Research provides the information to meet the needs of your customers and determine your company’s:
- target market
- proper location
- sales projections
- product or service line
- pricing strategy
- advertising placements
- credit policy
- required working capital
- appropriate retail and warehouse space
- stocked inventory
- required equipment and supplies, and
- employee complement
Where to find Information
For business people to make knowledgeable marketing decisions, they need accurate and up-to-date information. Market research is defined as the systematic gathering, recording and analyzing of data to determine the best marketing strategies for your goods and services. Its purpose is to help entrepreneurs make better decisions and avoid committing costly mistakes. The time and dollars spent on marketing research, regarded by many small businesses as frivolous, can be extremely valuable. This information may highlight unknown opportunities or expose possible risky situations.
The research process of assessing the market should provide useful information which will help focus your marketing efforts, providing insight into:
- present and future potential markets (what consumers are buying or prefer and possible future trends);
- strengths and weaknesses of your competition;
- economic forecasts; and,
- your own business (by becoming an expert).
In many cases this business information can be gathered at no charge. The following are sources which may have information for your industry.
- Government of Canada Publication
- Statistics Canada, e.g. Market Research Handbook, Census publications, Family Expenditures in Canada
- Industry Canada, Strategis web site
- Provincial Government Publications
- Departments or ministries responsible for industry, trade and commerce, and those targeting specific sectors, e.g. agriculture, environment
- Periodicals and Books
- Canadian Business Index
- Financial Post Survey of Industries
- Dun and Bradstreet Key Business Ratios in Canada
- Sales and Marketing Management magazine
- Advertising Age
- Various industry directories
- Trade Associations and Other Publications
- Canadian Advertising Rates and Data (CARD) lists all media in Canada and their rates
- Canadian Media Directors’ Council Media Digest provides basic information on the market and media habits of Canadians
- Tomorrow’s Customers (Woods Gordon) talks about trends in the marketplace
- Trade journals for various industries provide specific information on trends, competition and happenings in the industry
- Trade shows are a great way to learn more about your competition and how they market their products or services.
- Other sources of information:
- Board of Trade, City hall, Chambers of Commerce
- Business or trade associations
- Universities or colleges
- Yellow Pages
Taking your First Research Steps
- Monitor the business environment
You should be keenly aware of factors which influence your industry, and monitor the effects of these trends on your business. For example, monitor the economy. Will interest rates rise? Will the rate of inflation increase? How will these affect your business?
Governments impose many regulations (taxes, health regulations, and hiring practices) which can affect your operation. For example, imposing import quotas for certain products, such as textiles, could help manufacturers of such products within Canada, but may adversely affect any business involved in importing and distributing the product.
Similarly, there are social and cultural forces which affect the viability of a business’ operations. Trends in the 1980s and 1990s have been toward an increased awareness of health and body care. This has resulted in the marketing of physical activity products (racquets, jogging wear, cross-country skis) and health food (wheat germ, granola bars, wild rice). Certain products or services, which are considered “fad” products, may remain on the market for only a short time (pet rocks, hula hoops). Entrepreneurs need to determine if their products or services will enjoy a long lifecycle, or if there are factors which may limit ongoing customer demand.
Political, economic and social forces must be considered for their potential effects on your business. Focus on energy consumption has led to the reduced demand for certain products (e.g. cars with V-8 engines, oil-fired furnaces), while it has contributed to increased use of others (insulation, weather stripping, diesel engines).
Entrepreneurs must be aware of such forces, the opportunities they create, and the ones they extinguish. Developments in such fields as economics, politics and technology should be monitored for their potentially negative or positive effects on your business.
- Observe the competition
It is critical to learn about your competition. This and other research must be an ongoing activity.
Study your competitors. Visit their stores or the locations where their products or services are sold. Analyze the location, customer volumes, traffic patterns, hours of operation, busy periods, prices, quality of their goods and services, product and service lines, promotional techniques, positioning, product and service catalogues and other handouts. If feasible, talk to their customers and sales staff.
Consider how well your competition satisfies the needs of potential customers in your trading area. Determine how you fit into this picture and what niche you plan to fill. Will you offer a better location, convenience, lower price, extended hours, higher quality, and improved service?
Estimates of competitors’ sales volumes and their market share should be made. Also, the reaction of competitors to new entrants such as yourself should be judged. Your analysis of the competition should include a synopsis of the reasons for their success. You want to know why customers are buying their products and services.
In some product and service areas, the existing businesses are so strong and well established it would be difficult to enter that market. For example, an entrepreneur would have great difficulty competing head-on with a large food store, such as Safeway. The entrepreneur would be better advised to offer a unique service such as a neighbourhood location and longer hours, which would provide more convenient service to potential customers.
- Talk to your suppliers
Speaking with your suppliers will tell you a great deal about how your industry works and what trends are taking place in your market. Suppliers may be able to provide you with valuable information about pricing techniques and mark ups, the most popular lines and why they are selling, and why some competitors are successful. They may also provide you with information about generally accepted credit terms in the industry.
- Talk to your current and potential customers
Speaking with your customers or potential customers gives you insight into what their needs are. They may indicate what they look for when purchasing your products or services, what they think of your competition, what price they might pay and what level of service they require. They are usually flattered and pleased to assist you in your research, hopeful you will be able to provide them with products or services that meet or beat their desires!
- Surveys and focus groups
Surveys represent a formal means of gathering insight from your customers. Focus groups are an informal way of gathering information. They each have distinct advantages and disadvantages.
If you have a specific information requirement and a definable audience, it is likely you can collect useful survey data. In order to use survey results to make business decisions, you must design a non-biased questionnaire. Doing so requires attention to detail and significant expertise. There are many good books available on questionnaire design and initiating a survey. However, if you are depending on the survey to assist you with a costly decision, you may want to consider hiring a professional marketing research firm. Surveys are typically used when statistical significance is required. Disadvantage: Survey design and implementation are usually expensive.
However, community colleges and universities have marketing management programs where students can be hired on a confidential consulting basis as part of their curriculum. The students do not have the experience of professional firms, but will often do a reasonable job at little cost. Do your homework before embarking on a survey. Assure you will get the information you require.
A focus group involves getting feedback from a specially selected group of individuals using controlled interview techniques. The process usually allows the participants to provide their opinions, come up with new ideas and brainstorm.
Focus groups are valuable for generating new concepts, getting feedback on proposed advertising or gaining insight into attitudes and opinions about a new product or service. Focus groups can be used to identify parameters for a formal survey. Focus groups require a skilled interviewer and selected participants based on given parameters (e.g. parents with infants <1 year of age). Professional firms can be hired to tackle the project for you. Disadvantage: Outspoken individuals can blur the opinions of others in the group. Reserved individuals may not share their opinions or ideas even if they strongly disagree with other people in the group.