The 30 Day MBA (23 page)

You will need to research in particular:

• Your customers: Who will buy your goods and services? What particular customer needs will your business meet? How many of them are there?
  
• Your competitors: Which established companies are already meeting the needs of your potential customers? What are their strengths and weaknesses?
  
• Your product or service: How should it be tailored to meet customer needs?
  
• What price should you charge to be perceived as giving value for money?
  
• What promotional material is needed to reach customers; which newspapers, journals do they read?
  
• Whether or not your operational base is satisfactorily located to reach your customers most easily, at minimum cost.
  

Seven steps to successful market research

Researching the market need not be a complex process, nor need it be very expensive. The amount of effort and expenditure needs to be related in some way to the costs and risks associated with the proposition. The market research needs to be conducted systematically following these seven stages:

1. Formulate the problem: Before embarking on your market research you should first set clear and precise objectives, rather than just setting out to find interesting general information about the market.
   

       So, for example, if you are planning on selling to young fashion-conscious women, among others, your research objective could be: to find out how many women aged 18 to 28, with an income of over £35,000 ($54,800/€39,700) a year, live or work within your catchment area. That would give you some idea whether the market could support a venture such as this.
   

2. Determine the information needs: Knowing the size of the market, in the example given above, may require several different pieces of information. For example, you would need to know the size of the resident population, which might be fairly easy to find out, but you might also want to know something about people who come into the catchment area to work or stay on holiday or for any other major purpose. There might, for example, be a hospital, library, railway station or school nearby that also pulled potential customers to that particular area.
   
3. Where can you get the information? This will involve either desk research in libraries or on the internet, or field research, which you can do yourself or get help in doing. Some of the most important of these areas are covered later in this chapter.
   

       Field research, that is, getting out and asking questions yourself, is the most fruitful way of gathering original information that can provide competitive advantage.
   

4. Decide the budget: Market research will not be free even if you do it yourself. At the very least there will be your time. There may well be the cost of journals, phone calls, letters and field visits to plan for. At the top of the scale could be the costs of employing a professional market research firm.
   

       Starting at this end of the scale, a business-to-business survey comprising 200 interviews with executives responsible for office equipment purchasing decisions cost one company £12,000 ($18,800/€13,500). Twenty in-depth interviews with consumers who are regular users of certain banking services cost £8,000 ($12,500/€9,000). Using the internet for web surveys is another possibility, but that can impose too much of your agenda onto the recipients and turn them away from you.
   

       Check out companies such as Free Online Surveys (
   http://free-online-surveys.co.uk
   ) and Zoomerang (
   www.zoomerang.com/web/signup/Basic.aspx
   ) which provide software that lets you carry out online surveys and analyse the data quickly. Most of these organizations offer free trials.
   

       Doing the research yourself may save costs but may limit the objectivity of the research. If time is your scarcest commodity, it may make more sense to get an outside agency to do the work. Using a reference librarian or university student to do some of the spadework need not be prohibitively expensive. Another argument for getting professional research is that it may carry more clout with investors.
   

       Whatever the cost of research, you need to assess its value to you when you are setting your budget. If getting it wrong would cost £100,000, then £5,000 spent on market research might be a good investment.
   

5. Select the research technique: If you cannot find the data you require from desk research, you will need to go out and find the data yourself. The options for such research are described later in this section, under ‘Field research'.
   
6. Construct the research sample population: It is rarely possible or even desirable to include every possible customer or competitor in your research. So, you have to decide how big a sample you need to give you a reliable indication of how the whole population will behave.
   
7. Process and analyse the data: The raw market research data needs to be analysed and turned into information to guide your decisions on price, promotion and location, and the shape, design and scope of the product or service itself.
   

