Market research for the first time

Market
research
for the
first time
Become a successful owner manager

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 Market research for the first time
Market research for the first time is one of the Publications
“Become a Successful Owner Manager” series and introduces a
topic of crucial importance for every business. Whatever you choose
to do, your business will only be a success if customers like what
you are offering and are prepared to give you money in exchange.

People buy to enable them to do what they want to do and to fulfil

their needs. Unless you have an idea of your specific target
customers and an understanding of those needs, you will find it very
difficult to market your product or service. This booklet has been
prepared to help you understand fully the role of market research.

This book’s objectives are:

 to explain the importance of thorough market research;
 to introduce you to primary and secondary research and to
suggest ways in which you might go about your own market
research; and,
 to suggest ways in which you can accurately profile your chosen
customer group.

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 Market research for the first time

Market research for the first time

Whatever your business it will only succeed if customers like your
product or service and are prepared to give you money in exchange.
People rarely buy things just for the sake of owning them; they buy
things to enable them to do the things they want to do to fulfil their
needs. That is why it is important to undertake thorough market
research and to assess the results of that market research carefully.
Do not get overly carried away with your enthusiasm - see things as
they are, not as you would like to see them. Before launching a new
product or service you need to be able to:

 define your position in the market place;

 define your product or service;
 identify your potential customers, their needs and
expectations;
 determine the price your customers will be prepared to pay;
 identify the level of quality and service your customers
require;
 describe your competitors, what they offer and their
strengths
and weaknesses;
 describe how best to communicate your message to your
prospective customers;
 decide where your advertising campaign should be
conducted; and,
 estimate your potential market share.

The more detailed your market research the sounder, more

reliable the rest of your business planning will be. Market
research identifies customer potential. Take time to do it properly
and repeat it until you get results that are reliable. Remember, by
finding out what customers want and then providing them with it
at a profit, your chances of success are vastly increased. The table
below sets out some of the key research issues.

Research topic Typical questions

Customer profile Who are the buyers of your product or service likely to be?
How many will actually buy? How can you define or
describe them? Where are they? How can they be located?

Customer Why will they buy? What motivates them to buy? What
attitudes and particular benefits are they looking for? How do they judge
requirements value for money? How do they want to be able to buy? How
do they go about making buying decisions? Who or what
plays a part in making buying decisions or can influence the
decisions?
Competition What is being offered at the moment and by whom? What
actually sells at the moment? How are these products
being
sold? Where and from whom do customers buy? What do
customers think of their existing suppliers and
products/services? What would encourage them to switch?

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 Market research for the first time

Market size (volume and How many existing and prospective buyers are there? How often
value) are they likely to buy? How much of each type of product is being
sold? At what prices? Are prices very similar or widely different?
Why? What prices will buyers be willing to pay? How price sensitive
is the market?

Market structure What is the typical supply chain like – materials suppliers;
manufacturers; distribution channels; end-users? Who buys what
from whom? How many operators are there – and who are the key
players – at each stage in the supply chain? At what stage of
development is the market – new, growing, well-established,
declining?

Environmental forces What factors have a major influence on market development –

political activity; economic trends; social issues; technological
development; balance of supply and demand; market entry barriers;
resource issues? How are these factors affecting the market –
growth rates, trends, structure, stability, customer preferences,
profitability, etc?

Specific considerations Are there any special regulations or standards to meet? With what
legislation must you comply?

Using the above as a framework will enable you to compile a list

of all the necessary points you want to cover and thus define your
research aims, though it is not necessarily an exhaustive list of all
the questions you might have. Working through each of the
above and thinking about what you do know or don’t know can
act as a prompt for specific questions for which you do not yet
have the answers.

Market forces
As you undertake your research, it may help to bear in mind
some of the competitive forces on your business. Professor
Michael Porter, of the Harvard Business School, believes that
position in the market place is all important and has developed
what he calls his five forces model to reflect the basic competitive
market forces which impinge on any business. These are:

 Rivalry among existing businesses competing to

supply the
same product or service;

 The threat of new entrants in the marketplace and

the
impact they may have: If the barriers to entry are high there
is much less of a threat to existing players than if it is fairly
easy for a new firm to join in the fun. Conversely, as a new
entrant you will be happier if there are few factors that pose a
major block to entering your chosen market.

 The threat of substitute products or services, including

those
which, though different to yours, might provide similar
benefits: Customers may have the choice not only of buying
your particular type of products or services - from you or your
direct competitors - but also of choosing a substitute method
of solving the problem. For example, suppliers of manual
accounting packages are not only competing against each
other, they also face the possibility of customers deciding to
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 Market research for the first time
use computerised systems.

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 Market research for the first time
 The bargaining power of suppliers and, in
particular, their effect on costs: If the supplier of a particular
product or service has little competition or is a monopoly, you
may find it difficult to negotiate arrangements which are cost
effective.
You may then need to look for substitutes.

