Acquiring an Edge in Your Industry
Market research can help you identify potential customers, while competitive analysis can help you distinguish your business. Employing both can lead to a competitive advantage.
Use Market Research to Reach Your Customers
Market research integrates consumer behavior and economic patterns to validate and enhance your business concept.
Understanding your customer base is critical from the outset. Market research can help minimize risk even in the initial stages of your business venture.
Collect demographic data to better comprehend the prospects and challenges of attracting customers, such as population data concerning age, wealth, family, interests, or anything pertinent to your business.
Then, answer the following questions to gain insight into your market.
- Demand: Is there a desire for your product or service?
- Market size: How many people would be interested in your offering?
- Economic indicators: What is the income level and employment rate?
- Location: Where do your customers reside, and how far can your business reach?
- Market saturation: How many comparable options are already available to consumers?
- Pricing: How much are prospective customers willing to pay for these alternatives?
You’ll also want to stay current with small business trends, as it’s critical to understand the specific market share that will affect your profitability.
You can conduct market research from existing sources or perform it yourself by directly contacting consumers.
Existing sources can save you time and energy, but the data on your audience may not be as detailed as you require. Use them to answer general and quantifiable questions, such as industry trends, demographics, and household income. Search online or begin with our list of marketing research resources.
Consulting with customers directly can provide you with a more in-depth understanding of your target audience. However, direct inquiries can be time-consuming and costly. Use them to answer specific questions about your business or clients, such as feedback on your logo, suggestions for enhancing the shopping experience, and where consumers might go instead of your business.
Here are some direct research methods you can employ:
- Focus groups
- In-depth interviews
To determine which methods are appropriate for your business, the Small Business Administration (SBA) provides consulting services through its network of partner resources.
Gain a Competitive Edge through Analysis
By analyzing your competition, you can learn from their successes and failures, and create a competitive advantage that generates sustainable profits.
Identify your competitors based on product or service line and market sector. Then, evaluate the following factors to understand the competitive landscape:
- Market share.
- Strengths and weaknesses.
- Opportunities for your business to enter the market.
- How important your target market is to your competitors.
- Potential obstacles that may arise when entering the market.
- Indirect or secondary competitors that may impact your success.
Note that multiple industries may compete to serve your target market. Therefore, it’s essential to differentiate your competitive analysis by sector or branch of industry. Porter’s Five Forces analysis is one useful method to achieve this. Important industry factors to consider include the level of competition, the threat of new entrants, and the effect of customers and suppliers on price.
Free Business Data and Trends
Numerous trustworthy sources offer free customer and market information to aid small business owners in their market research and competitive analysis.
Consider the following federal business statistics in your analysis: