Carrying out market research is vital for any Social Enterprise. Through Market Research organisations can find out who their potential customers are, what they want and how much they are prepared to pay. Market research is also the key to understanding competitors' strengths and weaknesses, and identifying the opportunities presented by the business environment in which the Social Enterprise plans to operate.
Understanding and acting upon information that Market Research generates can help to ensure the future success of a Social Enterprise. Besides being a crucial startup tool, Market Research should be used continually once your business is established. It will help the organisation keep up with the latest consumer trends and avoid being overtaken by competitors.
There are two types of Market Research:
- primary research - information that you collect from people yourself and then analyse. This can be done either by the organisation itself or by commissioning an organisation
- secondary research - information already gathered by someone else and published as a report or an article
The research will be:
- quantitative - multiple choice or Yes/No questions like 'Do you own a car?', providing facts and figures about marketplace trends
- Qualitative - open-ended questions encouraging in-depth discussions and opinions
Here are four possible steps for carrying out market research:-
Step 1: Customers
First, define your typical customers in as much detail as possible. Consider things like:
- Are they individual members of the public, or businesses? What size of business?
- Where are they based? Do they need to visit you to view products or discuss requirements before purchasing, or are website/brochure illustrations enough?
- What do they do? Who are their customers?
- What is their turnover? How much do they usually spend on services like yours each year?
Step 2: Competitors
Identify your competitors and assess their strengths and weaknesses, both in products and services, and operation of their business. Consider who else your typical customer might buy from and why. It pays to keep a broad mind when identifying competition. For example, if you design corporate websites, competitors could include advertising and PR companies as well as web design businesses.
Collecting competitive intelligence
- Call competitors for information and prices. Visit their website, request brochures or other publicity and read it carefully. What kinds of customers do they get and what are they most interested in? How do they attract these customers? What kinds of sales are they making regularly? What special promotions or discounts do they offer? What promises do they make to customers?
- If they offer newsletters, get on their mailing list. You'll receive free information about new services, trends, improvements to their business/service, and even customer feedback. Learn from the experience, as a prospective customer would, the ways in which you can improve your own customers' experiences
- Keep up with current business and consumer publications such as magazines, newspapers and trade press. Look for any information about competitor activities, specialties or shortcomings; and potential market opportunities that you could benefit from. Don't forget to include the Internet, as there may be reviews and opinions of competitors online as well as general market information
Step 3: Industry Environment
Besides customers and competition, you must also know about the industry environment you're trading in to maximize your revenue. There are many publicly available resources (free or for a minimal charge). It's just a matter of knowing where to look. Start by putting words such as names of competitors or products into a search engine.
Your local library (as well as any College/University business library) will have information about spending patterns, consumer demographics and industry trends. Libraries also have copies of old telephone directories that will tell you about local design business addresses. You can see whether businesses have moved to new areas or expanded. You can find details of relevant trade and business associations and their publications, as well as Government publications from the Department of Trade and Industry, the Department of Culture, Media and Sport, local Chambers of Commerce and Business Link.
Turning a good idea into a great business isn't just about what you know, but who you know. Are there any local business associations or collaborations that you can get involved in? Is there any way you can co-operate with other small businesses to your mutual advantage?
Networking through friends and business associates helps strengthen your understanding of your industry.
- Look out for trade or industry events like fairs, exhibitions, showcases, business breakfasts or other networking events and attend whenever you can
- Read trade publications so you can hold your own in conversation
- Give out business cards. Collect them too - you never know who you might need to call on
When calling a contact for advice, make sure you are clear about what you want to know before you contact them. Introduce yourself clearly when your call is answered. Always be polite and courteous, even if they are unable or unwilling to help you at that time
Step 4: Testing the Market
If you launch a new product or service without testing the market first, it is unlikely to sell well. Part of the development process for something new should include market testing to establish whether it meets customers' needs. Show people your work or tell them about your services. Listen to their responses. Ask them what they'd be prepared to pay for your new items, or whether they think your fee is justifiable.
- Display prototypes/samples/information on new services to existing or potential customers, and collect feedback from them to ensure your new product satisfies consumer needs
- Look out for fairs, shows, exhibitions or other events with an appropriate audience for your business. Ask the organisers if you can participate, advertise/leaflet/flyer there, or conduct interviews (as appropriate)