Successful businesses have extensive knowledge about their customers and their competitors. Getting accurate and specific information about your customers and competitors is a critical first step in market investigation and development of a marketing plan. Accurate market assessment and development of an effective plan is critical to the success of both new and existing businesses. The market impacts and directs all aspects of the company's activities and ultimately will lead to success or failure of the business. In developing a market plan, your primary functions are to understand the needs and desires of your customer, select or develop a product or service that will meet customer needs, develop promotional material that will make the customer aware, and ensure product or service delivery.
Knowledge of the customer enables you to determine the market size and what determines their buying decision. It provides information that will help you choose a location, determine the product or services to offer, establish pricing, and plan a selling strategy.
Key issues to consider are:
An important aspect of market analysis is to ensure that the product or service meets the market (customer) needs. Product or service focus must be the customer.
Issues to address are:
Are there competitors that exist now and what new competitors are likely to enter the market? How will your product or service compare and what is the probable reaction of your competitors once you enter the market?
Issues to consider are:
Accurate identification and analysis of the target market enables you to develop an effective overall marketing strategy. The information will assist in determining business size (output requirements), distribution channels, pricing, promotion strategy, and other marketing decisions.
Target market issues include:
There may be many options for moving your product to the customer such as direct retail, wholesale, consignment, broker etc. The method of distribution has important implications affecting your pricing structure, advertising message, cash flow, etc. You will want to choose the distribution method best suited for your product and where you want to be positioned in the marketplace.
Key issues are:
The goal is to maximize profits while remaining competitive in the marketplace. Pricing can be based on either the cost price or market price (What will the market pay?). Regardless of the pricing method used, it is critical to know all of your costs involved in the delivery of your product or service to avoid possible under pricing and operating losses. If the market will not support a price level sufficient to cover cost, you will have to investigate whether costs can be lowered or alternatively, it may be necessary to abandon your plans to proceed.
Issues to consider are:
Promotion of your product or service and development of a promotion strategy is part of the market analysis. It is important to analyze what are the best methods of making your customers aware and what message will motivate them to buy. From the promotion strategy, the advertising budget and overall sales plan are then developed.
Items to consider are:
Note: While customer service, in-store display and merchandising are not part of the market analysis; they are an important part of the business image and promotion package. Ongoing attention should be given to these areas to assure maximum promotional benefit is achieved and so that the desired image is portrayed.
Primary data is the information you will obtain through your own efforts or by hiring someone, and can include observation, surveying, and experimentation.
Secondary data consists of information which has been gathered by someone else and is relevant to the venture you want to establish. Examples of sources and types include:
When researching your business idea, it is important to do as thorough a search for information as possible. It is also recommended to do as much of it as you can on your own. This will help you to know the market for your idea better, and can help to keep the costs down at the start. Once this initial research has been completed, you may then feel the need to contract professional services to collect additional information for you, or to verify the information you have collected so far. The information you have gathered yourself can form an important base of information from which a consultant can work. It will allow you to identify more specifically what you want him/her to do for you, particularly when there will be costs associated with his/her services.
Source: U.S Small Business Administration
Prepared by: Saskatchewan Regional Economic and Co-operative Development