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Market Study

A.Prof. Mohammed I. Migdad

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Your idea before the MS

Once you have validated your idea (i.e. ascertained that the project is realistic and that the entrepreneur is suitable for the demands and restrictions of the project), it is time to go on to the next step in planning the project.

This step involves careful attention to detail and the first thing to do is to carry out a study of your market

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Idea before

This will enable you, quickly and surely, to confirm, refine or change your first decisions regarding the "product/market" pair; in other words, which product or service are you going to sell and to what sort of customer?

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What is needed

Without having any specialist concept of marketing techniques, you must (at the risk of not being able to sell sufficient quantities of your product and eventually being forced to file for bankruptcy) ask yourself the following questions and have a clear view of how to proceed, enabling you to find and to back up with solid facts , at each step, the answers to the following questions:

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Questions for the MS

1. What & Why What are you going to sell?

(Why that product specifically, and not another? How can you be sure about what you are proposing?)Make no definite statement unless you can back it up!

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Questions for the MS

2. To whom Who are your customers?

(Why them? What makes you so sure of this?)

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Questions for the MS

3. How How will you operate and how will you

sell your product?(Why this way and not another? How can you back that up?)

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Questions for the MS

4. How much What is the forecast level of sales?

What makes you expect to meet this forecast level of turnover?What evidence is there to prove that this is realistic and can be attained?

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Questions for the MS

5. Where? Whereabouts?

(area, site)What are your reasons for thinking this is the ideal location, particularly if you are counting on a local customer base?

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Tools for Marketing

Marketing Mix includes 4Ps

1. Products

2. Price

3. Promotion or distribution mix

4. Place or communication mix

or channel of distribution

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Product Mix includes

1. Numbers of products

2. Quality

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Price Mix includes

1. Determination of prices

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Promotion or Distribution Mix

1. Advertisement

2. Public relation

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Place or Communication Mix

1. Channels of distribution

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Objectives of the market study

These are all obvious questions to ask, but you must be able to reply to each one, partly by using your common sense in the field , and find relevant answers that can be backed up with documentary evidence, careful observation, assessments, investigation and the advice of neutral parties who have the expertise necessary to discuss the subject.

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Principles of the market study

In many cases, it is feasible to carry out the study yourself.

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With a third party

Even if you do entrust it to a third party, for example to a 'Junior Entreprise,' (a student association based at the Business Schools, or 'grandes écoles') which offer very attractive prices, or to marketing professionals - details available through ADETEM (Association for the development of marketing techniques) - it is essential to take an active interest yourself so that you will be fully aware of all information regarding your market:

this is of the utmost importance.

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What is important

1. Proceed step-by-step and remain objective, prudent and ...pessimistic!

2. Meet your potential customers personally at every possible opportunity.

3. Show your future customers what it is you wish to sell (whenever possible: prototype, model, finished product, illustrated brochure presenting your services, etc.). Warning! - Do not forget to patent your idea, if necessary.

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What is important

4. Assess the available information critically, bearing in mind that it may refer to activity on a much greater scale and therefore have no relevance for a small business project or it may be too general in contrast to a speciality.

5. Always check the "freshness" of any information collected.

6. Compare several different sources of information on the same subject.

7. Continually update your knowledge of the target market.

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What is important

8. Try to contact as many people as possible who have valuable knowledge pertaining to your project (having prepared essential questions beforehand): the head of a professional organisation, a technical assistant at the Chamber of Commerce, or the Chamber of Trade, or the Chamber of Agriculture, or other experts. For example, from OSEO, from the economic services of the Collectivités Territoriales (Territorial Authorities), future suppliers, competitors, etc.

