are, and how attractive is a potential market for your product or service. There are two basic types of market research - primary and secondary:
If you identified significant potential of the overall market, conduct market segmentation to evaluate how large is each market segment and what market share you can expect in each segment. Also, analyse ease of entry, availability of substitute products or services and look at important industry trends, such as market growth or changing tastes of target customers and the reasons behind such trends.
Effective marketing is impossible without a thorough understanding of your current and potential customers. The better the client is understood, the better the business is able to fulfill the customer’s needs.
Researching you customers will provide insight in to their lifestyles, buying behavior and help you answering the vital question: who is the customer for your product or service.
If your aim is to enhance performance of your existing business you can take a look at the nature and distribution of your existing customers. Give a typical customer profile for each market segment you target. Are you heavily reliant on sales to a few large customers, and if so can you develop a plan to diversify your sales by acquiring new customers.
When determining demand for your product or service you also will need to research your competition. Who are your key competitors? What are advantages and disadvantages of their products and services when compared to yours? When benchmarking yourself against competitors cover issues such as price, quality and distribution. Then explain why customers will buy your product or service but not the one from competitors. You can utilize SWOT analysis when researching each key competitor in the market, focusing on competitors’ strengths and weaknesses.
For example, if you plan operating a retail business such as a shop or a café you can learn about your competitors as a customer. Observe the number of customers, knowledge of staff, pricing of goods and types of services, what customers are buying and how much they spend. If you plan establishing a manufacturing business obtaining information from competition is more challenging because your potential competitors will probably not talk to you. But you can get valuable data from a trade industry association representing your area. Alternatively you find an independent sales representative who works in the industry as he will likely be very knowledgeable about the companies in the industry.
Next assess your market strategies
• Explain how you will position your product or service on the market. For example, will you offer premium product & high price, a low cost consumable product or a niche product with unique features?
• Research the pricing and look at issues such as price elasticity for your products or services. Explain how you set your pricing and identify where you make your profits.
• How do you promote your product or service? Each market segment will have one or two preferred methods for promotion. You can perform a pilot field test to determine which promotion method works best
• What distribution channels do you use or plan using to target your customer? You can research various distribution channels, for instance, by looking at channels that your competitors are using.
• What advertising methods will or be utilizing: online or through traditional print