When you’re setting up a business, researching your potential market is essential. Although it is time-consuming to acquire, a thorough and reasoned knowledge of the market is invaluable to the future of your business.
So what do you need to consider?
It is likely you have an instinctive idea of who your customers should be. For example, if you manufacture a new kind of perfumed shower gel for men, you know that you need to appeal to retailers that stock shower gel and also to men that purchase perfumed shower gel.
If you do not have a clear market for your product or service, your research will have to be more broad-ranging to find one.
Be warned, a potential business without a defined customer base is a failure waiting to happen.
Once you have identified your target market you need to drill down to try and identify the 'typical customer'.
If you will be selling to individuals you need to know their gender, age, marital status, occupation, income and lifestyle.
If you are selling to businesses, you need to know their size, industry type, product-buying patterns and service requirements.
You also need to know what characteristics are common to all your customers who make or influence the buying decision.
You don’t just need to know what is required for your product or service to operate, you need to understand your audience so you don’t plan to make, or buy, too little or too much. For example, a printing firm should understand if its customer base will want a thousand postcards or a million brochures.
Is there a particular time when there is a demand for your product or service? For example, customers of a toy manufacturer will buy more towards the end of the year so they are stocked for Christmas.
Will your customer base want to see the product in a showroom, on the internet or both? Do you need to deliver a sales pitch in person?
If you want to be part of a successful supply chain or attract passing trade, you also need to consider the location of your premises in terms of access or cost.
Every start-up has to know why customers will buy from it rather than the competition. This is your ‘unique selling point’ or USP. You need to research that your USP is actually accurate by checking out your competition.
You have to understand the needs of your customers and the position of the market you are going into. For example, if you want to manufacture office furniture you need to know how often your target customers will want to renovate their offices and how regularly they will replace customers.
You also need to know about the health of the sector you are getting into. If the economy is shrinking, it may soon be the case your customers have no need or ability to buy from you.
In summary, market research is time-consuming, but remember the old adage 'fail to prepare, prepare to fail' - and do your homework before starting your business.
Find out more
Boost Business Lancashire offers a dedicated support programme for start-ups and business under three years old. To apply for a place on the programme, complete our online form or call 0800 488 0057.
Author
Rona McFall, Enterprise and Employment Manager, Regenerate Pennine Lancashire.
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