If you are searching for what market to enter in the growing economy then your going to need to do some research. Market research is important to all businesses. It is how you decide where to position your brand, who your audience is and so much more. Instead of “winging it” it is best to be backed up with some data.
Maybe you already have an idea. Maybe you’ve known from Day One that you were destined to design couture pajamas for cats—they’re the cat’s pajamas! All your friends swear they’ll buy them. Doesn’t that mean something?
Nope. This is the part where you look into the mirror of truth and ask: “Is there a place for my business in the fast-paced world of feline fashion?”
First, try to pinpoint your vision. Do you see an upscale corner boutique with a window display of seasonal fashions? Or are you in the market to bring reasonably-priced catwear to the masses? Will you sell only your products or retail others as well? Will you have a storefront, or will you market everything online? Are you tied to pajamas, or will you branch out into other clothes? Other products? Services? Dogwear?
Once your vision is clear, you’re ready to investigate the market and conduct an industry analysis. But what does that mean? Where do you start?
A common approach to industry analysis is to use Porter’s Five Forces. In this model, you conduct research to answer the following five questions:
- How easy is it to enter the market?
- What is the bargaining power of suppliers?
- How much bargaining power do customers have?
- What is the availability of substitutes (products or services customers could use instead)?
- How many competitors do you have, and what is their market share?
As simple as it sounds, this is a huge research project that could easily take you weeks. After you find answers, you may need to readjust your vision. Maybe cat pajamas are already widely available at an unbeatable price, so you decide to expand to holiday and event fashion. Now you’re making decisions based on data instead of just impulse.
The importance of market research is often overlooked by small business entrepreneurs. Many times people don’t know where to start or they don’t think they have the resources. In fact, everyone who has the internet and a trusty search engine can do sufficient research to position their brand better.
If you are looking for further assistance, check out our free business tools to help you get started.