 The bargaining power of customers, and in particular, their effect

on prices: Without customers there is no market. They usually
have notable buying power simply because they are in a position
to choose from whom they buy although this is not necessarily
always the case. You may be fortunate in being the sole supplier
of a particular type of product or service aimed at a particular
target group - often called niche marketing - but such luxuries
seldom last for long.

These factors, summarised in the middle of the figure below, will

effectively determine the likely profitability of any business because
they affect costs, prices and investment requirements. Part of the role of
market research, then, is to examine these forces and to be able to make
informed decisions taking this information into consideration.

Environmental forces

There are also forces - which are inherent in the environment -which
will impact on every business in a particular market. These
are grouped in the outer circle of the figure. Political forces refers
to current and possible future pressures brought about by local,

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 Market research for the first time
national or international political influences. Economic issues
can be closely linked to political issues and can also vary within
countries as well as internationally. Social forces can be one of
the most difficult to assess but are often the most influential since
most of the market drivers that determine what products and services
people want to buy, and why, fall into this category.
Technological development trends are not only relevant to
directly related industries. For example trends in sales of agriculture
products from rural areas to urban areas would be affected by farm
to road network and availability of latest consumer products in rural
areas, inspite of customer purchasing power would in addition to
road network, depend on rural population’s, degree of exposure to
media campaign.

Opportunities and threats

You will be successful with your business if you can identify

opportunities in the marketplace and avoid the threats. A
thorough analysis and, once started, the continuing gathering of
market intelligence should enable you to keep an eye on both.

1. Opportunities & threats

Now it's time for you to do some work. Think about your business.
Prepare some notebook pages set out like these.

Score 10 for highest

1 for lowest

Brainstorm opportunities and threats caused by the environmental

(PEST) factors and by Porter's market forces. Do not worry too
much at this stage about the accuracy of your list - you will have
the opportunity to research and refine it later.

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 Market research for the first time
Analysis of these influences, known as a PEST or as a STEP analysis, is covered in
more detail in “Planning to Succeed in Business”, David Irwin, Pitman, 1995.

Positioning your business

Thinking carefully about the market place and pressures will help
you to think about your likely customers.

Who do you see as your customers? Can you define them

precisely? How will they perceive your product or service? Have
you considered, for example, whether it will be a high quality,
high price premium product or a low cost, low price, commodity
product? How will you differentiate your business from your
competitors?

Competitive advantages such as these are known as differentiation

and cost leadership. Furthermore, you may decide to focus
on a fairly narrow market profile or segment. The way you choose to
position your product will be reflected in the way that you promote it,
the image and in the businesses that you see as competitors.2

Profiling customers

All businesses need to identify and then target accurately their

prospective customer groups. An accurate profile of your
customers’ needs will help you both to find them and to conduct
direct research to show how you can best satisfy their needs at a
price they can afford. In addition, promotion activities can then
be planned appropriately. This is particularly necessary for small
businesses. With limited resources you cannot hope to compete
in all available markets. For a small business this either means
finding a highly specialised ‘niche’ in a national or international
market, or tailoring a product or service to compete in local
markets.

Whatever your business is, you should be specific regarding the

segment in which you will operate. You might, for example:

 offer a service to community by opening an Internet café

 provide toys and games for children under 12 years old; or,

 provide an environmentally friendly range of packaging

materials for use in the food industry.

A product/market matrix can help: Products or needs are shown

in columns and customer groups or segments in rows. Take for
example the market for restaurant in Peshawar. You might conclude,
from your market research, that there are three segments - large
businesses, small businesses and household / families. You might feel
that there are a number of needs of each of these groups such as
foods like Continental, Chinese, Pakistani and facilities for conference
rooms etc.
Explained in more detail in “Marketing for the first time”,

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 Market research for the first time

SHEERAZ RESTAURANT PESHAWER

(Market Research Matrix)

Products \ Market  Large Small Families

businesses businesses
↓

Chinese food
* * *
Pakistani food * * *

Conference facility * *

You can then set them out in a matrix as shown in the

illustration. Not every market requires every product. This is still
very simplified of course. Needs of large business would be quite
different from Household customers.

What are your customers looking for?

It is important to satisfy the needs of your customers. When

asked what his business did, Mr. S.M.Usman Allahwala founder
of TIBET Group replied “In the factory, we make cosmetics; in the
store we sell hope”. In other words, businesses sell features, but
people buy benefits. This is true of every product or service.

Maslow, the eminent American psychologist, suggested that “all

consumers are goal seekers who gratify their needs by purchase
and consumption”. He classified consumer needs in a five stage
pyramid known as the Hierarchy of Needs. The first and largest
need was physiological (hunger and thirst), followed by safety, a
feeling of belonging, self-esteem and status and, at the top of the
pyramid, self-realisation and a sense of achievement.

