If you are thinking of starting a new business or expanding into new markets, proper market evaluation is critical to success. While it may sound deceptively simple to figure out if a market exists for your product or service, it's probably one of the most challenging requirements of business. The process involves scrutinizing your competition and your customer base and interviewing potential suppliers.
The information collected can help you, if necessary, adopt your product or service to better meet customer needs. In some rare cases, it might lead to a totally new, but financially rewarding venture. This Financial Guide covers some of the basic considerations of market evaluation. It is intended as only basic introduction to a complex determination to help focus the thinking for those businesspeople with limited experience in marketing. In many cases, a professional guidance can be extremely helpful.
Knowing your market not only requires an understanding of your product, but also an understanding of your customers' social and economic characteristics. In conducting your research, you can access relevant market information from these sources:
The Small Business Administration provides immediate, round-the-clock information on its services, publications and programs. Users can access a national calendar of events, such as training programs, small business seminars and international trade fairs. Most information is available at no cost.
Planning Aid: For a number of helpful publications on marketing, see Marketing Guides on the Small Business Administration Web site.
The SBA's Business Information Centers offer the latest in high-technology hardware, software and telecommunications. Each BIC offers electronic bulletin boards, computer databases, on-line information exchange, periodicals and brochures, counseling, videotapes, reference materials, texts, start-up guides, application software, computer tutorials and interactive media. BICs are located around the country. One-on-one counseling with seasoned marketing veterans also is available through the Service Corps of Retired Executives, better known as SCORE.
Other sources include:
- Trade association studies and journal articles.
- Regional planning organization studies on growth trends.
- Banks, realtors and insurance companies.
- Customer surveys in your market area, which you can conduct on your own or search out existing material.
Finally, research on competitors is extremely important. Visit industry trade shows to find out what your competitors are selling and how they are marketing their products. Similarly, stay current on information in industry magazines and publications.
Research data will help you develop the basic assumptions in your financial projections ó and tell you whether or not to go into business. Once you have obtained and analyzed this information, it becomes the foundation of your business plan. You should not view market research, however, as a one-time activity. Once you establish your business, you should continually be in touch with your customers. You may also have to adapt your product/service and/or marketing strategy to keep up with your customers' changing needs.
In general, you should be well-established in the U.S. market before committing resources and taking on additional risk to explore export markets. Some products, such as used equipment that is obsolete in the United States but new to other countries, may be particularly well-suited for exporting right from the start. Whatever your product or service, it is never too early to explore its export potential.
Researching international markets involves many of the same steps as domestic market evaluation. The first step is to identify the countries with the largest and fastest-growing markets for your product. The SBA's Office of International Trade can help. Information on this service can be found on the SBA's internet site. The National Trade Data Bank, maintained by the U.S. Department of Commerce, also contains valuable market information.
From your list of possible markets, you will want to determine which of these offer the best prospects. You should examine the markets in greater detail, looking at how your product quality and price compares with that of goods already available. You also should determine who your major customers are.
With this information, you can pick one or two export markets to explore initially. You can add more markets later, as your export skills develop. Now you are ready to conduct more in-depth market research on this target market(s), just as you did before establishing your business.