How to Do Market Research - The Basics

Market research is one of the key steps in the creation of a business and the plan of activities. To sell a product or a service, it is nece...

Market research is one of the key steps in the creation of a business and the plan of activities. To sell a product or a service, it is necessary to identify the market on which it will be positioned. Market research is carried out in three stages: determination of the nature and trend of the market, identification of targeted clienteles and analysis of competition. 
Follow our guide and our advice for a successful market research and thus demonstrate to your potential funders that you do not venture into unfamiliar terrain.

How to Do Market Research--The Basics
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PURPOSE OF MARKET RESEARCH

The market study should answer three questions:

  • What is the nature of the market and what are its trends?
  • Who is targeted? What are the categories of your potential customers?
  • What are your competitors? What is your positioning about these companies?

HOW TO EASILY DO HIS MARKET RESEARCH?

Before you see the various elements that a market study must contain, here are the two solutions available to you to carry out this work.

The online study

This is the answer that more and more business creators choose today. They provide quick information on the real potential of activity. Another advantage is that online studies affect a larger panel and a larger geographical area. Finally, unlike a "field" study, Internet users have questioned anonymously, which reduces the bias of classical studies.

Two types of online market research are possible.  The standard studies will consult you market research already carried out in your sector of activity and the personalized studies where professionals will elaborate a complete study of the market customized. The first solution is fast and accessible but is rather suitable for the launch of a perfect activity (restaurant, indoor soccer, etc.), the second is expensive, but the result actually allows to define its market and thus to implement the strategy The most suitable.

Your own field study

Your market research should contain two main chapters: the qualitative study (allows to understand in detail the behavior, the desires and the brakes of the potential customers) and the quantitative study (allows to measure the central tendencies of your market). To obtain the information that will enable you to complete them you have to develop a questionnaire which will comprise three main parts:

  • Information about the person polled (e.g., age, sex, domiciliation),
  • Questions unique to your future business (e.g., what does the name of the company mention to the respondents?),
  • Questions about the sector of activity (e.g., how often does it use this type of product?).
  • Once this questionnaire is completed, you will meet your potential clients individually, for example on the street. All that remains is to strip the questionnaires, synthesize the results and draw conclusions on the market.

WHAT SHOULD CONTAIN THE MARKET RESEARCH OF YOUR BUSINESS PLAN?

Nature and market trends

The nature and trends of the market are elements that you must identify in your market research. To do this:

Determine the type of market you are positioning on. What are its trends? The next question is whether this market is emerging, growing or declining.
Define the size of your market, its geographic dimension (local market, national) but also its volume regarding sales and turnover. What market share are you targeting?

Specify the evolutions, the significant technological advances in your market during the last years. Are there barriers to entry?
Finally, indicate whether the market is regulated and whether there are specific access conditions such as diplomas, authorizations, etc.

Do not forget that a sound knowledge of the market is essential to be able to react and adapt to its possible evolutions. You can use the PESTEL analysis to study it. Your market research should convince investors that you possess this skill.

Targeted clientele

Identifying your clients is a fundamental part of your project. These are actually those people who will buy your products or services. It is, therefore, important to determine their needs, desires, sensitivity (price, quality, quantity, etc.) in your market research. Also describe their mode of consumption, habits and purchasing behavior. Specify the catchment area: where do your customers come from? Where do they predominantly live? This definition of your target audience will enable you to prioritize your communication and sales efforts.

Competition

It is essential when creating your business or writing your plan of activities to keep in mind that there is a multitude of other players in the market. Especially companies that have the same activity as you or offer products or services that can substitute for yours. The analysis of the competitors makes it possible to adapt its offer to the economic reality of the target market. To get a robust competition analysis in your market research, you need to:

Identify current competitors but also potential competitors and new entrants. The latter are likely to gain market share and change your strategy.
Understand their brand image, their specificities, and strategies. Determine what makes their products or services sell well or not enough.

Identify your competitive advantage, that is to say, all the assets of your company (product, brand, range) to distinguish you from the competition and reach the target clientele.

Ultimately, market research will complement your business plan and demonstrate to your funders that you have measured the impact of your competitive environment on your future business.

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