Every product or service is bought to satisfy one or more of these

needs. So, for example, as people’s hunger and thirst needs are
satisfied, they move up the hierarchy, to satisfy other needs.
People buying basic food stuff from a high street, high volume
turnover outlets like Students’ Biryani at Karachi are buying food to
live, whereas, people who eat at OKRA, Zamzama Karachi buy
goods from a high quality outlets with a large range of
exotic or specialised foods are buying for self gratification or
egotistical reasons. Both stores are 'convenient' for their
customers’ profile. However, the 'convenience' means something
entirely different to each set of customers.

Where are your customers on the ‘needs’ hierarchy and how can
your product or service help them to achieve their goals? What
do customers think about the kind of products or services being
offered? What are their likes and dislikes? What attributes are
important to them? What features or promises would be most

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 Market research for the first time

likely to make them use your product or service? What benefit

would they gain from your product or service?

Understanding your market can also ensure that you are alive to
changes in say, technology or customer preferences. Conversely,
if you do not understand what you are really providing, you can
be overtaken by competitors or by changing buying habits. Look,
for example, what happened to the Swiss watch industry. Swiss
watches were renowned for being well made, precision,
mechanical time pieces. But the manufacturers failed to see what
was happening in the electronics industry and they were
decimated by the introduction of Digital & Quartz watches from
Japan which could offer a major benefit (accuracy) at an extremely
low price. It is only recently that the Swiss have fought back, with
companies such as Swatch stealing a march by promoting watches as
fashion accessories. What business are they in now?

Whilst it is important to understand your customers’ needs, do

not be totally constrained by what they tell you. “However well a
company meets the articulated needs of current customers, it
runs a great risk if it doesn’t have a view of the needs customers
can’t yet articulate, but would love to have satisfied”. In other
words, you have to make some effort to anticipate what future
needs they would like to have satisfied!3

The seller pays for the features but the customer buys the
benefits. So the benefits must be more valuable to the customer
than the features cost you, the supplier, to deliver.

2. Needs of customers

Refer back to your list of opportunities and threats. Now think

about the possible needs of customers - all of which are
opportunities - and prepare a product/market matrix. Then
describe, as precisely as you can, your expected customers.

Case Study
One client involved in graphic design, for example, has segmented
the market as follows:
A B C D E F G

1995

1996

1997

1998

1999

2000

Gary Hamal & G.K. Prahalad, “Competing for the Future”, Harvard
University Press, 1994.

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 Market research for the first time

A Clients who buy print and don’t care about design.

B Clients who are worried about design but can’t afford it so

go to ”Design and Print” businesses. They look around for the best
price and so fail to build up a relationship with a design company.
Customers know what they want in advance and the designers simply
react to requests.

C Clients who want to use a design company for more than

simple print but constantly say they’re too expensive – always
screwing the price down.

D Clients who appreciate the importance of having a good

image and want to build up a relationship with a design company
to implement this. This is still quite reactive work; the customers
know what they want at the beginning of the year and discuss it
with the designers but it remains primarily the customers’ decisions
and ideas. There is still a concern about price.

E Clients who are not just getting a supplier to do a specific

job. They know vaguely what they need and want the problem
taken away. There is more control by the designer over the work to
be done for them. Customers want to build a long term relationship.

F Clients who take on board proactive ideas from the

designers. They know how they want to appear but will wait until
ideas are suggested to them to decide how to get their message
across.

G Clients who are willing to let a design company control

their budget. They discuss their marketing plan with the designers
who then help implement their marketing strategy over the year.

Researching your market

By now, you should have a pretty good idea of the structure of

the marketplace and your possible position within it. The next
step is to undertake more detailed research to confirm and
expand your understanding of the marketplace - and to give you
the information required to convince others to back your idea
(or, possibly, to convince yourself to look at a different idea in a
different market!).

In a nutshell, market research is observation, experimentation

and asking questions - nothing else.

Information about your potential customers and your

competition can be collected in two ways: using secondary
information sources, or carrying out primary research.

The term secondary research refers to research which has been

conducted by other parties and to other published information.
There are numerous published sources that can provide

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 Market research for the first time
information related to your business idea. Your local SMEDA
helpdesk, Central Statistical Office Bulletin, Local chamber of
Commerce Library or friendly contact in trade can help you
to access background information quickly and cheaply and assist
you in deciding what, if any, further in-depth research is needed.

Primary research involves talking to and observing your

customers, potential customers and others’ customers. This kind
of research provides information that is specific to you, and is
concerned with the impact of your business on the market, as
well as that of your direct competitors. For existing businesses,
this will involve talking to customers, both actual and potential,
and looking at past performance on indicators such as sales
volume. For new businesses, this kind of research will require an
assessment of likely demand, by dealing with potential customers
to find out the level of interest.

Primary research should always be validated by secondary

research to ensure accuracy and honesty of respondents. Good
primary research also says something about you and your
approach to business as it is difficult and often time consuming if
it lacks discipline.

It is essential to research the market for any product or service

very carefully. If others are already offering something similar, it
is no guarantee that you will be successful too. Conversely, gaps
may exist because of lack of demand rather than lack of supply.
Market research should be undertaken before you launch a new
product or service. Assumptions about the market are exactly
that...assumptions. They must be tested carefully.

