While having a great idea is an important part of establishing a business, you’ll only get so far without laying the proper groundwork. To help your business take off, not only do you need to size up the competition, but you also need to identify who will buy your product, how much it will cost, the best approach to selling it and how many people will demand it.
To get answers to these questions, you’ll need a market research plan, which you can create yourself or pay a specialist to create for you. Market research plans define an existing problem and/or outline an opportunity. From there, the marketing strategy is broken down task by task. Your plan should include objectives and the methods that you’ll use to achieve those objectives, along with a time frame for completing the work.
A market research plan should provide a thorough examination of how your product or service will fare in a defined area. It should include:
Doing business without having a marketing plan is like driving without directions. You may eventually reach your destination, but there will be many costly and time-consuming mistakes made along the way.
Many entrepreneurs mistakenly believe there is a big demand for their service or product but, in reality, there may not be, your prices may be too high or too low or you may be going into a business with so many restrictions that it’s almost impossible to be successful. A market research plan will help you uncover significant issues or roadblocks.
One of the first steps in constructing your marketing plan is to create a strengths, weaknesses, opportunities and threats (SWOT) analysis, which is used to identify your competition, to know how they operate and then to understand their strengths and weaknesses.
Strengths to include in your plan should encompass competitive advantages. These advantages can include the talent, proficiency and expertise of you and/or your executive team that can help improve the position of your company in the marketplace.
Weaknesses are factors that reduce the ability of your company to independently achieve its objectives, such as outdated production tools, unreliable delivery and a lack of planning.
Opportunities are ways that your business can grow and become more profitable.
Threats would be things that prevent you from entering into a primary market, such as political developments or a labor shortage.
When developing a market research plan, it is essential that you do your homework to determine your possible customer base, to gain knowledge about the competition and to have a solid foundation for your marketing strategy.
In this section, describe the desired outcome for your marketing plan with realistic and attainable objectives, the targets and a clear and concise time frame. The most common way to approach this is with marketing objectives, which may include the total number of customers and the retention rate, the average volume of purchases, total market share and the proportion of your potential market that makes purchases.
A financial plan is essential for creating a solid marketing plan. The financial plan answers a range of questions that are critical components of your business, such as how much you intend to sell, what will you charge, how much will it cost to deliver your services or produce your products, how much will it cost for your basic operating expenses and how much financing will you need to operate your business.
In your business plan, be sure to describe who you are, what your business will be about, your business goals and what your inspiration was to buy, begin or grow your business.
Once you know what makes you stand out from your competitors and how you’ll market yourself, you should decide who to target with all this information. That’s why your market research plan should delineate your target audience. What are their demographics and how will these qualities affect your plan? How do your company’s current products and services affect which consumers you can realistically make customers? Will that change in the future? All of these questions should be answered in your plan.
Rarely does one research avenue make for a comprehensive market research plan. Instead, your plan should indicate several methods that will be used to determine the market share you can realistically obtain. This way, you get as much information as possible from as many sources as possible. The result is a more robust path toward establishing the exact footprint you desire for your company.
A good market research plan involves using more than one type of research to obtain the information you need.
With your plan in place, you’ll need to figure out how long your market research process will take. Project management charts are often helpful in this regard as they divide tasks and personnel over a timeframe that you have set. No matter which type of project management chart you use, try to build some flexibility into your timeframe. A two-week buffer toward the home stretch comes in handy when a process scheduled for one week takes two — that buffer will keep you on deadline.
Market research always presents opportunities for ethical missteps. After all, you’ll need to obtain competitor information and sensitive financial data that may not always be readily available. Your market research plan should thus encourage your team to not take any dicey steps to obtain this information. It may be better to state, “we could not obtain this competitor information,” than to spy on the competitor or pressure their current employees for knowledge. Plus, there’s nothing wrong with simply feeling better about the final state of your plan and how you got it there.
If the thought of trying to create your own market research plan seems daunting or too time-consuming, there are plenty of other people willing to do the work for you.
You don’t need to pay thousands of dollars for assistance crafting a market research plan. University business schools often provide free resources that can assist you.
As an objective third party, businesses can benefit from a market research firm’s impartial perspective and guidance, helping to shape impactful brand strategies and marketing campaigns. These firms, which can help businesses with everything from their marketing campaigns to brand launches, deliver precise results, drawing on their expertise and experience to provide in-depth insights and solutions tailored specifically to your company’s needs.
Even more, working with a market research firm can elevate a brand above the competition, as they provide credible and unique research that is highly valued by the media, enhancing brand credibility and potentially increasing website traffic, social media shares and online visibility.
Although hiring a firm can provide businesses with tremendous results, certain downsides can lead a business toward the do-it-yourself route. Most notably, market research firms can be a costly expense that some businesses can’t afford. However, businesses that can allocate the funds will likely see a positive return on investment, as they are paying for the expertise and proficiency of seasoned professionals in the field.
Additionally, finding the right market research firm for your business’s needs can take some time — and even longer, ranging from weeks to months, for a market research firm to complete a plan. This lack of immediate results can be detrimental for businesses that don’t have the time to wait.
Market research firms can charge into the thousands of dollars for a market research plan, but there are ways to get help more affordably, including:
Miranda Fraraccio contributed to this article.