In their book, Start Your Own Business, the staff of Entrepreneur Media, Inc. guides you through the critical steps to starting a business, then supports you in surviving the first three years as a business owner. In this edited excerpt, the authors describe the importance of market research in order to obtain information on the three key areas you’ll need to investigate before launching your new business.
So you have a great idea for a product?something that?s bound to capture the hearts and minds (and wallets) of consumers everywhere. Or perhaps you’ve stumbled on a service that isn?t being offered by anyone else?one that’s desperately needed. This is your opportunity! Don?t hesitate … don?t look back … jump right into it and ?
Wait! Before you shift into high gear, you must determine whether there really is a market for your product or service. Not only that, you need to ascertain what, if any, fine-tuning is needed. Quite simply, you must conduct market research.
Many business owners neglect this crucial step in product development for the sole reason that they don?t want to hear any negative feedback. They’re convinced their product or service is perfect just the way it is, and they don?t want to risk tampering with it.
Other entrepreneurs bypass market research because they fear it will be too expensive. With all the other startup costs you?re facing, it?s not easy to justify spending money on research that will only prove what you knew all along: Your product is a winner.
Regardless of the reason, failing to do market research can amount to a death sentence for your product. ?A lot of companies skim over the important background information because they?re so interested in getting their product to market,? says Donna Barson, president and owner of Barson Marketing Inc., a marketing, advertising and public relations consulting firm. ?But the companies that do the best are the ones that do their homework.?
Consider market research an investment in your future. If you make the necessary adjustments to your product or service now, you?ll save money in the long run.
So what exactly is market research? Simply put, it?s a way of collecting information you can use to solve or avoid marketing problems. Good market research gives you the data you need to develop a marketing plan that really works for you. It enables you to identify the specific segments within a market that you want to target and to create an identity for your product or service that separates it from your competitors. Market research can also help you choose the best geographic location in which to launch your new business.
Before you start your market research, it?s a good idea to meet with a consultant, talk to a business or marketing professor at a local college or university, or contact your local SBA district office. These sources can offer guidance and help you with the first step in market research: deciding exactly what information you need to gather.
As a rule of thumb, market research should provide you with information about three critical areas:
1. Industry information.
In researching the industry, look for the latest trends. Compare the statistics and growth in the industry. What areas of the industry appear to be expanding, and what areas are declining? Is the industry catering to new types of customers? What technological developments are affecting the industry? How can you use them to your advantage? A thriving, stable industry is key; you don?t want to start a new business in a field that’s on the decline.
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