Planning your research

The aim of market research is to assist you to make informed

business decisions. Market research can provide you with
information covering, for instance:

 Recent and forecasted trends.

 The potential size of your market.
 Level of demand for your product or service.
 Customer characteristics.

Before diving into your market research, it is a good idea to take

some time to think about what you need to know. The amount of
information available is vast, and it is all too easy to get bogged
down or diverted from your purpose.

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 Market research for the first time
Ask yourself these three key questions, which cover the main
things you will need to know.

 Customers - can I interest them in my product or service, can

I communicate with them, and will they pay me enough to be
profitable?
 Competitors - will I be able to compete with other
businesses
in the marketplace?
 Operations - do I have the ability and resources to meet the
needs of my customers?

Examples of key questions

 Customers:

o What type of person/business will buy your product or

service?

o How much spending power do they have?

o Will this rise or fall?

o How do I let them know about my product or service?

o What do they want from my product or service?

o Why would they buy my product or service?

 Competitors:

o Is anyone doing this already?

o What do they charge?

o Are there gaps in the market?

o Is anyone likely to muscle in?

o What methods/equipment do they use?

o Are they any good at it and why?

 Operations:

o How much will I charge?

o What level of funding will I need?

o Where can I get funding?

o What specialist skills are needed?

o What equipment is necessary?

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 Market research for the first time
o What specialist regulations will I need to meet?

o How many am I likely to sell?

3. Planning your market research

What do you need to learn about your market? Before you start
researching it makes sense to plan. Some market research
companies write their report - full of gaps of course - before they
do their research. This helps them to concentrate their minds on
what information they hope to derive from their research.

Trends in your market

The current state of sales in the market as a whole will have
important implications on the viability of a business starting up,
expanding, or even one content with just surviving.

You need some idea of the market size in order to work out how
much of your product or service you can realistically expect to
sell. If you were in the home improvements market your
calculations may run as follows: If, on average, people spend Rs.
10/day on eating out and if the number of such customers in the
range of that retail food out let is 25,000 people then total annual
sales for that area is 10x30x12x25000 = Rs. 90,000,000.00.This is
called Market Potential which is expected sales in that area under
given period under ideal conditions.Using the same data for previous
years, you can work out how fast the market is expanding or
contracting.

You should also be able to identify whether your market is static

or changing rapidly, whether what you are offering has a stable
demand or is just a craze. Combining this information with your
sales figures over the last few years should help to give you an
indication of how the market may develop in the future. Is the
market seasonal? Will demand be the same throughout the year,
or will there be peaks and troughs? Are other products or services
complementary or competitive? What might be the impact of
reductions or increases in their sales?

If you know in advance that the market is seasonal, you can

better prepare for the troughs: Do you concentrate some
advertising here to raise the troughs? Can this time be used for
building up stock or finding new customers for later on?

If you have identified trends - say, rising sales - are they repeated
in all segments of the market or are different parts of the market
reacting in different ways? For example, increasing disposable
income may encourage more people to spend more in the shops
but there may be a similar decline amongst market traders.

Where to start

A considerable amount of information can be obtained from your

nearest your local SMEDA helpdesk, Central Statistical Office,
Chamber Libraries, contacts in trade , yellow pages directories, press

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 Market research for the first time
articles, telephone directories, professional bodies, articles in
Newspapers and magazines and the electoral list.

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 Market research for the first time

Whilst you need to ensure it is current and that the compilers

were not biased, information from these sources includes:

 Market Information: Size, market location, types of

product/service, overall market, main market trends, pricing
structures.
 Competition: How many competitors locally and nationally,
turnover product group, services, branches? Are there
alternative products with similar benefits?
 Customers: Customer type for various products/services,
spending habits, customer preferences.
 Future trends: Influenced by forecast population changes,
technological developments, changing customer trends,
political and economic forecasts, etc.

Trade magazines and Trade magazines published in your chosen market can be
newspapers very useful for gaining a general impression of current
market activity – competitors, current issues and opinions,
active agents and distributors, ancillary services. Special
features can sometimes include relevant market statistics.

Public reference Typically the main source of information. Reference

libraries Libraries in larger towns and cities store a wealth of
information on a vast range of topics; trade directories,
commercially produced market reports, published
commercial and government statistics, newspaper and
magazine archives, copies of UK, European and USA
legislation, reference books and catalogues, copies of
annual reports of quoted companies, etc. Access to this
information is usually free though some libraries now
charge for librarian assisted searches. Libraries maintained
by State Bank of Pakistan & Export Promotion Bureau are
good examples.

Trade associations Many trade associations maintain their own reference

libraries. Being more geared towards membership interest,
these tend to be less extensive than public libraries but can
often hold material otherwise unavailable elsewhere. Trade
associations often conduct heir own research into national
and international markets and will make extracts of the
information available to members. Charging policies vary
from association to association.

