- Created on Wednesday, 31 July 2013 15:04
- Published Date
- Written by Veronica Jorden
Day 17 of Operation: Create Your Own Path and some more great advice from our featured military spouse business owner! One of the most important steps in beginning a business is evalutating whether there is a need for your product or service. Will people buy what you have to offer? To find out, you have to know your market.
A Platinum Resume
"The one piece of advice I would give anyone starting a new business is to do research- research about the market/industry you are pursuing, price points, licenses needed, competitors and branding. It is also important to take a personal inventory of your strengths and check in with your family to make sure they are on board with the new business undertaking. If you can - start your business while you are still working to make your transition easier!"
JM Gordon, JD, MBA
The Business Professor
In the entrepreneurship course, I teach a variety of tools that are useful, if not essential, in planning a startup venture. Recently, one of my students asked me what I believe to be the most important part of the planning a startup venture. I didn’t hesitate for a moment in responding: market research
What is marketing research?
Business owners and entrepreneurs acquire information through marketing research that helps to:
- Identify and define marketing opportunities and problems
- Generate, refine and evaluate marketing actions
- Monitor marketing performance
- Improve the understanding of marketing as a process
Market research is generally broken down into primary and secondary research.
Secondary research involves exploring information previously assembled by others. You may read journals about market preferences or use census bureau information to determine the size of potential markets.
Primary research, on the other hand, involves undertaking the research oneself. More specifically, it involves collecting information about or directly from potential clients and customers. You may use questionnaires to learn about customer buying preferences.
Successful market research often involves a combination of primary and secondary research.
How is marketing research valuable to entrepreneurs?
In order to determine whether a potential business opportunity will produce the desired amount and type of value, the entrepreneur has to fully understand the nature of the industry, the competitors, the substitute products, the willingness of the customer to pay a particular price, etc. All of this information arises from the entrepreneur’s directed research into the market.
Likewise, market research helps the entrepreneur to understand the potential customer(s). It involves identifying the needs and wants of your target customer, scope business operations necessary to meet those needs, the manner in which to reach the customer with your offering, and broadening your product or service to include other prospective customers.
Market research allows you to uncover the following information:
- What are the demographics of your potential customer base? (Age, race, ethnicity, community or belief association, socio-economic status, etc.)
- Where is your potential customer base located?
- How many people exist within a given area to meet those demographics?
- What is the level of urgency (level of need or want) for the product among the potential customers?
- To what extent will your product or service meet that specific customer demand?
- Are there other businesses already serving these customers?
- How well do these competitors meet the customer’s level of demand?
- Does any competitor have a competitive advantage over other businesses in meeting the customer demand?
- Do you have a competitive advantage in meeting the customer demand? That cannot be replicated? That cannot be outdone?
The above questions are just examples of the type of information you will want to understand in evaluating the potential of a product, service, or idea to be a profitable entrepreneurial venture.
The Business Professor provides free business and legal resources for entrepreneurs and small businesses.
JM Gordon is a former US Army Jag Corp attorney and is a Small Business Attorney and Consultant. He created the Business Professor in order to provide resources to aspiring entrepreneurs and business owners.
This post is an expert from a longer article which can be found here: http://thebusinessprofessor.com/market-research-and-how-entrepreneurs-use-it/