Free market research!

By Linda Berlin, Director of Research, Fond du Lac County Economic Development Corporation

No, this is not a commercial or one of those recorded phone solicitations for a free service that ends up costing you a lot.  This is about you taking your business research into your own hands and learning about the many free and low-cost ways you can get and stay connected to your market.

One mistake that entrepreneurs often make is to rush into opening their business without fully researching the market for their product or service.  You are so passionate about what you have to offer that you are sure people will be rushing in to take advantage of it as soon as you open for business.

But who are these people (your potential customers) and what other choices do they have (your competition)?  These are critical questions to answer before you can decide how to spend your limited marketing budget.  You could be doing everything right in your world (within your store/office/plant) but things will happen that are totally out of your control that can deeply affect your business. By opening your business you are entering a market.  There are already players in this market – customers and competitors – and they already have a way of doing business.  Where do you fit into this market?  You need to do some market research.

Some of you are now saying, “Market research!  Are you kidding?  I can’t afford that!”  True, market research consultants are expensive.  There are non-profit organizations that can help you.  Fond du Lac County Economic Development Corporation (FCEDC) can assist by providing some demographic reports and other market analysis, but remember this is about what you can first do on your own.  It is important that you dig into this yourself.  Having someone hand you a pile of reports on your market will provide some facts and figures for your business plan, but you really need to have a ground level understanding of your market to be successful.

Say, for example, you want to open a health food store.  You know everything about the products you will sell and how valuable they will be for those who shop there.  But what do you know about those people that might shop in your store?
 

"Fond du Lac County Economic Development Corporation (FCEDC) can assist by providing some demographic reports and other market analysis, but remember this is about what you can first do on your own."

Get connected!

You need to find any way you can to become actively involved with your market:  attend fairs and trade shows for products or services that are in any way related.   There you can see what people are interested in and talk to them about product preferences or gaps in the market.  You can ask them where they shop, how often and what they buy.    Be observant.  Do you notice trends in the type of people who are drawn to this market: age, gender, family situation, income levels, etc?  Are there certain magazines they read, associations they belong to, other products they buy, certain brands they tend to wear?  

Spend considerable time “Googling”.  Type in keywords that are related to your industry and products and see what information you can glean about your market. Google AdWords is a tool that you can use to make sure your website gets to the top of internet searches.  But if you are not ready for that yet, you can use this along with Google Insights for Search to find out what keywords people are typing that are related to your business, even historical and geographical trends.    

Enter the discussion.  Join blogs.  Find out what the hot issues are.  Get connected with social media: Facebook, LinkedIn, Twitter.  Learn how to use social media as a business tool to connect with your market.  What are people talking about?  How can you become a respected expert in these discussions?  Start conversations and answer questions.  Listen to your potential customers.  See how your competition is responding.

Go shopping!

Get out and shop in stores within your market area as well as outside of your competitive area.  Shop in person and on line.  What is offered?  What is it like to be a customer in this market?  What are best and worst practices? What innovative products and services can you offer that are not offered now?

Feel free to ask questions, especially of those outside your market area.  You don’t need to go in disguised as a customer.  Tell them what you are doing.  You’ll be surprised how open some will be. Many business owners enjoy talking about their business and sharing what they have learned.  Take this opportunity to develop a peer network that will be useful to you for years to come.

Get data!

Now that you are immersed in your market, you probably have a lot more focused questions.   There are many sources for free or low cost data to help you analyze your market further.  First make an educated guess at your ideal customer profile.  Who is most likely to shop at your store? For example it might be a married woman, aged 35 and over, with a household income level of $50,000 - $70,000.   Also think about how far people will likely travel to your business.  Will most of your customers come from within a 10, 15, or 30 minute drive time?

Using this profile, FCEDC can provide you with some demographic and spending reports to help you learn more about your potential customers. Some of the data can be found on our website: www.fcedc.com – see the market profiles under Resource Library.  If you need more focused spending reports, etc., contact us at (920) 929-2928.

If you are working on finding the best location for your business and want to know how much traffic passes a particular location, go to the Wisconsin Department of Transportation website: http://www.dot.wisconsin.gov/travel/counts

A valuable tool for learning about your competition can be accessed through the Fond du Lac Public Library.  ReferenceUSA is a nationwide database of over 11 million businesses.  You can look up information on a certain type of business for a certain geography (30-mile radius, a county, city, etc.)  This will tell you how many competitors you have and some information about their businesses.  All you need is a library card to get on the system – look under Online Databases, Business and Investments, ReferenceUSA.  You can print or download up to 25 records.  If you need more records, FCEDC can help.  We can also provide targeted mailing lists of consumers.

The U.S. Census Bureau has some information on sales by industry: http://www.census.gov/econ/census02/data/wi/WI039_44.HTM.  For this example, the link is to retail sales in Fond du Lac County.  Click on the “more” arrow by food and beverage stores and you’ll find specialty stores.  Divide the total sales by the number of stores and you’ll get an average to use in your projections.  Keep in mind this is 2002 data.  The 2007 business census results will be available in August 2010.

Stay Connected!

No doubt you will find other valuable resources as you explore your industry.  There is a wealth of information out there for free.  You just need to commit the time and energy into going after it.  And keep in mind that this is not just a business startup activity.  You will need to keep up with your market so that you can constantly improve and innovate to keep your customers satisfied and coming back to see what you’ll do next!