Banks Banks are an obvious source of financial related data such

as exchange rate forecasts. Not so commonly known is
that the major banks have departments that are involved in
researching world markets and economic trends and
assessing trading risk. Contact your SMEDA helpdesk or
SME bank manager for details of the full range of services
your bank may be able to offer.

Others If you have access to Internet and have acquired vital skills
in its use (if not please do it now) then through Internet you
may have many answers to your queries.

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 Market research for the first time

Making use of these sources of existing information can save

both time and money, but it is important to check just how
up-to-date the information is. Some types of printed material can
become out of date relatively quickly. Furthermore, it is very
unlikely that desk research will enable you to obtain all the
information you need. At best you will obtain a very good
impression of what is generally happening in the market and get a
good feel for the overall market trends. At worst you may find
there is very little information with which to work.

4. Secondary research

Now it’s your turn to undertake some research. Start with

secondary research. Go to the library or obtain published
information from other sources. How much can you learn about
your proposed market? How big is it? How many suppliers are
there already? Describe any identifiable market trends. Describe
your likely customers - as precisely as possible.

Your own market research

Published information cannot answer all your questions. Most

small and medium sized businesses are unique or specialised in
some way, so it is likely that the bulk of useful data will have to
be gathered by you. Bear in mind that imaginative and thorough
market research will impress those who you want to support your
business, as well as providing you with valuable management
information.

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Location

Where your business is located requires careful consideration.

There are regional influences to consider as a bigger issue, and a
finer issue on the subject of physical location is whether or not
you are in a place where your potential customers habitually buy.
For retail outlets, often a few yards can make the difference
between success and failure depending on the amount of passing
trade. The footfall, that is, the amount of people passing a
particular place within a given period of time is an important
consideration.

 Timing

Timing is important. Research must assess how fashionable a

product or service is at one particular moment in time and also
where a particular product is within its 'lifespan'. All products are
considered to have a lifespan and a major business skill is
knowing just where on the 'lifespan curve' the launch is taking
place. The launch must take place within the bottom two-thirds
of the incline in order to derive the maximum benefit from when
the product actually 'peaks'.

 Customers

The most important form of research is a survey of your potential

customers. The aim is to find out exactly what they want. The
results of such a survey will be the most crucial piece of evidence
that you will present. It is the only way to find out if there are
enough people out there who will pay for your product/service.
You may also learn how to make your product/service even more
attractive to them, and why they would buy from you.

There are three basic methods you can use to find out about your
customers.

 Personal Survey
 Telephone Survey
 Postal Survey

Survey methods

Personal Survey

PROS CONS

Greater flexibility Time consuming

Opportunity to clarify if misunderstanding Expensive

arise
Respondents have little time to think
Can ask supplementary questions

High response rate

Can watch body language as well as

verbal responses

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Telephone Survey
PROS CONS
More flexibility and higher response than Interview must be short
post Respondents have little time to think
Reach people who won’t give personal May give inaccurate response
interview Costly
Fast Only reach people with telephones
Convenient when calls are far apart Lack of perrsonal rapport
geographically
Postal Survey
PROS CONS
Respondents have time to think Notoriously low response
May express true feelings and be more No flexibility to clarify answers
objective Limited information produced
Useful when respondents are difficult to Response may not represent sample
contact mailed
Time consuming
Expensive

Questions to ask in a survey

Having identified the consumer and method of carrying out the

survey, you must decide what to ask.

 What do you want to know?

 Build a question around it; for example, where will I
Advertise for used car sales business?

Q. When you’re looking for a used car do you look :

 in Yellow Pages directories?

 In Local Newspaper classified Ad. Section
 to a Car Show room
 towards your friendly car mechanic

It is useful to design a questionnaire because this ensures that

interviews remain brief, and that the information is consistent. In
addition, it provides a simple and convenient means of logging
the answers, and a standardised basis for assessing the results.
The type of information sought in a survey will vary according to
the type of product/service involved, but there are some common
requirements:

 What is the product or service used for?

 How many are bought each year?
 Which brands have been tried?
 Which brand has been bought most often?
 Which attributes are most important in the decision to
purchase this brand?
 Which of the product’s attributes would be particularly
important to the consumer?

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DO’s and DON’Ts for good questionnaires

DO’s DON’Ts
Do define the target audience, e.g. it is not Don’t ask questions the respondent probably cannot
possible to check the 16-25 year old answer, e.g. “What is your husband’s favourite business
fashion market by surveying pensioners! topic.

Do keep the wording as SIMPLE as Keep the questions to respondent’s personal experience.
possible, e.g. do not ask passers-by about
“advertising copy”.
Don’t ask LEADING questions, which imply an answer,
Do be PRECISE, e.g. not “Do you watch TV e.g. “Do you think the capacity of the fridge is too small?”.
regularly?” but “Do you watch TV every
day?”. Don’t use EMOTIVE words, e.g. “Do you buy cheap
brands?” (“Low Cost” is preferable).
Do put EASY and INTERESTING questions
first. Don’t ask DOUBLE-BARRELLED questions, e.g. “Do you
like the colour and design of this dress?”
Do have a LOGICAL order.
Don’t ask touch on certain topics for else phrase the
Do keep CONFIDENTIAL or PERSONAL question carefully, e.g. “Tell me your exact income” (“No”
matters and COMPLEX questions towards would be the answer). Instead, give a choice of income
the end. bands.

