Conducting Start-Up Market Research

You guys are becoming more and more like Business men and women every day! You guys could well and truly be on the way to starting up your own businesses!!! Except we need to spend a little time now thinking about our product and the information we need to know before we invest too heavily in our venture. 

What is our market?
What are our target audience?
Do they even like our product?

Don't panic little ones... we shall conduct some Market Research...

Market research is the gathering and analysis of data that is relevant to your target market. The data should be on your customers and competitors.

So what information do we want to find out from our market research?

• The size of the market - is it a mass market or have we found our niche?
• Key market trends - are we entering a growing market? How quickly is the market growing?
• What the customer really wants - you might think your product is genius... others... may not!!!
• How much are customers willing and prepared to pay

(I'm not even jealous of this woman!!!)

Why would businesses bother to use market research?? 

• Research can allow us to identify market opportunities. Maybe we missed a gap within the market - now is our chance to get first "dibs"!
• We can look at ensuring our product truly meets the needs of our customers. If suggestions have come out from our research we can put these into action ready to officially sell our product on the street.
• Finally, we can assess the effectiveness of our marketing. Which stream is bringing in more consumers? Those that generate sales will be reinvested in compared to those that aren't.

Now be very careful when it comes to your essays! Consider the TYPE of business - how the market research change to suit the specific business? A hairdresser would be very different to a pizza franchise.

TYPES OF MARKET RESEARCH

So there are two types of research that we can collect:

The data that we collect can either be:

• Qualitative: providing us with opinions and "soft" data
• Quantitative: numerical and "hard" data

We need to have a good mixture of both Qualitative and Quantitative data in order to make informed decisions.

SAMPLING

Sampling is a subgroup of the target population - the people selected for a sample should be representative of the entire target market.

There are three sampling methods you need to worry about:

• RANDOM: this is a small group of people that are representative of the entire target market. Every member of the target market have an equal chance of being selected.

• QUOTA: this is a small group of people that are representative of the entire target market. The proportions of the target market are reflected in the sample e.g. is the market is 60% male and 40% female then the sample should reflect this.

• STRATIFIED: this is a small group of people that are representative of the entire target market. The sample are chosen based on a specific characteristic e.g. black women aged 35 - 55.

What factors will determine the choice of sampling method, I hear you scream?

• the nature of the product
• the risk involved
• you knowledge of the target market
• the extent to which the target market has clearly differentiated groups of buyers
• the time available
• your budget

Business Plans

Business plans - what are they and do we need 'em??

A business plan is a document that sets out exactly how an entrepreneur proposes to start a new business venture.

The plan allows us to:

• set clearly defined objectives
• identify steps we have to take to start trading...

Example time...

http://www.buzzfeed.com/mariasherm/music-festival-hacks-that-will-make-your-experience-way-more#yvopde

When it comes to the joys of you attending festivals, you want to make sure you are fully prepared otherwise you end up like this crazy bunch who didn't even bring a coat!!! 

Without creating a list of the necessities - we wouldn't know where to begin. By clearly identifying what actions need to be undertaken, we relieve some of the stress.

• The plan also helps give our business direction. We can very easily get caught up in the excitement of our new business, but sometimes we need to remind ourselves of our final aim.
• And of course, our plans should support us when trying to raise finance.

Several people are going to be interested in your business plan. The main ones are your banks and potential investors. Our suppliers however may also want to know more about our business to see if they support your idea and want to be involved. The plan may also help you gain trade credit (take the products today but pay later).

Ultimately - YOU should be regularly looking at your plan. You need to know where you're going and how you are getting there.

Benefits of a business plan

• Encourages a logical and detailed breakdown of the business
• Forces an entrepreneur to stop and think
• May identify a weakness or gap in the entrepreneur’s knowledge
• Helps secure funding
• Provides a framework
• Progress can be reviewed against plans

Limitations of a business plan

• Can be difficult to make accurate forecasts
• Difficult to turn paper plans into reality
• Opportunity cost of time spent planning - causes a delay to trading
• Can cost money if help is needed
• Can restrict creativity

Sources of information

As a new start-up, we may be a little unsure of certain areas of our business plan, but where on earth can we go for help? Below is just a few suggestions as to where we can gather the necessary info...

• Small business advisor
• Bank managers / Accountants
• Government agencies
• Library (they have books and stuff here!!!!)
• Internet
• Other businesses