Launching

Market Research

No matter how good your product and your service, the venture cannot succeed without effective marketing. And this begins with careful, systematic research. It is very dangerous to assume that you already know about your intended market. You need to do market research to make sure you’re on track. Use the business planning process as your opportunity to uncover data and to question your marketing efforts. Your time will be well spent.

There are two kinds of market research: primary and secondary.  Secondary research means using published information such as industry profiles, trade journals, newspapers, magazines, census data, and demographic profiles. This type of information is available in public libraries, industry associations, chambers of commerce, from vendors who sell to your industry, and from government agencies.  Start with your local library. Most librarians are pleased to guide you through their business data collection. You will be amazed at what is there. There are more online sources than you could possibly use. Your chamber of commerce has good information on the local area. Trade associations and trade publications often have excellent industry specific data.

Primary research means gathering your own data. For example, you could do your own traffic count at a proposed location, use the yellow pages to identify competitors, and do surveys or focus group interviews to learn about consumer preferences.  Professional market research can be very costly, but there are many books that show small business owners how to do effective research themselves.  In your marketing plan, be as specific as possible; give statistics, numbers, and sources.  The marketing plan will be the basis, later on, of the all important sales projection.

Economics

Business plans should contain some information about your industry:

• What is the total size of your market?
• What percent share of the market will you have? (This is important only if you think you will be a major factor in the market.)
• Current demand in target market.
• Trends in target market—growth trends, trends in consumer preferences, and trends in product development.
• Growth potential and opportunity for a business of your size.
• What barriers to entry do you face in entering this market with your new company? Some typical barriers are high capital costs, high production costs, high marketing costs, consumer acceptance and brand recognition, training and skills, unique technology and patents, unions, and shipping costs.

Product Features and Benefits

In the Products and Services section, you described your products and services as you see them. Now describe them from your customers’ point of view.

Features and Benefits

List all of your major products or services.  For each product or service:

• Describe the most important features. What is special about it?
• Describe the benefits. That is, what will the product do for the customer?

Note the difference between features and benefits, and think about them. For example, a house that gives shelter and lasts a long time is made with certain materials and to a certain design; those are its features. Its benefits include pride of ownership, financial security, providing for the family, and inclusion in a neighborhood. You build features into your product so that you can sell the benefits.

What after sales services will you give? Some examples are delivery, warranty, service contracts, support, followup, and refund policy.

Customers

Identify your targeted customers, their characteristics, and their geographic locations, otherwise known as their demographics.  The description will be completely different depending on whether you plan to sell to other businesses or directly to consumers. If you sell a consumer product, but sell it through a channel of distributors, wholesalers, and retailers, you must carefully analyze both the end consumer and the middleman businesses to which you sell.  You may have more than one customer group. Identify the most important groups. Then, for each customer group, construct what is called a demographic profile:

• Age
• Gender
• Location
• Income level
• Social class and occupation
• Education
• Other (specific to your industry)

For business customers, the demographic factors might be:

• Industry (or portion of an industry)
• Location
• Size of firm
• Quality, technology, and price preferences
• Other (specific to your industry)

Competition

What products and companies will compete with you?

List your major competitors (Names and addresses).

Will they compete with you across the board, or just for certain products, certain customers, or in certain locations?

Will you have important indirect competitors? (For example, video rental stores compete with theaters, although they are different types of businesses.)

How will your products or services compare with the competition?

What are your Strengths, Weaknesses, Opportunities & Threats as a business?