You'd like to start your own business and have a concept in mind, but are you sure it will work?
To answer this question, you'll need to go through the all-important market research stage, which will enable you to analyze the sector in detail and assess the commercial potential of your project.
Discover the 5 steps to market research before taking the plunge
The first step in your market research is to take the pulse of the business sector you intend to enter.
The aim of this section is to understand the current situation in the sector. Is it a growing or declining market? Is it a fragmented market, i.e. essentially made up of independents, or one dominated by a few major brands?
This sector analysis will ensure that the sector is promising and that you can easily enter the market.
Here are some of the things you need to know to make it happen:
- Overall sales trend in recent years
- Growth in the number of companies and jobs
- Weight of independents versus brands
- Distribution network structure
Most of this information should be available on statistical information websites such asINSEE orEurostat, or by consulting business journals and specialized industry magazines.
Once you've done your research, you'll be able to understand the economic situation of the sector you're planning to enter.
The next step in your market research is to look at the expectations of your future customers.
This involves observing the behavior of potential customers, as well as their purchasing habits:
- When do they call on your products or services? To solve a problem, out of necessity, or simply out of desire?
- What are the key features of the product or service? Quality, price, functionality, lifespan, etc.
- What is the typical customer profile (socio-demographic profile of individuals or businesses)? Who makes the purchasing decision? Is it the same person as the end user? What is their budget?
This information will be available on websites specialized in your sector, in studies carried out by independent firms, and in the field, i.e. by meeting your future customers.
Once you've understood who your customers are and what they want, you can then determine a commercial positioning that meets their expectations and implement a relevant sales strategy.
The next step in your market study will be to carry out a competitive analysis of your local area.
This will enable you to check that the local market is not saturated by competing offers, and therefore that there is enough room for your company to enter the market.
This section will also enable you to learn more about your competitors' strategies, so that you can fine-tune your own, and decide whether or not to take inspiration from them.
We advise you to list your competitors and their characteristics: positioning, target clientele, sales strategy in place, number of employees, sales, age of the company, etc.
To find this information, use search engines, directories and your competitors' websites. And don't hesitate to visit their sales outlets or talk to their sales reps.
The penultimate stage of your market research will consist in finding a differentiating angle: why will people buy from you rather than from your competitors?
Having an element of commercial differentiation, i.e. one that makes your commercial offering unique in the marketplace, helps you avoid too much confrontation with your competitors.
To find yours, you will need to use the information gathered in the previous parts of your analysis to define the following aspects of your products or services:
- How do they respond to customer needs and desires?
- What are the benefits for potential customers?
- What are the values that correspond to your brand and to which your customers will turn?
Once you have these questions and their answers in mind, you should have a credible business proposal.
The final stage of your market study is to make sure that your concept really does meet a demand in the sector.
To do this, you'll need to approach potential customers to gather their opinions.
You can present your concept to friends and family to get their opinion. But be careful: unless they're in your target market, their opinion should be taken with a grain of salt.
For this stage, it's strongly recommended that you don't take any shortcuts, and that you go out and meet your potential customers, so as to obtain reliable data with which to decide whether or not to go further.
This article is coming to an end, and we hope we've helped you set up your market research and realize your project.
This article was written in collaboration with The Business Plan Shop, which offers an online business plan creation solution that you can use to continue building your project once you've completed your market study.
Written by our expert La Rédaction
April 18, 2020
