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Market
analysis is the foundation of your sales and financial plans.
However, a good analysis of the market entails comprehensive
market survey whose costs may be beyond the reach of small
business owners.
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If
you do not have thousands of dollars needed to hire marketing
research firms, here are some methods of market research home
based businesses can do on your own for only the cost of your
time:
·
Look at the advertising sections of local
newspapers for similar businesses.
This is particularly relevant
if you’ve chosen a product or service that is advertised in
newspapers or magazines. Check issues a year old or two to see
if the firms are still operating. Repeat ads are a good indication that sales are being made,
and there is indeed a demand for the product.
·
Check the Yellow Pages to see how many businesses
similar to yours already exists.
Call them to find out how long
they have been in business. While you’re at it, you can also
compare previous year’s edition of Yellow Pages to check if
the number of businesses similar to yours has increased,
decreased or remained stagnant.
A decreasing number of firms may be an indication of
weakening demand.
·
Investigate such resources at a public or college
library as future trend books (like Trends
2000), market studies, census data, trade publications, and
so forth. Demographic
characteristics of your prospective customers, such as the
number of people in your area and their age, sex, and income
level are available in census reports.
You can also investigate the industry using standard data
sources such as Moody’s and Standard and Poor’s
publications.
·
Talk to friends, relatives, and strangers for their
opinions about your business concept. To the extent possible,
survey prospective customers in face-to-face conversations,
telephone interviews or mail surveys. Ask them directly –
would they buy your product or service, how frequently, and what
price would they be willing to pay? Ask them what they like and
what they don’t like about your competition. Carefully listen
for any indication of unique features that, if offered, will
provide an advantage over competition.
·
Shop the marketplace and get some feel about
business conditions. Talk to other business owners in a similar
venture (in a non-competing area) to get their feedback about how
they see the potential growth and expectations for their business
in future years. Do the businesses appear profitable? Are
customers waiting in line and paying high prices? A strong
demand means there’s probably another room for a supplier. The
firsthand information that they can provide could be very
useful.
·
Meet with suppliers of
materials, which are another
source of excellent information.
They know what’s selling and what’s not and generally
have a good feel for market trends.
·
Attend meetings and network with home-based
business associations and Chambers of Commerce chapters to get
some feedback about the predicted growth of businesses like
yours in the area. Your chamber of commerce may also have data
about your market, including consumer demographics and the
number of competitors in a geographical area. Trade associations
are excellent places to locate valuable marketing information.
·
Ask others in your community
what they like and do
not like about businesses similar to yours.
·
Test advertise by placing a small advertisement in
the local newspaper to solicit interest in your business idea.
Evaluate the positive and negative feedback that you get.
A word of
warning, though: A positive reaction to market research
doesn’t assure success. People sometimes say one thing and
then act differently. But doing some research is still better
than acting on a gut feeling.
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