Successful businesses have extensive knowledge about their customers and their competitors. Getting accurate and specific information about your customers and competitors is a critical first step in market investigation and the development of a marketing plan.
Market research is the process of gathering information about your market, customers and competition. It can help you to learn more about the people you want to sell your product or service to; what they want, need, believe or how they act. It will allow you to identify and analyze the market need, size and your competition.
It can be used to determine the feasibility of your product or service, identify how to promote your product or service, and develop a competitive strategy.
As a business owner, you are gathering market research every time to you speak to a client or check out the prices of your competition. By formalizing the process, you can gather a great deal of information about your products and services, customers and marketplace. You can gather the information yourself through a customer satisfaction questionnaire or by hiring a professional market research firm. No matter what your budget is, some form of market research is possible and can be very helpful when making business decisions. Overall, it allows you to make informed decisions about your business and be more responsive to your customer’s needs.
Marketing is more than the promotion, advertising and all of the selling techniques used to get someone to buy a product. The American Marketing Association (AMA) defines marketing as, “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”
Marketing is not a stand-alone activity. It generates the strategy that underlies your sales techniques, business communication, and business development. It is integrated with all of the other functions of your business.
Your research and development needs to be focused on developing products that meet the needs of clients.
Your production team has to be able to keep up with the demand that you create for your product and live up to promises you make about the quality of your product.
Your human resources strategy has to be focused on hiring and training people to sell your product and create a strong image for the business.
Your financial experts need to provide input into discussions around pricing your product.
Your legal team needs to assess the privacy implications of various marketing techniques that you are considering.
Your environmental team will want to look at the packaging of your product and ensure that, while still being attractive, it has a low impact on the environment.
You will need to ensure that you have a solid marketing approach, budget, plan and strategy in order to build strong customer relationships and create value for you and your customer.
In developing a market plan, your primary functions are to understand the needs and desires of your customer, select or develop a product or service that will meet customer needs, develop promotional material that will make the customer aware, and ensure delivery of the product or service.
Market research can help you to:
Better understand the characteristics and preferences of your customers
Identify opportunities to increase sales and grow your business
Recognize and plan for problems in your industry and in the economy at large
Monitor the competition in your market
Diminish risk by making informed business decisions and not just relying on intuition or
Market research should be the primary driver of changes to your company’s marketing mix — the combination of product, price, place and promotion. This is commonly referred to as ‘the 4 Ps’. Using these components, you can put your business in the best possible position to reach your target market.
Market research is beneficial at any stage of a business, but is critical for new start-ups. New businesses need to demonstrate that there is a potential market for their product or service before starting up. Much of the information you collect while conducting market research will feed into a number of sections when writing your business plan. It can help you to determine your sales potential, identify your target market’s demographic profile, select an appropriate business location and set your price. Your market research will also assist you in developing a marketing plan for your business.
Existing businesses may require market research to ensure that they can continue to serve their clients by remaining current with the trends, keeping ahead of their competition, or in seeking out new markets for growth potential. Market research can also help when existing businesses are thinking about making significant changes such as an expansion or relocation. A regular flow of market research can help you to maximize the potential of your current business activities and help you to create a road map for future growth.
Before starting any market research activities, you need to first decide what you need to know and why. There are two types of market research, primary and secondary.
Primary research is undertaken by companies or a hired research firm to gather data and information to be used for their own purpose. It consists of information collected from potential customers through surveys, interviews, focus groups, direct observation, field-testing, and any other method that provides first hand data. The purpose of primary research is to obtain information about customers’ attitudes, preferences, buying habits, tastes and behavior that is not otherwise available.
Secondary research involves searching for existing information, such as demographic data and industrial statistics that have already been collected and possibly analyzed. It is usually less expensive and takes less time to gather than primary research. Existing businesses may use historical invoices and purchase receipts as sources of information. Industry Canada is an example of a secondary resource. They have industry benchmark reports on sales and expenses of small and medium sized enterprises (SMEs) on their website
Secondary data can also be collected from statistical providers such as Statistics Canada, Financial Post, Dun & Bradstreet, Government Agencies and Departments, etc. Sometimes data is available at no charge, but it may also require a per use fee or subscription.
You’ve collected the data…now what?
Reviewing the large amount of data you have collected can be a daunting and overwhelming task. Take the time to sort, organize and summarize the information. You will need to decide how best to present your data. Charts, graphs and tables may make it simple to read the data and can make finding patterns easier. Depending on the size of your charts or graphs you may embed this information within the body of your market plan. If there is a large amount of information, it may be best to include this data as an appendix to your plan and write a summary of your findings in the report itself.
Assess the results of your survey to find your target market:
Who is buying?
Where are they buying now? What do they like?
What do they not like?
Present statistical data for comparison:
Male / Female Number of households Average Income Expenditures
A Marketing Plan (also known as an Action Plan or Marketing Strategy) is a written plan that specifies the marketing goals and objectives to be achieved over a specified period of time. It also includes the strategies to be used to achieve these marketing and promotional goals. Although the following outline may seem very long or detailed, your business will dictate how comprehensive you need to be. Some sections may not be relevant to your business or market. i.e. you may not have all of the sections broken up with headings, but will include the information in 1–2 paragraphs.
It is recommended that you write this section last as it is a summary of the entire plan. Here, you will highlight the main elements of your plan and create a desire by the reader to continue reading your entire plan.
