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Definining Your Market

Janet Feirin
Arán Foods Inc.

These days, Janet's business is well established, and she's still conducting market research. "I listen to the news and the latest health issue is trans-fat free food," she says. "You want to gear your business to what your customers need."

Janet Feirin was a young mother of three children. She had a gluten sensitivity and nowhere to buy wheat-free products. So she perfected a range of specialty recipes and launched her business.

"I started selling spelt bread every Saturday at the East Vancouver Farmers' Market and within two or three weeks, I was selling out," she said. "I thought: Okay – this is my test market. If I can sell here, there's a customer base. And if there's a customer base, it might make sense to open a storefront."

Janet started a business plan. But in 1998, there wasn't a lot of information about either specialty breads or gluten-sensitive customers.

"My first problem was how to do market research on something that doesn't exist yet. One way I showed a growth in the industry was by looking back in the Yellow Pages. In 1995, there wasn't even a listing for organic products. In 1997, there were four places. And in 1998, there were 11 places. That's how I showed growth."

Janet built a website so people looking for wheat-free bread could find her. She also sent brochures to naturopaths, dieticians and nutritionists. "I made sure that the medical professionals who were diagnosing people with food intolerances had information about my products."

"There used to be only two places in Vancouver where you could buy organic food. Now you can buy it at Safeway. "That didn't just happen ... over the years, people have actually been purchasing organics, and putting their money where their mouths are.

Every business decision you make, from the design, production and pricing of your product or service, to the location of the store or office, to the way you choose to advertise will be determined by two questions: who are your customers and what do they want? The more you know about who your customers are, the more successful your business will be. Market research is all about getting to know your service or product, potential customers, the competition and your business environment. You can do your own research, or you can hire a market research firm.

Primary research is gathered through formal or informal surveys. It helps determine how potential customers feel about the products or services you plan to offer, what they like or dislike about them, how much they'd pay, or if they'd drive across town to make the purchase.

Secondary research includes existing statistics about your industry and customers (like geographic location, population), gathered from sources such as Statistics Canada, BC Stats, Small Business BC, libraries, government and economic development agencies, local Community Futures offices, Chambers of Commerce, universities and publications. Getting information can sometimes be challenging if you're researching new industries, or doing business in rural areas.

Your market research will answer key questions such as:

Who is your target market? How many potential customers do you have and what are their habits? Are they male or female? What are their ages, races, income and education levels? Where do they live? What do they have in common? Explore every avenue for potential customers.

In "The 80% Minority," Joanne Yaccato notes that 80 percent of all consumer decisions are made or strongly influenced by women. Knowing this may affect how you package, distribute and support your product or service.

What is their purchasing power? Buying habits? How much disposable income do your customers have? How much do they spend on products or services similar to yours? Do they value cost savings or time savings? Is convenience a decision point for them?

What's the psychological makeup of your customers? What values and qualities do they hold near and dear? Are they swayed by low prices or high ethical standards? Are they impulse buyers or not? Will word of mouth and reputation influence them?

Who is your competition? What are your competitors' marketing advantages? Disadvantages? Are there any niches you can fill? What can you do for your customers that your competition isn't already doing?

What environmental factors are you dealing with? Are there any big-picture social or economic issues that could affect your business? For example, is the local economy growing or stagnating? Will you suffer if the Canadian dollar drops or rises? Is your target market a certain age? What happens when they outgrow your product?

The information you collect will reveal trends, opportunities and vulnerabilities. You may need to modify the design of your product or service, adjust your price, widen your territory or carry a broader range of products. Or you may find that your inspiration was bang-on.

Resources

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