Desk research

There is increasingly a great deal of secondary data available in published form and accessible either online or via business sections of public libraries throughout the UK to enable new home business starters both to quantify the size of market sectors they are entering and to determine trends in those markets. In addition to populations of cities and towns (helping to start quantification of markets), libraries frequently purchase Mintel reports, involving studies of growth in different business sectors. Government statistics,
showing trends in the economy, are also held (Annual Abstracts for the economy as a whole, Business Monitor for individual sectors).

If you plan to sell to companies or shops, Kompass and Kelly's directories list all company names and addresses (including buyers' telephone numbers). Many industrial sectors are represented by trade associations, which can provide information (see Directory of British Associations, CBD Research), while Chambers of Commerce are good sources of reference for import/export markets.

These are some readily available sources of desk research data that an MBA can use without tapping deeply into the corporate budget:

• Applegate (
  www.applegate.co.uk
  ) has information on 237,165 companies cross-referenced to 57,089 products in the UK and Ireland. It has a neat facility that allows you to search out the top businesses and people in any industry.
  
• Business.com (
  www.business.com
  ): Contains some 400,000 listings in 25,000 industry, product and service sub-categories. Useful for general industry background or details about a particular product line.
  
• Chambers of Commerce (
  www.britishchambers.org.uk/business/
  > International Trade) run import/export clubs, international trade contacts and provide market research and online intelligence through a 150-country local network of chambers.
  
• Companies House (
  www.companieshouse.gov.uk
  ) is the official repository of all company information in the UK. Their WebCHeck service offers a free-of-charge searchable Company Names and Address Index which covers 2 million companies either by name or by their unique company registration number. You can use WebCHeck to purchase a company's latest accounts giving details of sales, profits, margins, directors, shareholders and bank borrowings at a cost of £1 ($1.57/€1.12) per company.
  
• Corporate Information (
  www.corporateinformation.com
  > TOOLS > Research Links) is a business information site covering the main world economies, offering plenty of free information. This link takes you to sources of business information in over 100 countries.
  
• Easy Searcher 2 (
  www.easysearcher.com
  ) is a collection of 400 search engines, both general and specialist, available on drop-down menus, listed by category.
  
• Kelly's (
  www.kellysearch.co.uk
  ) lists information on 200,000 product and service categories across 200 countries. Business contact details, basic product and service details and online catalogues are provided.
  
• Key Note Ltd (
  www.keynote.co.uk
  ) has built a reputation as an expert provider of market information, producing highly respected off-the-shelf publications that cover a comprehensive range of market sectors, from commercial and industrial to service and consumer titles. Its report gallery has a listing of literally hundreds of reports covering everything from Activity Holidays to Women's Magazines. The executive summary, a generous 1,000 words plus a full index, is available free on every report, which should make it clear if the report is worth buying, or worth a trip to a major reference library that may well have a copy to view. Reports are priced from around £300 ($470/€340) upwards, with most in the £500 to £700 range.
  
• Kompass (
  www.kompass.com
  ) claims to have details of 1.6 million UK companies, 23 million key product and service references, 3.2 million executive names, 744,000 trade and brand names and 50,000 Kompass classification codes in its UK directory. It also creates directory information in over 70 countries. Its website has a free access area that users may access without registration.
  
• LexisNexis (
  www.lexisnexis.com
  ) has literally dozens of databases covering every sector you can think of, but most useful for researching competitors is Company Analyser, which creates comprehensive company reports drawn from 36 separate sources, with up to 250 documents per source providing access to accurate information about a company.
  
• Mintel (
  www.mintel.com
  ) publishes over 400 reports every year examining every conceivable consumer market. Reports cost several hundred pounds, but you can view the introduction and main headings. Most are available free in business libraries. Mintel also offers a number of reports on the US and European markets.
  
• National Statistics (
  www.statistics.gov.uk
  ) contains a vast range of official UK statistics and information about statistics, which can be accessed and downloaded free. There are 13 separate themes. Each one deals with a distinct and easily recognizable area of national life. So, whether you are looking to access the very latest statistics on the UK's economy, or research and survey information released by the government, or want to study popular trends and facts, click on one of these themes and explore!
  
