An Edward Lowe In-Depth Business Builder
Investigation and analysis of your competition and potential customer base are major components of a comprehensive market analysis. This checklist of resources for gathering market data provides perspective regarding common market research tools and methods.
Before launching a new product or a new business, you need to conduct a thorough analysis to minimize your risk and enhance your likelihood of success. Remember, knowledge is power. For existing businesses, market research allows you to re-evaluate your client's changing needs, your competitor's marketing tactics and future needs of your industry. For new businesses, market research allows you to evaluate the viability of your potential market and analyze your competition before making any long-term decisions.
WHAT YOU SHOULD KNOW BEFORE GETTING STARTED [top]
You will need to conduct a market research analysis before you develop a marketing program then again after you implement your plan, to determine if it is effective. Market research does not require that you have special skills. If you can ask questions, record information and take the time to understand what it means, then you, or an associate, can conduct market research. This Business Builder will address market research for both established and new businesses. If you have chosen to conduct your own market research study, there are several additional sources of assistance you may want to consult.
The first step to starting and/or growing a successful business is understanding in detail your market and industry. Whether you have an established business or are launching a new business, many questions need to be addressed. The remainder of this Business Builder will show you where to find the answers to these questions and tactics that you can use to create your own research.
Questions to ask yourself are:
Market Research is only as valuable as the actual data that is collected and the resources used to gather that data. Market researchers use the following types of data in their decision making process:
Secondary data is information that is collected for other purposes than the current project. This information is available through external sources such as:
The U.S. government is an insatiable compiler of statistics from which you can reap benefits.
Most federal government publications can be examined at public and college libraries that serve as depositories, or ordered from the U.S. National Technical Information Service and Government Printing Office.
To gain access to government statistics files, visit the Contacting the Census Bureau Web site.
In addition to the agencies listed above, find your state and local agencies that are likely to have useful statistics for your region and industry at the State and Local Government on the Net Web site. State sales tax receipt statistics are a good indicator of the health of your local economy. Local planning department information regarding building permits indicates population growth or stagnation.
Trade and Industry Sources
If you have a small business, you can locate many of the trade references you need in the Small Business Sourcebook, published by Gale Research of Detroit, Mich. Although the Small Business Sourcebook is limited to a relatively few types of businesses with a strong orientation towards retail trade, if your business happens to be included, you'll find substantial information well-organized for easy accessibility. The book lists trade publications, industry associations, trade shows and conventions, and venture capital firms and consultants active in each business.
For bigger businesses or those not listed in the Small Business Sourcebook, try Gale Research's Encyclopedia Of Business Information Book. Arranged by industry, this guide lists trade associations and major sources of statistical information, including databases, directories, and major publications in the field. If you still need help finding information on your industry's sources, consult Gale's Encyclopedia Of Associations or the National Trade And Professional Associations Of The United States, published by Columbia Books of Washington, D.C. These two resources offer information on more than 30,000 trade associations and also list the major publications of such associations.
General Business Sources
The following publications discussed in this section are available at most public and college libraries that have business resources. Ask a librarian to help you find them, as many are likely to be online and not listed in the library catalog.
Statistics sources
Business Periodicals Abstracts from H.W. Wilson Co., ABI/Inform from UMI, Business Source Elite and Premier from EBSCOhost , and General Business File ASAP from Gale/Infotrac are indexes to articles in major business publications that your library may make available. Ask a librarian how to use the indexes from home or at work.
For non-governmental statistics, refer to the Statistical Reference Index (SRI), published by Congressional Information Service of Bethesda, Md. SRI index reports statistical studies from major organizations and trade associations. A second volume, SRI Abstracts, provides brief summaries of the information included in these reports.
One often overlooked source of business information is the Yellow Pages of your local telephone directory. The Yellow Pages can give you insight about the nature and scope of your local competition and potential suppliers.
Advantages to using secondary data include saving time and money and minimized duplication of work. Disadvantages are that the data may not apply to your situation or that the data are outdated. As long as the advantages of using secondary data outweigh the disadvantages, go for it. Marketing research in any form reduces the known and unknowns. Therefore, reducing risks, it empowers management to make new choices and alternatives.