Do try to make the FIRST question fix the Don’t ask questions which involve loss of status for the
factor under review - “Do you own a respondent, e.g. “Can you afford a car?”.
computer?”,

Do ask questions in the past tense, that Don’t ask more than three or four multiple-choice
way you are more likely to get a truthful questions. Your respondent’s memory is not
answer. that good.

Do a mock analysis of your questionnaire

before conducting your research

Have a maximum of six or seven questions with no more than

four choices of answer. Four choices stops people from opting for
the central response.

Test out your questionnaire

Always conduct a sample analysis to make sure you get the

information you need before conducting your full research. Try
the questionnaire on a few people to check that they understand
the questions and that the answers you get are meaningful. If
your “test” respondents keep asking you to explain the question
or repeat it, you know that the question needs to be rephrased.

Sample techniques

Don’t be tempted just to survey the pedestrians you like the look
of, or seem easiest to talk to! This will prejudice your sample and
impair your results. Stick to a rigorous system, e.g. by approaching
every 7th or 10th person as you stand waiting, or visit homes, or
telephone a sample taken from the phone book. You will need to
sample a significant number of people to achieve usable results -at
least 60 and ideally closer to 200. See your marketplace as it is

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 Market research for the first time

and not how you desperately would like it to be - the only person
you’re kidding is yourself.

Interviews

Interviews are particularly worthwhile for existing businesses

with existing customers and suppliers. They are in the unique
position of having a clear view of how the business is regarded
and will be able to suggest what improvements could be made.
As well as providing information to increase your understanding
of the market, the process of asking your customers and suppliers
will promote the business as being concerned with customer and
supplier care.
If you are going to talk to customers formally it is important to
use a standard questionnaire - so that you ensure that you ask
everyone all the questions to which you are seeking answers. If
people offer more information than simply the answer to the
question, write it down. You will probably find that customers are
very willing to help you by answering your questions - and some
of the most useful feedback often comes in asides or the
extensions to answers.
You do not need to meet people face to face to conduct personal
interviews. These can be done over the telephone. Once you are
in business you may choose to outsource this research to a
professional research organization. You may locate such people
through SMEDA helpdesk.

Focus groups

A focus group is simply a number of people who discuss your

product or service - what they think of it, whether they would
buy it, whether they think others would buy it, etc. It is important
to collect together people whose opinions you will value - this
means assembling people who match your customer profile. Their
feedback will then provide you with information that can be
considered typical of this target group. For existing businesses,
the group could consist of existing customers or suppliers.
Bringing together a group of customers in a focus group can
provide very valuable information, but you do need to ask the
right questions. Even informal conversations, for example, with a
small group of housewives over coffee, can often give as much
information and as many leads to a small business as an
expensive and formal survey. These informal sessions will also tell
you the language - vocabulary - which customers use when
talking about your product or service. Focus groups can be a
useful follow up to a more formal questionnaire.
If you decide to use focus groups to gather market intelligence,
remember some of the principles of effective communication.

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 Market research for the first time

Plan your questions:

 Use open questions;

 Listen actively;
 Clarify and summarise to check understanding.

5. Primary research

Now do some primary research. Prepare and pilot a

questionnaire - then do a larger survey. Alternatively organise a
focus group. Ask about customer needs and preferences. But use
the opportunity to ask about your competitors as well -particularly
their strengths and weaknesses. Analyse the results
and describe what you have learnt about your potential customers
and about your competitors.

Competitor scans

Gathering information about your competitors is crucial, as this

knowledge will play an important part in determining your
strategy. You have to know everything about them: their product
range, prices, discount structure, delivery arrangements,
specifications, minimum order quantities, terms of trade and the
kind of advertising that competitors use, where they advertise
and with what success. What their customer profiling mix is and
why customers buy from them.

Finding out information about your competitors may not be as

difficult as it may seem. For instance, if you have experience
within your market, you may already know a great deal about the
competition. And you will probably know who you can talk to
within the industry in order to find out more. Building up a
number of contacts in your field will be useful for keeping up to
date with what is happening in the market, and they can also be
sources of advice.

Even if you are new to a particular market, there is a certain

amount of information available to you. As mentioned earlier,
trade journals are a useful source of information, with articles on
your competitors, and advertisements. If, in your market research
with potential customers, you talk to someone who is at present a
customer of a competitor, they may be willing to tell you about
the service they receive.

If your competitors are companies, they have to publish an

annual report - these can be obtained from them on request which, in
some cases, they may even decline. In addition to that gather copies
of your competitors’ marketing materials. Make sure that you have
copies of their current price lists. Find out how they handle
enquiries, what questions they ask, and what they perceive is
important to their customers by their answers.

