Research is the Foundation, Opportunity is the Result

All business plan strategies must be based on facts, not conjecture, opinions, fantasies or unrealistic assumptions. Only detailed, current and accurate data, which is gathered through comprehensive research, can provide the foundation on which to develop comprehensive business plans that lead to success. Market research and its’ analyses assist in convincing the viability of a product or service in the marketplace. Market research is the systematic gathering and analyzing of data and information as it relates to how a particular product or service would be positioned within a market and the convincing message given to the targeted customer.  Both quantitative and qualitative reviews regarding customers, trends, competitors, and economic conditions are gathered and analyzed. Comprehensive market research requires referencing numerous information sources because no single market source contains all the required information. Information and data needs to be compiled and then analyzed and formatted to best reflect the specific needs and goals of a business plan. A strong business plan requires the substantiation with fact-based market research and analyses to explain.

  • Industry Profile—Where is the industry headed based on trends, new product and service entries, etc. Trends in technology, regulations, cultural, demographics and psychographics are important facts for market positioning. Knowing the key industry players and total revenue in the industry generated are both necessary in understanding the size of the industry.
  • Market size, share and characteristics—Market size reflects the magnitude of a potential market generally measured in terms of the number of customers, companies, products or services, production units or revenue.  Market share is the percentage of a market that a specific company owns compared to the competitors.  Measured market share generally includes data such as profits, sales volume, or percent of a target audience that purchases its products.  In addition to market size and share, market research also analyzes barriers to entry, such as government regulations or high monetary costs. Another important consideration is whether the industry is shared amongst many companies or just consolidated between a few.
  • Competitors—Must understand the major players in the industry together with their reason for success. Knowing the services and products in addition to the competitors’ marketing efforts and market share assists in determining how to differentiate a product or service within the marketplace.
  • Suppliers and Supply Chain—Identify the sources companies in this industry depend upon to produce products and services. Are there risks involved in these dependences?
  • Buyers and Customers—The target market for a product or service must be identified. Demographic, geographic, sociographic and psychographic data are required in order to best determine what message is needed to sell a product or service. In addition, this information assists in determining the media vehicles used to deliver the message. Examine primary and secondary markets and in some cases tertiary markets are valuable.
  • Substitutes and Alternatives—Understanding the industry and market also requires the knowledge of alternative products and services a customer could choose providing the same outcome. This does not always mean another similar product. For example, when and why would a customer use a paper clip instead of staple? Would a prospective client choose stainless steel or aluminum and why?
  • Barriers to Entry—Any entry into a market is going to produce barriers. Examples include the need for large capital investment or the permitting process is too difficult. These barriers must be reviewed in order to better understand the business environment this new product or service is entering.
  • Industry Ratios—Financial and performance ratios provide the quantitative foundation in which a business can compare itself to the industry in total.  For example, some industries may tolerate high levels of debt while others typically have low operating margins.