Primary Data
Primary data is information you will collect yourself to analyze a specific situation. The data can be either:
Subjective data is useful and elemental, but cannot be statistically analyzed. One source of subjective data is:
Measurable data is more reliable because statistical analysis can be done on it. Measurable sources include the following:
The most widely used method is the personal interview. Conducting market research through this venue will provide you with the most accurate information because you will be speaking directly with the consumers. However, because you will most likely interview people at multiple times and locations, this is the most expensive and time-consuming route to take.
Several advantages to choosing the personal interview technique include:
The personal interview can either be conducted by you or someone you hire and is on a one-to-one basis. Your survey "sample," or group of people you choose to survey, can either be chosen randomly (for example in a shopping mall) or specifically (for example buying a specific product). It is to your advantage to pick consumers who best resemble the customers you will serve. Keep in mind: If you are conducting research for an outdoor recreational store, don't interview only men. Women are equally active in outdoor sports and should be included in your interviews as well.
One of the most convenient methods for market research is the telephone interview. This can be done in your home and around your schedule. However, since you normally won't know whom you are calling, your sample will be very random. Keep the questionnaire brief and grab their attention immediately, as people tend to become very impatient when kept on the phone for something that doesn't benefit them directly. Remember that they are doing you a favor and they know it. For example: "In order for us to provide you with a product that best fits your needs, we would like you to take just a few moments of your time to ask some questions regarding your toothpaste."
The mail interview is the perfect way of reaching consumers a distance away who are hard to reach by phone or in person. In order to reach the right people, you will need an appropriate list of addresses. Mailing lists can be purchased from research agencies and range in cost from $50 to $200 per thousand names. Don't forget to include a return envelope with postage.
One disadvantage is that direct mail doesn't receive a high response rate. On average, you can expect between .5 percent to 3 percent (that's 3 responses from 100 questionnaires) of the people to whom you sent questionnaires to respond. There is also the option to follow up with a telephone interview, but this can be time consuming. If expense isn't much of an issue, but time is, it may be well worth your while to look into market research firms to conduct the interviews for you. By comparison, you can expect the telephone interview to give you a 60 percent response and the personal interview should give you a response of 90 percent. Combined, they will give you the most accurate and complete information.
Asking the right people the right questions and being able to decipher the information will enable you to use it to your best advantage to see direct and positive results in your business. However, keep in mind that time is the key investment.
The "right" people are the ones with whom you will be doing business. You need to gather everything you know about the people who will buy your products/services.
Include the following in your pursuit of customer information:
Next, you need to find these customers, and how you choose to locate them is up to you. You could sit on a street bench and look for obvious match-ups. You could stand near a competitor's store and interview customers. You could purchase mailing lists with your customers' profiles and conduct a mail survey. There are many possibilities.
Once you identify the group of customers that matches your profile, they become your "sample." This is a sample of the general public who are the type of people with whom you will most likely do business. Keep in mind that the smaller your sample the greater your margin of error will be. Watch out for the sample that is too small, or carelessly selected. This could provide you with incorrect information.
DESIGNING A QUESTIONNAIRE [top]
It is important to ask the right questions to get the information that will benefit you. Determine the value of each question by judging how you would use the results. This will help you avoid wasting time on questions that prove useless and inadequate. There are several rules to follow when designing your questionnaire to suit your needs:
The following are some examples of various forms of questionnaires:
The first questionnaire is for a select group, the customers of Speedy Photo. The owner conducted the survey during a one-week period, reaching both weekday and weekend customers.
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SPEEDY PHOTO SURVEY In order for us to serve our customers better, we would like to find out what you think of us. Please take a few minutes to answer the following questions while your photographs are being printed. Your honest opinions, comments and suggestions are extremely important to us.
Thank you,
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This survey was done by a businessman interested in opening public storage buildings. Before he committed any time and money to the project, he sent a questionnaire to consumers within a 15-mile radius of the proposed site.
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PUBLIC STORAGE QUESTIONNAIRE 1. Are you presently renting any public storage space?
____ NO
If NO, go to question 2.
1a. Where are you currently renting storage space (name and address):
1c. Is your storage space heated?
____ NO 1d. Approximately how much space are you renting?
1e. Do you think you'll need additional space in the future?
