Market Research?

[TheCompany]

Greetings,

I am in the early stages of formulating a business plan. I am prepared to do market research, both primary and secondary, but I am confused as to finding information.

My company is entering a marketplace that is non-competitive. We have established indirect competitors but I am having trouble identifying my direct competitors. Can anyone comment?

[BusinessAdviser]

Market research:

It's great to see that you've identified the need for market research. Now, the question is how to do it. Before I or anyone else start shouting out different research techniques, it is imperative that we know at least two things: (1) your business, and (2) your target market. Without knowing these, any advice, again whether it comes from myself or anyone else, is just BS.

Competition:

I am not 100% sure what you mean when you say that you are entering a marketplace that is "non-competitive." Typically, non-competitive markets, or at least less competitive markets, are those in which the market is highly concentrated in one or a few companies and where products are greatly differentiated. This is at the opposite end of the spectrum from a purely competitive market.

Either way, the best way to identify your competitors is to creatively brainstorm substitutes for your product, be it a good or service. Think of any conceivable substitute, as it is better to include a few that might not end up being an actual substitute than to miss or discount one and suffer as a result. These can then be used to create your list of competitors.

Additionally, you can brainstorm compliments for your product, both currently existing or imagined. This will help you identify opportunities for both synergy and added value.

Hope this helps you get started.

[TheCompany]

Thank you for your comments, they are helpful. However, the trouble is that our concept is not a product but a service. What I meant by non-competitive is that, at the moment, there are very few companies if any offering our services all said and done.

As you mentioned above our target market is in fact highly concentrated. Any other comments YE? Thank you Jonathan, additional comments would be greatly appreciated!

[BusinessAdviser]

Thank you for your comments, they are helpful. However, the trouble is that our concept is not a product but a service. What I meant by non-competitive is that, at the moment, there are very few companies if any offering our services all said and done.

As you mentioned above our target market is in fact highly concentrated. Any other comments YE? Thank you Jonathan, additional comments would be greatly appreciated!

OK. When I referred to a "product," I meant whatever it is that you are providing to your customer, whether it is a good (tangible) or service (intangible).

You may be correct that there are very few, if any, companies offering the same services. However, that does not mean that you do not face competition. (This is a very common mistake made by inexperienced and experienced entrepreneurs alike.) The first example I can think of off the top of my head is the restaurant industry. You may be the only Mexican restaurant in town, but that doesn't mean that you are in a non-competitive market.

The key to determining your competition is to follow a two-step process:

First, you must determine the underlying customer need that your product satisfies (again, "product" refers generally to a good or service). In the example I used above, the need that you are attempting to satisfy is the customer's hunger, not the customer's desire to eat Mexican food. This is a step that seems very simple, but can be very deceiving and is often mistaken.

Second, you must rack your brain for all other ways that this customer need can be satisfied. In this example, it does not only include other Mexican restaurants. It includes other Mexican restaurants, Chinese restaurants, American bar & grills - ALL other restaurants in the area in fact. And this need can ALSO be satisfied by the customer staying home and cooking dinner. (These are the substitutes that I referred to in a prior post.) Why is it important to understand ALL of these competitors? Very simply illustrated, if every restaurant in town, including your Mexican restaurant, offers average food for $150 per plate, it doesn't matter whether you cut your price to $120 per plate, you will still lose out to the customer staying home and cooking dinner.

Thus, you see that you might be the only Mexican restaurant in town, but you are far from operating in a non-competitive market. I would bet that if we ran your service through the same competition-identifying process, we would find that there are other ways for a customer's need to be satisfied.

Why don't you start there, and, as we have talked about, if you would like help in working through such problems, we can work something out.

[paul2145r]

Would you be able to clarify as to what type of service you will be providing? I think that we would be able to provide a much clearer answer to your question.

[ladyk5]

When I was doing my business plans I used city-data.com it gives a lot of statistical information broken down by city.