Understanding your market
When you want a competitive edge.
Understanding your market - both your customers and your competitors – is essential if you’re going to build a successful business. Finding out what your customers really want will help you improve your product and service to meet their needs. And by discovering how your competitors work, you can find ways to improve on their service to give your business an advantage.
Carrying out market research will:
- Give you the information you need to plan.
- Reduce the risk of making the wrong decision.
- Identify potential new openings.
- Help improve your marketing and selling points.
- Give you ideas for product development.
- Inform your business plan.
Whatever your business, you’ll need to know:
- Is there a demand for your product or service?
- What would people be willing to pay for it?
- Can you make it for them or provide it to them at that price?
You can carry out three levels of market research:
- Market awareness: This involves online research, reading newspapers and other publications, speaking to friends and colleagues, talking with your competitors' customers/clients, analysing your competitors’ business approach, analysing sales, and noting what’s happening in your business, e.g. the number of people entering your premises.*
- Ongoing research: This includes surveys, especially asking customers and prospects for their feedback on a regular basis.
- Formal research This research would be carefully planned and carried out, probably by a professional, to support a big, new investment. The researcher would have a clear brief, budget and timescale.
- Understanding your customers.
To know what customers want, it’s important to collect all the relevant information and insights you can. Carry out your research by telephone, email or face-to-face meetings. There are data protection laws regarding making unsolicited calls, so make sure you are not breaking them, visit The Information Commissioner’s Office www.ico.org.uk for more information.
- Understanding the market.
You need to understand how business is done in your industry, the ways products are sold and delivered, and what discounts and credit arrangements are offered by other suppliers.
- Understanding your competitors.
To learn as much as you can about your competitors:
- Study trade websites, newspapers and the business sections of local papers.
- Look at trade directories as soon as they’re published, and note any changes.
- Try out competitors services as a mystery shopper.
- Have a talk with your competitors' customers.*
- Chat with your competitors – although they’re your rivals, they’re also your industry colleagues.*
- Research your main competitors at www.companieshouse.gov.uk, and by looking at competitors’ websites, keeping up to date with press releases and searching online.
Carry out ongoing informal research as your business develops to keep your business fresh.
Talk with your customers and prospects – whoever in your business deals with customers should use every opportunity to gently ask them for feedback. Also talk with retailers and distributors. You should set up a system for recording and capturing feedback – this could help you improve your services. Even if your business grows rapidly, always deal with a few customers yourself to keep your eye on the ball.
Be on the look-out for problems
Watch for even the smallest signs of dissatisfaction – people will often stop buying/using your service rather than complain.
Try asking customers what their ideal would be, e.g. ‘If you could change one thing about our product/service, what would it be?’ Then work towards delivering it.
Benefit from complaints
Complaints should give you ways to improve your offer.
Ask your customers for their views occasionally by post or email. Keeping surveys short and anonymous and offering possible prizes can encourage people to take part.
Monitor sales records
Structure your accounts so that you can compare year on year, month on month. Look for seasonal trends, or a product in long-term decline, and try to evaluate the reasons for them.
Look at your data
Review what you’ve learned from your research at a fixed time each month. Discuss it with your key staff and see if you can draw conclusions and agree on what actions to take.
If you're writing a business plan or have an idea for a new product or service, consider doing some formal market research or employing a professional to carry it out for you.
The economy: Economic research can help you allow for a recession or boom in the future. Focus on trends that affect your industry.
The population: You may find statistics on the population, spending power and consumption patterns helpful in identifying which areas of your market to target.
Other research relating to your market: Find facts and figures particular to your market – temperature statistics if you sell air conditioning, or statistics on industrial production if you sell industrial machinery.