Once the entrepreneur has an idea for a business to start a business, he will need to ensure that the market in which he wishes to enter meets his expectations . For this, it is necessary to carry out a market study .
This step can be carried out entirely by the entrepreneur himself, but it is also possible to be assisted, in whole or in part, by a professional specializing in the matter.
The objectives of the market research
This will be for the entrepreneur to ensure that his project can be commercially feasible. It is hard to imagine starting a business in a declining, unprofitable sector or even hyper-competition from large companies.
The aim is to obtain as much information as possible on the sector of activity concerned and to analyze supply and demand.
An answer will have to be provided, thanks to the market study, to the following main questions:
Concerning the sector and its regulations
- What are the regulations applicable to this sector of activity? Are there specific tax provisions?
- How is the market doing and what are its future prospects?
- What are the latest innovations in this sector?
- Is the market regular or are there seasonalities?
In addition, we advise you to read this publication: the study of the target market.
Regarding the request
- What are the characteristics of the target clientele? (geographic area, consumption habit, income, age of the population, etc.);
- What are the needs of the population and their motivation to buy?
- What are their preferences? What do they think of the offer proposed by the competitors? What could be improved? (These questions are important because they can allow you to stand out from your future competitors);
About the offer
- What products are there on the market?
- Who are my main competitors? (company size, turnover, geographic location, etc.)
- How are my main competitors doing? (sales policy, organization of distribution, target customers, etc.)
The different types of market research
Two main approaches exist for carrying out a market study: the quantitative approach and the qualitative approach. We will also discuss the documentary approach.
Quantitative market research
Quantitative market research is essentially based on statistics, key figures, about a market, a branch of activity, a sector. The information obtained will be global.
It will be, through this market research technique, to quantify and measure information. The problem is that this large panel may not be precise enough, unlike a qualitative study.
For more information: the quantitative market research .
Qualitative market research
Qualitative market research is much smaller than quantitative research but will be much more in-depth.
The objective here is to reduce the sample questioned but to increase the amount of information collected. We will seek to know more about consumer behavior, what they are looking for as a priority, what they like or don't like, the improvements they would like to find in a given product or service, etc.
The qualitative study can therefore be assimilated to an in-depth exploration of the demand which will provide a lot of information. On the other hand, the sample is relatively small and therefore less representative than a quantitative study.
Ultimately, the ideal is to couple a quantitative study with a qualitative study, but this will require spending more time and / or more money.
For more information: qualitative market research .
Documentary market research
Documentary market research will only be carried out by searching for documents providing information on the market in question. One will find in particular reports on the sector, interviews and articles, documentation in professional bodies.
Pitfalls to avoid in market research
A well-conducted market study must make it possible to perfectly identify the needs of customers belonging to the targeted catchment area, to learn about the main players in the sought-after market and to analyze the future prospects of the sought-after sector.
Thus, when carrying out the market study, it is important not to:
- Neglecting the step of analyzing demand on the target market: a poor understanding of the needs and behavior of your future potential customers is detrimental;
- Failure to properly delimit the future catchment area. If a market study is carried out at the national level and the company ultimately only offers its products or services in its locality, the risk of failure will be higher because the behavior of a population located in one place A will not be the same as that of the population located at a location B;
- Neglecting the analysis of the competition : it is absolutely necessary to be aware of your future competitors, the prices charged, the products and services they offer and their qualities, their commercial policy, their distribution networks ... Otherwise, how can we know if it is possible to find a place in the market and offer an offer equivalent or superior to the others?
- To ignore the regulations of the sector : it would indeed be a shame to set up a business project and to realize belatedly that one does not meet the requirements legally imposed to act on such or such market.
The three pillars of market research ( supply, demand and the environment ) must be analyzed with the greatest care. You cannot study the needs of consumers while ignoring what existing companies already offer, analyze a market without worrying about the regulations that apply to it ...
Tools for carrying out market research
While searching on the internet, you risk coming across a multitude of offers, which will range from the complete realization of the market study (the most expensive solution) to the purchase of report or pre-established document.
Two parameters must be taken into account by the entrepreneur to choose the solution to adopt for carrying out his market study:
- How much budget do you want to allocate to carry out the market research?
- Would you like to get involved in carrying out the market research?
When possible, it is best to get as personally involved as possible in carrying out the market research. This will allow you:
- To make significant savings during the business creation phase;
- And above all, to get involved in the study of the market in which the future company will operate.
One of the essential elements for the success of a business creation resides in the perfect knowledge of the sector of activity in which one operates, which is unfortunately not systematically the case in practice.
Market research findings
At the end of the market study, the entrepreneur must be able to judge the advisability of creating a company which will act on the targeted sector of activity, with the offer of adequate products or services.
This work should also, sorry to repeat it a second time, allow the entrepreneur to improve his knowledge of the market concerned, to understand how it works and to perceive its future prospects.
If the result of the market study is conclusive, it is necessary to proceed to the realization of the business plan , which constitutes the logical continuation of the market study.