Opening a business is a challenging but rewarding endeavor. However, not every business idea is suitable for every location. You need to consider various factors that affect the demand, supply, and profitability of your products or services in your vicinity. In this blog, I will share some tips on how to conduct a market research and analysis before opening a business in your area.
1. Know Your Customers
The first step is to understand who are your potential customers and what are their needs, preferences, and purchasing power. You can start by answering these questions:
- What class of people live in this locality and what’s their source of income? (Rich, medium or poor.)
- Are people here mail-order buyers or do they prefer to shop locally?
- Do housewives ask for articles in your line by name or trademark or do they rely on recommendations and reviews?
- What are the demographic and psychographic characteristics of your target market, such as age, gender, education, lifestyle, values, etc.?
You can use various methods to collect this information, such as surveys, interviews, focus groups, observation, or secondary data sources.
2. Know Your Competitors
The next step is to identify and analyze your competitors in your vicinity. You need to know who they are, what they offer, how they operate, and how they market themselves. You can answer these questions:
- What is the total number of dealers who sell your class of products or services?
- How many sell your goods or similar ones?
- What prices are competitors making to local customers?
- What kind of advertising is most successful locally —an offer of “something for nothing;” seasonable articles; bargains; price displays?
- What local advertising is done by competitors?
- Do local dealers make good window trims, store arrangements, or have special features to attract crowds?
You can use various methods to collect this information, such as online research, mystery shopping, customer feedback, or industry reports.
3. Know Your Industry
The final step is to understand the trends and opportunities in your industry and how they affect your business potential in your vicinity. You need to answer these questions:
- What important industries are located here and how do they influence the demand and supply of your products or services?
- What is the number of rural free delivery routes and how do they affect your distribution and delivery options?
- What are the legal, regulatory, environmental, and social factors that impact your business operations and profitability in your area?
- Estimate the approximate annual consumption of your class of products or services locally and how it is expected to grow or decline in the future.
You can use various methods to collect this information, such as industry analysis, market reports, expert opinions, or scenario planning.
Conclusion
By following these steps, you can conduct a comprehensive market research and analysis for your business idea in your vicinity. This will help you to identify the strengths, weaknesses, opportunities, and threats of your business and to develop a suitable business plan and strategy. Remember, the more you know about your market, the better you can serve your customers and beat your competitors.