Before starting your business, it is important to become accustomed to market research. It will not only pave the road for the direction you need to take your business, but you will be conducting ongoing market research for the life of your business. This blog will break down what types of things you will need to conduct research on. So let’s get started!
What should be focused on when conducting market research?
If you need some assistance as to what you need to do research on, the best place to start would be to do a Porter’s Five Forces Analysis which basically looks at the market in five ways. This might seem mundane and too basic, but all are absolutely relevant to any industry and should be a good place for you to start and help set you in the direction of what to focus on. Here are the five forces:
- Threat of new entrants: How hard will it be to enter the industry? Are there stipulations or barriers to entering? Examples: cost to enter, cost for buyers to switch to your product/service, economies of scale, and more. Basically, how hard or easy is it for a company to enter the industry and become your competitor?
- Bargaining power of buyers: How easy is it for the buyer to switch to you? Can buyers use substitutes instead? Examples: buyer’s use of multiple resources, buyer’s volume, buyer’s switching costs, and more. It’s important to look to see if your customers are willing to buy from you compared to using someone’s brand.
- Bargaining power of suppliers: Do suppliers have product differentiation? What is the availability of their input service or product? Examples: importance of industry to supplier, availability, differentiation, threat of forward integration, and more. In other words, what is the situation like of the supplier you would use for your product or service and how much control do they have over your business?
- Threat of substitute products: Are substitutes more readily available? Are there switching costs to using a substitute instead? Examples: price, quality, and the cost to switch to something else. So if there are many types of products out there that others can use instead of yours because it’s cheaper or there’s more variety, it is important to consider what else is in the market.
- Rivalry amongst competitors: What is your competitive advantage compared to others? How many competitors do you have? Examples: product differentiation, diversity of competitors, industry growth, and more. It’s important to know how competitive your competitors are and why.
How to conduct market research?
Much of this information depends on the type of company you have, your target market, your product/service, and where you plan of selling your products/services.
- Utilize government resources: Many government websites and your local chamber of commerce are very helpful when it comes to learning about the industries in your area, the demographics, household incomes, and employment statistics. This will allow you to get an overall scope of the type of people who live in certain areas and the industries and businesses.
- Get to know organizations: There are many types of business organizations that get together and network. It is a good idea to learn about local organizations that are relative to your industry and to visit the networking events. This will allow you to meet competitors, suppliers, alternative industries, and even leads.
- Internet Search: This may sound obvious, but doing internet searches can bring up information you never thought you’d find. With so much business and the amount of people who spend their time on the internet, there is a lot of information to be found. The internet is a great place to search for competitors by location, their products/services, the industry, suppliers and their services, events, news information about the industry, and more. The internet is you friend when doing any type of research.
- Subscribe to industry magazines: If the industry is large enough, there are usually some type of media that is relative. This type of media is helpful to know who is successful, what the industry is doing and where its headed, and provide tips and tricks.
- Understand the global market: This might not be for every company since not all companies are global or international businesses. This would involve knowing the export laws with tariffs and taxes, distribution channels, trading issues between countries, business etiquette between countries, currency, and more! A good source to use is Country and Industry Market Reports.
If you are looking for a company to conduct the market research and analysis the current and future state of the market, please contact us today!