This is week three of our Ten Week Business Plan course. It is about market research
When you prepare to vacation in a new city, state, or country, do you set out uninformed about your destination — or do you read a few guidebooks, surf the internet for advice, or perhaps visit a travel agent? You likely do at least a little bit of homework first so that you know what to expect.
What should you research?
Conduct Market Research to Define Your Customers
Everyone is NOT your customer. The more well-defined your customer, the more confidence the reader has that you actually know your market. What is the geographic scope of your market? Is this a hard or soft boundary? Describe demographics of target customers. Why will a customer buy your product? Who are the innovators – the ones who will be first to buy – among target customers?
From the customer’s perspective, describe the three most important features of your product. Which of the following elements will be most influential in your customer’s buying decision? Which are irrelevant?
- Price and Quality
- Your Reputation and Customer Service
- Product Appearance and Size
- Packaging, Ease of Handling, and Trans-portability
- Operating Characteristics
- Location, Facilities, and Hours of Operation
- Credit Terms
- Advertising and Promotion
- Seasonal Cycles
Conduct Market Research to Define Your Competitors
Even new, completely innovative products have competition. Long before your product comes into the market, customers have found ways to solve their problems. Understanding who your real competitors are is critical to your business success. As you analyze your competitors, it can be helpful to think about the three levels of competition.
Level 1 – These companies solve the customer’s problem with products or services that are very similar to yours.
Level 2 – These companies offer an alternative solution to your customer’s problem.
Level 3 – These companies do not solve the same problem, but compete for your customer’s limited resources.
Make a list of three competitors and study them. Look at their website, call their customer service department, look for their ads. Find 1 – 2 things they do well.