Researching Your Market

1. What You Need to Know

1.1 Identify potential customers.

It is likely that you have an instinctive idea of who your customers could be.

• If you wanted to start a retail business selling children's hair accessories, the main targets would be mums or young girls.
• If you were setting up an ironing service, single business people or busy parents would be two possible market sectors.

1.2 You need to find out the five Ws - who, what, when, where, why - as well as how.

1.3 Who your potential customers are.

• If you will be selling to individuals, you need to know their sex, age, marital status, occupation, income and lifestyle.
• If you will be selling to businesses, you need to know their size, industry type, product-buying patterns and service requirements. You also need to know what characteristics are common to all your customers and who makes or influences the buying decision.

1.4 What they buy and in what quantities.

• A printing firm should understand if its customer base will want a thousand postcards or a million brochures.
• A successful sandwich shop will predict its top-selling sandwiches and how many of each they expect to sell each day.

1.5 When they will buy.

• Customers of a toy manufacturer will buy more towards the end of the year so that they are fully stocked for the pre-Christmas trading period.
• A minicab firm will expect more business on Saturday evening than Monday evening.

1.6 Where customers prefer to buy.

• A bookseller will know that while many customers like visiting a shop, some also buy books through the Internet.
• Do a hairdresser's customers want to come to the salon, or would they rather have their hair done at home?

1.7 Why they will buy your product or service.

Every start-up has to know why customers will buy from them and not the competition. This will become your unique selling proposition (see Marketing your business).

• Your research should test how effective this is. If you are starting a sandwich shop, are you sure your potential customers will prefer your sandwiches to those from supermarkets? If you are going to manufacture jewellery, do retail jewellers think the designs will sell to their customers?

1.8 How customers buy.

You have to understand the needs of your customers and the position of the market you are going into.

• You also need to know about the health of the business-property sector - if the economy were shrinking and businesses giving up property, you may find your customers have no need to buy from you.