Market research is an imperative when it comes to your business plan. It may be possible you only think about market research as a single-faceted approach. The truth is Market Research covers a lot of ground and can inform your business plan in a number of ways.
Market Overview – This is the form of market research that people most often think of when they think about market research and the business plan. The market overview requires gaining knowledge about the overall industry. It then focuses down to specific target markets.
Competitive Analysis – Part of truly understanding your industry and market is knowing your place in it. That is the role of competitive analysis in the business plan. The name implies it all. This aspect of market research focuses on learning who your competitors are. It’s also about understanding exactly what they sell, how they sell it, and what your potential clients think about it.
Location Analysis – You’ve likely heard the expression, “location, location, location!” Location matters, especially for a retail business or one that relies on foot traffic or local business. Analyzing the location as part of your market research also matters for less obvious businesses.
Where you place your office, or a warehouse can have significant impacts. This is because of regulations and tax differences between states and localities. Make sure to understand your location, no matter what type of busines you have.
Price Analysis & Product Comparison – A very important part of your Business Plan will be the financials. Two primary factors drive your financials, the revenue and expenses. Revenue depends on what you choose to charge for your product or service. Not only does market research help you determine how much you may be able to sell, it helps you know how to price your product.
Part of the price analysis also comes from the product comparison. Competitor pricing can be one of the determining factors in your pricing decision, though certainly not the only one. In order to price it in a way the market will tolerate, you must know how it compares to what else is out there.
Value Chain Analysis – A recurring theme here is knowing your place in the market, and that is one facet of the value chain analysis. This requires not only understanding your own place in a value chain but, also the distribution chain required to get your products or raw materials to you. This will help complete various components of the business plans.
Potential List of Clients – While market overview will give you a top-level overview of the market, it is important to clearly identify potential clients. This is especially true if you sell business-to-business. Not only will this help you know who to go after for sales but, you can survey a sample of them to better understand these clients for several reasons.
Data Analysis – Inherent in all the types of Market Research listed above is data analysis. Simply digging up information is not enough. You must also analyze the data to draw insights from it so that it can inform the business plan.
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