____ NO 1f. Are there any changes or improvements you would like to see in your present storage space arrangement?
2. Are you planning on using any public storage space?
____ NO
If YES, or DON'T KNOW continue. 2a. If you are planning to rent public storage space or may rent such space, how far of a distance are you willing to travel to use your space?
2b. Approximately what size storage space would you need?
2c. How much monthly rent would you be willing to pay?
2d. Would you require heat for your space?
NAME:
Thank you very much for your cooperation.
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Another questionnaire was developed by a woman who was interested in selling southwestern jewelry made by native Indians.
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SOUTHWESTERN JEWELRY QUESTIONNAIRE 1. Have you ever purchased or received southwestern jewelry?
____ NO 2. Have you ever purchased or received southwestern jewelry made by native Indians?
____ NO If Yes, what type of jewelry?
______ Necklace 3. Would you be interested in purchasing the above mentioned jewelry made by native Indians?
____ NO 4. Do you know where to shop for such jewelry?
____ NO 5. When buying jewelry, what do you value the most? On a scale of 1 through 5, list in order according to your preference. A number one represents your most valued choice.
_______ Cost _______ Uniqueness _______ Other |
The last questionnaire was developed by a woman who wanted to open a fitness center and offer one-on-one training.
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FITNESS CENTER QUESTIONNAIRE 1. Do you exercise?
____ NO
If NO, please answer questions in Part A.
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In each of these cases, the business owners gain valuable information to help them make major decisions about their businesses. Remember that if the results of the survey aren't very positive, you need to find out WHY. The questionnaire is used as a guide. It doesn't mean you can't go into business.
ALTERNATIVES TO SURVEYS [top]
Questionnaires aren't the only forms of market research. There are other methods you can pursue yourself. Play the role of customer in your competitor's store. Visit them different days at various times and fill out an analysis form. This will give you valuable information how you can improve your own business.
Analyze the license plates of your competitors' customers. How many of them will find it more convenient to shop at your store?
If you offer a coupon with print advertising, code it so you know where it came from when the customer redeems it. When the offer is over, analyze which publication had more customer response. You could even write the customers phone number on the coupon to narrow the research down more.
You can do the same with broadcast advertising. When you hear commercials that say, "Tell them you heard it on WXYZ," they are doing market research. Have a different code for each station and keep track of the customer response. Don't forget to check the profile of their average listener to find out about your clientele.
One important note: Your findings may not be without error. There could have been flaws in your survey or the sample of people you selected. Don't forget that market research is also an effective venue to keep up with the trends, attitudes and preferences of your customers.
RESOURCES [top]
Books
Research guides
Exploring Marketing Research, 7th ed. by William G. Zikmund. (Dryden/Harcourt Brace College, 2000). More for the researcher than the manager.
The Handbook for Focus Group Research, 2nd ed. by Thomas L. Greenbaum. (Sage, 1998).
State of the Art Marketing Research, 2nd ed. by A.B. Blankenship, George Edward Breen and Alan Dutka. (NTC Business Books, 1998). More for the manager than the researcher.
Data sources
Editor & Publisher Market Guide. (Editor and Publisher Company, annual). Descriptions of infrastructure and markets in cities large enough to have newspapers.
Encyclopedia of Business Information Sources. (Gale Research, annual). Directory to sources of published data on specific industries.
Government Research Directory. (Gale Research, annual). Where to find government information resources.
Magazine Directories
Business Publication Advertising Service. (Standard Rate and Data Service, monthly). The SRDS index includes trade journals that often provide industry situation reports.
Bacon's Magazine Directory. (Bacon's Information, annual).
Web Sites
Basic Market Research. KnowThis.com Marketing Virtual Library.
Market Research. Kauffman Foundation, EntreWorld.org.
Market Research, Rutgers University Libraries
This In-Depth Business Builder was originally published in 1996, revised 2003.
Resources
U.S. Jobs 2006-2008
U.S. Jobs 1993-2008
Littleton Economic Gardening
Kauffman Foundation Research
| Chris Gibbons: Introduction to Economic Gardening |  |
| Mark Lange: Economic Gardening Update for Collier County, FL (Naples) |  |
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