In the executive summary, you will:
Summarize the current situation, your company missions and objectives
Provide a description of your product or service
State your marketing objective (i.e. increase sales of Product X by 15%)
Describe our marketing program(s) and strategy
Project your expected marketing and/or financial results
Point out the keys to your success
Make sure you have answered the following questions in your executive summary:
Who is your company?
What is your target market?
What is your product or service?
Where is your market located?
When will your marketing plan be implemented?
What are the expected results?
How much will it cost?
What is the expected return on your investment? How much profit? How many sales?
The purpose of Competitive Analysis is to thoroughly analyze the competition that will exist for your business. Part of developing a successful business involves being aware of possible competitors and their products. Competitors are any business which can sell a product/service that accomplishes a similar type of result as yours; therefore, the features and benefits of a competitor’s product can also appeal to your target market. There is ALWAYS competition!
Who are your direct competitors (exactly what you offer)? Who are your indirect competitors (offer substitutes)?
How long have they been in business? How is their business: Steady? Increasing? Decreasing?
What have you learned from their operations? From their advertising?
What are their strengths and weaknesses? Ensure you are being unbiased.
Are there any opportunities and threats that your competition may present?
How does their product or service differ from yours? What is your competitive advantage?
List the direct competitors in your local market. These are firms who offer exactly what you offer. List the current number and the number in existence for the past three-year period.
List the indirect competitors in your local market. These are firms who offer substitute products.
Analyze any competitors who have gone out of business in the past and if possible, why.
Explain how your firm will compete with these competitors to prove how you can survive
in their markets.
Examine risks that could occur when you enter the market. For example, what if your key competitor cuts their price when you open your business?
Price is the second “P” of your marketing plan. You will need to consider three important factors when setting the price of your product or service: What does it cost you to produce or purchase your product or service? What is your competition charging? What is your customer willing to pay? Once you have determined your price, it is also important to complete a Break Even Analysis.
Break Even Analysis
The Break Even Point in your business is the point at which your sales revenue is equal to your total expenses. At that point you neither make money, nor do you lose any. This point is where your business has sold enough products or services to pay for all costs.
The break-even can also be used to evaluate a business expansion or any other business expenditure. You are simply asking how much additional revenue will be required to cover the additional cost. There are some key definitions necessary to determine the break-even for the business.
Fixed Costs (Overhead) are costs that do not vary directly with sales. Utilities, salaries, advertising, office supplies and telephone are just a few examples. They do not have to be the same every month. What is important is that you pay them regardless of sales made.
Variable Costs (Cost of Goods) are the actual costs of making the product or providing the service. They can include materials, shipping and contract labor. Capacity governs your output. It can be measured in units of production, billable hours, or sales volume.
Now we will display how to calculate the break-even point.
Break-Even Point = Fixed Expenses Gross Margin
For example: Selling Price Cost of Good
Gross Margin (difference between selling price and cost of goods sold, expressed as a percentage)
This demonstrates that you need $25,000 in sales (or 5,000 units) in order to break-even.
Competition is good for business! Knowing your competition is the only way to stay one step ahead. You should know who they are, where they are, how they operate and what they are capable of. Learn from your competitors’ weaknesses.
Consider the customer’s point of view when trying to identify your product or services’ benefits.
The lowest price doesn’t always win. Consider your price with quality and service. “No price is
right if you don’t like the quality.”
Examine your distribution channel carefully as it can greatly affect your costs and therefore your pricing strategy.
Target your marketing to your target market. If they’re not the ones reading local newspapers then there is no sense in placing newspaper ads.
When conducting a survey, consider a 20% margin of error on your results.
Can you sell someone on your business in sixty seconds or less? Sometimes a minute is all you
have; make sure you are ready with your “elevator pitch”.
Successful branding goes beyond your company logo. It reflects your business’ core values. Your brand creates and maintains your reputation. It echoes the experience customers have with your organization. A strong brand can make your business stand out from the crowd, especially in competitive markets.
Be consistent in the message you are sending out when promoting your business no matter which medium you are using (print, video, internet, etc).
Make sure your marketing strategy ties into your overall business and marketing plans. Ensure they are cohesive.
During and after you run a marketing campaign, remember to take the time to measure the results. Learn what did or didn’t work. It will help you to focus your marketing budget for the following period.
Set clear, realistic and measurable targets and make sure you have deadlines for reaching those targets.
Don’t forget to set a budget for each marketing activity.
Test your research tool or marketing campaign before releasing it to your target audience.
Making a business plan
Regardless of whether you’re a born salesperson or not, there are some essential parts of the process that can help you achieve your sales goals.
Having the right type of label on your products is a key component of your sales and marketing strategy. On product labeling include information you must include on your label, as well as links to industry regulations such as the Food Standards Code.
Do you know how trade measurement laws apply to the products you sell? You can find out what they are what your business needs to do on Your nations trade measurement laws.
Did you know the new Country of Origin Labeling (CoOL) laws mean products packaged from 1 July 2018 must display the new labels? You can find out how to get the new labels from the country of the origin food labeling.
A customer loyalty or reward program offers incentives for customers to keep buying your products or services. There are benefits and risks but our page can help you decide on the type of customer loyalty program that best suits your business.
You may also want to consider selling your products or services to government agencies.
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