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 Market research for the first time

Finally, if you’re feeling brave, you could talk to your competitors

yourself (or get a friend to do it!) and ask for brochures, sample
quotes, or even purchase one of their products - particularly
valuable if you are involved in manufacturing something that is
not too expensive. Whether you admit to being a prospective or
an actual competitor is up to you!

6. Competitor scans

Learn all you can about your competitors. Use published sources.
Obtain their annual reports. Ask survey or focus group questions.
Analyse and describe their strengths and weaknesses.

Test marketing

The best way of finding out whether your product or service will
sell is to carry out trial runs - known as test marketing. Retailers
often carry out test marketing - they will try a new product in a
few stores, and if they sell well, then other stores will also stock it,
or they will take more stock in their next order. However, if the
product fails to sell, the amount of money wasted is limited -much
more than if all stores had taken the stock, or a large order
had been placed originally.

In manufacturing, prototypes can be made up and shown to

prospective clients - they will be reluctant to place advance
orders without this. Or a company providing services may wish to
begin a new service on a small scale before integrating it into the
company brochures or investing in it.

Analysing information

Market research analysis is the way in which a business uses the

collected data to draw conclusions about potential customers and
even to project financial outcomes. It is not an exact science and
will probably take a different form with every individual business.

The objectives, however, are to:

 determine the likely size of the market; and,

 estimate the share that you might be able to achieve; that is,
to forecast likely sales.

Remember that the aim of any market research exercise is to give

you information and answers on specific matters related to your
business. You must ensure that your analysis gives you this
information. Use and take note carefully of the results which
your questionnaire provides. Remember that there is no point in
pursuing a business idea if your research has shown that there
will be little demand for it.

Once you’ve gathered your data, you need to analyse it, organise
it and make sense of it so that you can retain the important
elements, process them and then make those all important
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 Market research for the first time

decisions. You may have to take particular care not to

misinterpret what you learn from your research. Draw
conclusions from it to “shape” your business. Keep an open mind.
Be honest. The information you acquire is for you - not for the
bank.

Do not allow your preconceptions to cloud the message from

focus groups - or any other form of market research. A well
known jeans company some years ago was convinced that it had
spotted a gap in the market and held a series of focus groups. The
clear message coming from the groups was that there was indeed
a gap, but that the strong brand name of the company was not
associated with that gap. The company ignored the message,
launched a new product - and discovered a failure on its hands!

7. Analysing your data

When analysing what you have learnt, attempt to identify any

external factors which might affect you in implementing your
business plans. What are the trends in the market? What may
affect those trends (for example, technological changes or
political changes or economic changes)? What will be the
reaction of your competitors to a new entrant in the market
place? Describe the opportunities and the threats.

Sales forecasting
Unlike existing businesses, new ventures will have no previous
performance upon which to base any sales forecast. However,
determining what level of sales you can expect to achieve is a
crucial part of the planning process - without this, you can have
no real idea of whether your business will be able to make a
profit. Example given under heading “trends in your market”
has enabled you to calculate Market Potential . Having identified
competitors and made SWOT analysis you may estimate share that
each market player would enjoy in that market. However, not all
competitors will have an equal share - factors such as price, location
of premises, quality of the product or service, and image &
positioning of the company will all influence market share.

When predicting likely sales for a new business, then, it is

important to verify any estimate of market share with your own
research. Information from questionnaires and focus groups will
give you an indication of the level of interest, while market
testing will provide evidence on the viability of your product or
service. If you need to borrow money, this will be particularly
important when approaching the banker!

Most small businesses should aim for zero based forecasting. That
is, each time you forecast, do your best to look at the total market
and your likely share. Is the market expanding or contracting? Talk
to your major customers about their likely purchases from you next
year. Are you planning additional marketing? What is the likely
effect of that marketing? Will you be putting up your prices?

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 Market research for the first time

If so, what is the likely effect of that on your sales? Use all
this information to predict as accurately as possible your sales
both by value and by volume. If you have more than one product,
sales budgets should be prepared for each of them. If you sell in
more than one area (Punjab, Sindh, N.W.F.P.,Baluchistan) then
it may be helpful to have a sales budget for each area. You
should also aim to prepare your sales budget on a monthly,
quarterly or annual basis.

8. Forecast your sales

Now have a stab at forecasting your expected sales for your next
year in business. Do it on a cumulative basis and express your
forecast both by volume and value.

Sales platform

Forecasting sales is very difficult, at least until you have built up

some historical data. It might be appropriate, therefore, to make
some test calls to discover the rate of conversion of calls into
sales. Then you can calculate how many calls will be needed
every week or every month to achieve the sales required.
Consider whether that number of calls is manageable. Does it
leave enough time to do the work?

