We are concluding today our series of three articles dedicated to market research. In our first article we dealt with the very methodology to apply when doing a market research and covered the two first important steps : the trends’ analysis and the competition analysis. In our second article we went in depth about qualitative research and explained the differences that exist with quantitative analysis.
It’s time today to conclude with environmental analysis and give you some tips on where to find the information you need.
Environmental analysis
Your environment, the environment of your project, is made of all variables you can’t control. It can be legal variables, political, demographic, financial or economic variables, you name it. All of them can have a positive or a negative impact on your project and on the eventual growth of your business.
We use a little managerial tool called PESTEL to carry out this analysis. PESTEL is an acronym for: Political – Economical – Sociologic – Technologic – Ecologic – Legal.
Before you start conducting your PESTEL analysis be aware that you will need some external help to avoid taking too quick conclusions. You can’t, by definition, evaluate something you don’t know enough. It may be wise during this phase to use the expertise of other people around you: experts in their field (for instance the market or industry you plan to go into), future suppliers and even competitors. Everything is allowed (if it’s not illegal of course) and you should not lose faith if people are irresponsible or just not willing to listen. That’s life and that’s just a sample of what you will experience afterwards as an entrepreneur.
PESTEL is a well know acronym that you can easily google. You’ll find a lot of resources on the internet to conduct it by yourself.
Synthesis
To analyze is fine; yet you need to come to a conclusion someday. The results of your preliminary research can be summed up in the form of a SWOT analysis : Strengths – Weaknesses – Opportunities – Threats.
If you want to learn about the definition of a SWOT analysis you may want to look at Wikipedia. The SWOT analysis is a kind of starndard and not including it in a business plan would probably be considered a major flaw.
Where can you find data to carry out your market research?
The research of existing data constitutes what is called the “desk research”. Its aim is to collect the available information on a given issue, to summarize it, and to draw your own conclusions.
To conduct a desk research several sources are at your disposal:
- Press, journals, magazines, books, …
- Specialized websites and forums
Our blog for example gives a lot of advices for free and is a source of inspiration for entrepreneurs. You should also follow the specialized forums on Linkedin. There are thousands of them and some are very active. Those Linkedin forums will also give you the opportunity to identify to most influential and/or knowledgeable persons on a given topic. This may be helpful afterwards for your qualitative research when you will seek to interview experts and get professional feedback on your project. - Industry-related statistics and studies: there is myriad of professional associations (especially in Brussels) which collect and sum up data and statistics for their members. It’s good to know that this data is sometimes (not always) also available for non-members. Sometimes it’s even put online for free. Take advantage of it! If such an association exists in your future field of activity (and chances are that it does exist) we recommend you arrange a meeting with the responsible persons. Not only will it be a good opportunity to deepen your knowledge of the sector but it will also allow you to increase the size of your network and find respondents for your qualitative and quantitative research phases. Don’t forget that such a meeting can also greatly accelerate your competition analysis. Use synergies to make your life easier and improve your efficiency.
- Proceedings of conferences
- Master and PhD thesis
- Academic articles often give in the introduction a brief overview of the problem which includes statistics and further sources. We recommend you use Google’s excellent tool called Scholar : http://scholar.google.com
- Financial databases
The types of information most commonly collected in a desk research are the following:
- General data on the market: size, volume (number of units) and value (en € ou autre monnaie), growth rate (very important to give you an idea of whether this is an attractive sector or not; don’y forget the concept of market layers that we explained before), main trends, market segmentation, maturity level (think about the GPS market for instance: everyone has one such device. The market has gone from equipment to replacement)
- Identification of the main “players” (read “competitors”) and the main opinion leaders
- The general economic indicators of the sector: margins, factors impacting profitability, cost structure, organization of the distribution channels and value distribution within those channels, the weights of the different brands, …
- Identification of the main competitors (direct and indirect ones … remember what we said about competition), offer (marketing mix), revenues, annual growth, “financial health”, brand image
- Legal constraints and norms that apply to your sector: this is something that you should carefully research and document. We see too many would-be entrepreneurs losing their money and going in bad situations because they did not research well (or at all) what the legal constraints where and what the financial consequences are to respect those constraints.
- Technological perspectives: how will the future look like in your sector, how will technology influence its future
This desk research may seem easy. You may think it’s easy because you can google all what you need. It’s not for at least two reasons. The first reason is that most data is hidden or even not available on internet and that you’ll need to search hard to find it. The second reason is that Google will not think for you and will not summarize your findings. You’ll still need to go through it, to read everything, and to draw your own conclusions.
This being said we found that the following resources were useful to get the information we needed on the occasion of clients’ assignments. The Belgian ONSS (social security) site gives a lot of statistics about employment, firms, size of firms, location of firms and this data is updated every 3 months. Collecting and updating statistics is one of the missions of the ONSS and for us this is a useful one. Whereas ONSS provides firm-related data for free, B2C (in other words consumer data) are more difficult to obtain and are often not free. You may be able to obtain consumers’ data via one of the big research institutes which have panels at their disposal : GfK, Ipsos, Nielsen for instance. Yet be prepared to pay and to pay sometimes a lot of money. Another way to access this data for a few Euros is to purchase or subscribed to a professional journal like Marketing Magazine which publishes extracts of such data in each issue. If you are lucky one month will come where the data you’re looking for will be published.
Interestingly data on consumers or on consumers behaviors is also to be found in newspapers. There are however scattered and you’ll need to be very disciplined about searching the information in each issue until you find it. This may take weeks or months. One very good newspaper is Le Figaro (in French) which has an economic / business section which is often very rich in data and statistics (obtained from the big names above).
Last but not least you can read or subscribe to this blog and enjoy our free analysis and stats.
To finish, once you’ll have gotten a first good overview of your market, you’ll have to deepen your knowledge. You’ll soon notice that reading several days in a row is an exhausting exercise. It will then be time to wonder how to organize your data collection, which topics you want to deepen and which not. For those topics that you didn’t find any information on, you’ll also need to wonder which parallel ways exist to access data.
What’s the price of a market research ?
This is a question that comes again and again. We actually wrote a post on it. If you want to have a professional market research done (thus maximizing the odds to have your business plan approved), the price is what you’re willing to spend. There is no limit to the price since price will eventually determine the level of detail that you obtain. It will also depend on the professionalism of the supplier you’ll have chosen and his/her capacity to work according to state-of-the-art methods. If you are about to chose one, it may be useful to use this article to double check what he/she is proposing you and make sure you are not fooled.
Now it’s up to you. Good luck and good work!
Cet article The secrets of market research: how to avoid pitfalls when creating a new venture. Part 3 est apparu en premier sur Market research consulting.