• Online Newspapers (
  www.onlinenewspapers.com
  ). Newspapers and magazines are a source of considerable information on companies, markets and products in that sphere of interest. Virtually every online newspaper in the world is listed here. You can search straight from the homepage, either by continent or country. You can also find the 50 most popular online newspapers from a link in the top centre of the homepage. There is also a separate site for online magazines (
  www.onlinenewspapers.com/SiteMap/magazines-sitemap.htm
  ).
  
• Research and Markets (
  www.researchandmarkets.com
  ) is a one-stop shop that holds nearly 400,000 market research reports listed in a hundred or so categories and across over 70 countries. Reports are priced from £20 ($31.50/€22.50) upwards.
  
• The Wholesaler UK (
  www.thewholesaler.co.uk
  ) is a directory for a wide range of products. It is intended for businesses looking for additional suppliers but as such provides a valuable first sift to see who is the market.
  
• Thomas Global Register (
  www.thomasglobal.com
  ) is an online directory in 11 languages with details of over 700,000 suppliers in 28 countries. It can be searched by industry sub-sector or name either for the world or by country.
  
• World Market Research Associations (
  www.mrweb.com
  ), while not quite the world, does have web addresses for over 65 national market research associations and a hundred or so other bodies such as the Mystery Shopping Providers Association, which in turn has over 150 members, companies worldwide.
  

Using the internet

The internet is a rich source of market data, much of it free and immediately available. But you can't always be certain that the information is reliable or free of bias, as it can be difficult if not impossible to always work out who exactly is providing it. That being said, you can get some valuable pointers as to whether or not what you plan to sell has a market, how big that market is and who else trades in that space. The following sources should be your starting point:

• Google Trends (
  www.google.co.uk/Trends
  ) provides a snapshot on what the world is most interested in at any one moment. For example, if you are thinking of starting a bookkeeping service, entering that into the search pane produces a snazzy graph showing how interest measured by the number of searches is growing (or contracting) since January 2004 when they started collecting the data. You can also see that South Africa has the greatest interest and the Netherlands the lowest. You can tweak the graph to show seasonality, thus showing that Croydon registers the greatest interest in the UK overall and ‘demand' peaks in September and bottoms out in November.
  
• Google News (
  www.google.com
  ), which you can tap into by selecting ‘News' on the horizontal menu at the top of the page under the Google banner. Here you will find links to any newspaper article anywhere in the world covering a particular topic over the past decade or so listed by year. Asking for information on baby
  clothes will reveal recent articles on how much the average family spends on baby clothes, the launch of a thrift store specializing in second-hand baby clothes and the launch of an Organic baby clothes catalogue.
  
• Bing Ads Intelligence is a keyword research tool that allows you to easily gauge the performance of relevant keywords and use these insights to improve your keyword selection and campaign performance (
  http://advertise.bingads.microsoft.com/en-us/bing-ads-intelligence
  ).
  
• Blogs are sites where people, informed and ignorant, converse about a particular topic. The information on blogs is more straw in the wind than fact. Globe of Blogs (
  www.globeofblogs.com
  ), launched in 2002, claims to be the first comprehensive world weblog directory, which links up to over 58,100 blogs, searchable by country, topic and just about any other criteria you care to name. Google (
  http://blogsearch.google.com
  ) is also a search engine to the world's blogs.
  
• Trade Association Forum (
  www.taforum.org
  > Directories > Association Directory) is the directory of Trade Associations on whose websites are links to industry-relevant online research sources. For example, you will find The Baby Products Association listed, at whose website you can find details of the 238 companies operating in the sector, including their contact details.
  
• The Internet Public Library (
  www.ipl.org
  ) is run by a consortium of US universities whose aim is to provide internet users help with finding information online. There are extensive sections on business, computers, education, leisure and health.