What is Market Research?

Hi Dane, I have an idea for a business. How do I know if it’s a good one?

Based on the other information that you provided in your email (that I didn’t publish), I think you need to do some market research.

Market research is an organized way to gather and analyze information needed to make business decisions. It helps you avoid costly mistakes as well as to obtain financial support for a new business.

Market research tends to focus on three areas: the business environment, potential customers, and the competition.

Business Environment This typically includes industry size, potential room for growth, seasonal or economic trends, government policies, and social and environmental trends that could affect the industry.

Potential Customers These include demographics, geographics, psychographics customer spending habits and patterns, and factors that motivate customers.

Competition Data This category of information includes data about direct and indirect competitors, as well as any potential future competitors. Include the competitors’ locations, annual sales, number of employees, products, services, prices, selling and delivery methods as well as any unique features or benefits provided.

Once you’ve completed your research, identify your target. Identifying a target market, rather than selling to a mass market, is usually the best approach for small business. Determine if there is a market for your product or service, and if the target market is large enough to support it. Also ask if the target market is satisfied with the current offerings in the field, how often the target market buys the product or service.

Then, based on the potential demand, and your ability to meed it, determine if your business is viable.

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