Strengths and weaknesses

If you are already familiar with the concept of a SWOT analysis

(strengths, weaknesses, opportunities and threats) it will come as
no surprise to find that, as the summary of your market
environment research was focused on opportunities and threats,
the summary of your research into market structure and activity
is focused on strengths and weaknesses. This is principally
because success in any market is being able to do a better job of
satisfying the target customer group and an assessment of
strengths and weaknesses is mainly concerned with identifying
what you are good at and what you are not so good at.
There are two points of view you need to consider. Firstly, from
your competitor research you will be able to develop your own
view of how well you compare with the competition. Your
assessment will include aspects such as production efficiency,
technological capabilities, financial strength, distribution
capabilities, etc. These are internal factors related to how well
your business is able to perform relative to your competitors. The
second viewpoint is that of the customers. They are unlikely to be
particularly concerned about whether your production process is
more efficient than a competitor’s, or whether you have more
up-to-date equipment. They are much more likely to base their
view of your strengths and weaknesses on factors such as speed of
response, standards of customer care, product quality issues and
perceived value for money - the issues that matter to them.

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 Market research for the first time

Assessing your strengths and weaknesses from both points of

view helps by encouraging you to think in terms of what your
customers really want and, consequently, what resources you will
need to be able to do that better job of satisfying those
requirements.

9. Strengths & weaknesses

Brainstorm your strengths and weaknesses and those of any

colleagues with whom you work. Think about the resources that
you will have available.

Conclusion

Having undertaken and completed your market research you will

now be in a position to use the information to formulate the
plans for your business - it may show up weaknesses in your
market research. If it does, take the time to address those
weaknesses - it will be time well spent.
Finally, remember that market research is a continuing process to
assimilate information to help you make good business decisions -it
never stops. The market tomorrow will have changed; you are
only as good as your current knowledge of the market place.

© Project North East / LiveWIRE 1996

 Market research for the first time

*NAMES OF SOME LIBRARIES IN PAKISTAN

Allama I.I. Kazi Library University of Sindh - Jamshoro

All Pakistan Educational Conference Library Karachi
Archaeological Library Taxila
Archival Museum Peshawar
Atomic Energy Minerals Center Library Lahore
Azad Kashmir Assembly Library Muzzafarabad
Bait-ul-Hikma (Hamdard University) Library Karachi
Bahauddin Zakriya University Library Multan
Baluchistan Provincial Assembly Library, Quetta
Baluchistan University Library Quetta
British Council Library Islamabad
British Council Library Karachi
British Council Library Lahore
British Council Library Peshawar
Central Library Bahawalpur
Central Secretariat Library Islamabad
Dr. Mahmood Hussain Library, University of Karachi
Dr. Baqir's Library Lahore
Dyal Singh Trust Library Lahore
Ewing Memorial Library Lahore
Sport Promotion Bureau Library, Karachi - Lahore
Faisal Shaheed Library University of Engineering and
Technology Lahore
Goethe Institute of Karachi Pakistan
Gomal University Library Dera Ismail Khan
Government College Library Lahore
Government College Library Peshawar
Hamdard University Library Karachi
Institute of Sindhiology Jamshoro
International Islamic University Central Library
Islamia College Lahore Library Lahore
Islamia College Library Peshawar
Islamia University Library Bahawalpur
© Project North East / LiveWIRE 1996
 Market research for the first time
Islamic Research Institute Library
Islamic Documentation and Information Center Karachi
Khalikdina Hall Library Association Karachi
Lahore University of Management Sciences Lahore, Pakistan
Liquat Memorial Library Karachi
Mehran University of Eng. & Technology Library Jamshoro
Ministry of Agriculture and Works Library Islamabad
National Archives of Pakistan Islamabad
National Assembly Library Islamabad
National Bank of Pakistan Head office Library Karachi
National Library of Pakistan Islamabad
NED University of Engineering and Technology Library
Karachi
NWFP Agriculture University Library Peshawar
NWFP University of Engineering and Technology Library
Peshawar
NWFP Provincial Assembly Library Peshawar
Pakistan Administrative Staff College Library Lahore
Pakistan Forest Institute Library Peshawar
Pakistan Institute of Interational Affairs Library Karachi
Pakistan Library Network Karachi, Pakistan
Pakistan National Center Library Hyderabad
Pakistan Scientific and Technological Information Center
Islamabad
Punjab Provincial Assembly Library Lahore
Punjab Public Library Lahore
Punjab University Library Lahore
Peshawar University Library Peshawar
Quaid-e-Azam Library Lahore
Quaid-e-Azam University Library Islamabad
Scientific Information Center, Karachi
Shaban Library, Peshawar
Shamsul Ulema Daudpota Sindh Government Library,
Hyderabad
Sindh Provincial Assembly Library, Karachi

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 Market research for the first time
State Bank of Pakistan Library Karachi
UNESCO Regional Office Library Islamabad
University of Agriculture Library Faisalabad
University of Azad Jammu and Kashmir Library Muzaffarabad
University of Punjab Library Lahore
University of Engineering and Technology Lahore
University of Sindh Library Jamshoro (near Hyderabad)
University of Engineering and Technology Taxila

* Source Internet

© Project North East / LiveWIRE 1996