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10 Step Venture eMentoring Program™


Session 3: Market Research & Analysis

There must be a market for your goods or services, or you cannot have a business.

A systematic process of market analysis and research will help you to determine whether there is a market opportunity. Identifying who will buy what you are offering, why they will buy, when they will buy, and how much they are willing to pay are just some of the critical issues touched on in this critical step.

This is another step where going to the trouble to gather data and being very honest with yourself is critical to your future success. The good news is that you do not have to be a trained statistician to analyze your market place, nor does the analysis have to be costly. The rest of the good news is that there are numerous resources where you can find the data and that will help you to understand what the data tells you about your market.

In this session, you will now determine whether there is in fact a potential market for your business idea. The first section is an article about why market research is so important along with some ideas about how to get started. The worksheet that follows will help you organize your ideas, and show some questions that need to be answered. There are numerous sources of market data - these are shown, along with links to resources in your local area, all to help you answer this critical question:

Is there a market for my business idea?

Why Market Research & Analysis?

The market research or study is one of the most critical parts of the whole planning process. It establishes the base for the feasibility analysis and sales forecasting. A market study identifies target customers, the size of the potential demand and the competition, and includes a comparison of the company's products or services with those of the competition. Market research and analysis often seems to be the most difficult of the planning activities, yet that doesn't have to be so. There is a great deal of market information available, even for highly innovative new ideas. Taking the time to find this data and understand it is an essential part of your planning process.

Market research starts with target marketing. Very simply, target marketing means identifying the "target" of your sales and business activities. The clearer you can be, the more accurate your analysis can be. Potential customers can be defined by geographic location, socio-economic or ethnic factors, occupation, age, sex, or any of a thousand other factors. Whatever they are, make sure you identify them. There are some key questions you must answer before you get started. Use the Market Profile Worksheet to define your target market.

You can obtain information about the size of your market from your chamber of commerce, local planning commission, trade publications, marketing consultants, other businesspersons, schools and colleges. The local chamber of commerce and planning commission are great places to start, not only because they have excellent data readily available, but also because there is usually someone there who will help you find and understand the information you need. The planning commission will have trend analyses and often even have traffic counts for various areas to help in location assessment. The marketing department at your local college or university is another great source of help. It may be possible to work with a professor to develop a market research project that students will perform for you as a part of their class work - an excellent, no-cost resource.

Other excellent sources of information are the Federal Census and state department of labor. The Federal Census data is broken down by many different consumer and business characteristics - even down to neighborhood areas. Find and review the census tracts that are relevant for your market area. Another valuable resource is Economic & Labor Market Information (ELMI) reports available from your state Department of Labor. This information provides both profiles of labor market characteristics, showing earning levels for different employment categories, the size of these categories in your area, and a forecast of how these categories are expected to grow or change over the next ten years. The ELMI system also contains community profiles that show differences between community areas.

There are many other excellent resources, especially on the web. The danger though with web-based research is that the sheer quantity a web search can return can be overwhelming, and it is often difficult to know its validity. One of the very best places to use is the local library - and the help of the librarian

Just because Market Research sounds complex doesn't mean that you shouldn't do it - Actually, you MUST do it as the success of the venture depends on making sure that there will be enough customers for your business to succeed

Sources of Market Data

The following sources will help you identify and find data you need to help you evaluate the market opportunity for your own business idea:

Census Data

A useful source for demographic data is the US Census Bureau. Here you will discover detailed data on population demographics as well as business statistics including how many, types, and locations.
Link: Search nationally for data at http://quickfacts.census.gov/qfd/index.html

Competitive Research Data

One of the best ways to find industry data on size, trends, and competition, is through the annual and quarterly filings required by the US Securities Exchange of all publicly traded companies. This information, known as 10k or 10q, is detailed and voluminous. Read what you want, but be aware that the SEC requires these firms to be as truthful as possible.
Link: SEC Filings and Forms (EDGAR) at http://www.sec.gov/edgar.shtml
Link: Search by specific company at http://www.freeedgar.com/Search/BeginSearch.asp

Business Credit Information

To obtain credit information on just about any company anywhere, use the Dun and Bradstreet credit reports and search database. There is a charge for certain data. Link: D & B Information Request Form at http://www.dnb.com/us/

BUZGate.org

The Knowledge Institute's Business Utility Zone Gateway is a small business resource community listing thousands of free and low cost public programs available to help small businesses to get started and grow.

Market Data may be found under the following listings:

  • Business Marketing
  • Business References
  • Business Research
  • Business Statistics

To access this information, go to this link: www.BUZGate.org, then click on your state, then click on Free Help. Select the categories you want to explore.

  1. Market Profile Worksheet
  2. Advertising & Marketing Strategy
  3. Summary


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