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What is important

9. Carry out a macro-economic overview of the proposed activity: national statistics, general market trends, etc.

10. Research information databases11. Moreover, you should also focus your

research on a micro-economic approach

12. Be selective as far as concerns the statistics gathered.

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The information you are looking for should cover

1. The demand (the potential customers) who should be qualified and quantified with careful attention to detail

2. The offer (direct and indirect competition) you must be fully aware of this and analyse it thoroughly

3. The environment (professional, economic, legislative, sociological, scientific, etc.), in other words, all the factors which from a distance and on closer inspection may have a predictable effect on the development of the future activity (information sources: professional bodies, professional reviews, Ministries, local authorities, experts, documentation centres, for example those provided by the Chambers of Commerce, etc.).

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After data collection & analysis

1. define precisely which products or services will be targeted at which categories of customer,

2. determine how you can make yourself stand out from your competitors,

3. work out the forecast sales figures,

4. plan everything that needs to be implemented in order to meet these hypothetical figures.

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Categories of customer

There are 4 main categories of customer; for each one, part of the information-gathering process is different

The market study should be adapted according to the category of customer you are targeting, bearing in mind that a business may have an interest in one or more customer categories.

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Identifiable customer

1. These include businesses, "professionals," and organisations with a particular statute that can be identified using database files

2. For this type of customer, it is imperative that you meet a certain number of them in person (a panel) to find out their reactions to the product or service on offer.

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3. This type of customer is a veritable godsend, since you can start to prospect for future customers while you are carrying out the market study and even record your first intended orders.

4. The hypothetical sales figures will be all the more realistic when based on such contacts (negotiations in progress, intentions to order, conditional orders).

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Local customers

This means the potential customers of a retail outlet: those who live in the immediate vicinity, or who work there, or who have to pass that way (e.g. a shop near a train station).

1. You must therefore choose the trading area of your retail outlet with care, by observing the area in minute (key features of the area, headcount passers-by at different times of the day, a questionnaire to be completed by customers, etc.).

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3. Assess the quality of life and wealth in this area, (The INSEE provides highly detailed statistics based on the most recent population census

4. Location is all-important in opening a retail outlet: it is rare that you can change the normal route taken by passers-by.

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Broad customer-base

This is the most difficult category to define. It involves cultural activities, fashion, tourism, hydrotherapy, the restaurant trade, the hotel industry, small, non-localised craft workers, etc.

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Therefore, you need to research as closely as possible all information concerning the existing offer (the competition), current trends, lifestyles, fashion, trends, (professional bodies, experts, etc.).

You should contact the key influential media, the specialist press, opinion leaders and, depending on the circumstances, other retailers who sell related products.

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The quantitative study of this customer base is no easy task, you must therefore cross-check general information, and the opinions of specialists and influential media with information obtained about the competition.

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It is not possible to reach this customer-base in person, as it is, by definition, widespread. Once you have defined a customer profile, you can carry out a survey by giving a questionnaire to a panel composed of this "customer-type" and paying close attention to the buying intentions revealed by the survey and how these may be of use in carrying out your project.

In general, growth in activities with this customer base is slow.

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Mass market customers

This involves, on the scale of a very large market, the diffusion of consumer products through the intermediary of mass-market distribution networks.

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Mass

An in-depth market study is necessary and requires the expertise of specialists in the field to carry out a study of consumer behaviour and incentives. The professional directory published by ADETEM (Association for the development of marketing techniques) can help in finding a specialist quickly and easily.

For setting up this type of business, the market study is a costly process and the commercial investments necessary are consequently very high.

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Whatever the type of project.General Recommendations

1. A market study, although not a precise science in itself, enables you to reduce uncertainties to a minimum. For this reason alone, it should on no account be ignored or rushed.

2. The information gained from a market study is only valid for a particular moment in time.

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G. Recommendations

3. A study carried out at another time and place will never correspond exactly to another project.

4. Do not hesitate to ask for advice from people who know the area and experienced professionals.

5. Do not forget that there are a number of qualified professionals who can be consulted free of charge.

6. - Whenever possible, the market study should be a pre-sales test.

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Market Segmentation

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Growth Stage

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Market Strategy