You may think you have the best idea ever for a business or product, but without laying the proper groundwork, it could easily go the way of the Edsel. Not only do you need to size up the competition, but you also need to identify who will buy your product, how much it will cost, the best approach to selling it and how many people will demand it.
To get answers to these questions, you'll need a market research plan, which you can create yourself or pay a specialist to create for you. Market research plans define an existing problem and/or outline an opportunity. From there, the marketing strategy is broken down task by task. Your plan should include objectives and the methods that you'll use to achieve those objectives, along with a time frame for completing the work.
A market research plan should provide a thorough examination of how your product or service will fare in a defined area. It should include:
- An examination of the current marketplace and an analysis of the need for your product or service
- An assessment of the competition
- Data about customers
- The direction for your marketing in the upcoming year
- Goals to be met
How to create your market research plan
Doing business without having a marketing plan is like driving without directions. You may eventually reach your destination, but there will be many costly and time-consuming mistakes made along the way.
Many entrepreneurs mistakenly believe there is a big demand for their service or product, but, in reality, there may not be, or your prices may be too high or too low, or you may be going into a business with so many restrictions that it's almost impossible to be successful. A market research plan will help you uncover significant issues or roadblocks.
Step 1. Conduct a comprehensive situation analysis.
One of the first steps in creating your marketing plan is to create a SWOT analysis (strengths, weaknesses, opportunities and threats), which is used to identify your competition, to know how they operate, and then to understand their strengths and weaknesses.
| Strengths | Strengths to include in your plan should encompass competitive advantages. These advantages can include the talent, proficiency and expertise of you and/or your executive team that can help improve the position of your company in the marketplace. |
| Weaknesses | Weaknesses are factors that reduce the ability of your company to independently achieve its objectives, such as outdated production tools, unreliable delivery and a lack of planning. |
| Opportunities | Opportunities are ways that your business can grow and become more profitable. |
| Threats | Threats would be things that prevent you from entering into a primary market, such as political developments or a labor shortage. |
Step 2: Develop clear marketing objectives.
In this section, describe the desired outcome for your marketing plan with realistic and attainable objectives, the targets, and a clear and concise time frame. The most common way to approach this is with marketing objectives, which may include the total number of customers and the retention rate, the average volume of purchases, total market share, and the proportion of your potential market that makes purchases.
Step 3: Make a financial plan.
A financial plan is essential for creating a solid marketing plan. The financial plan answers a range of questions that are critical components of your business, such as how much you intend to sell, what will you charge, how much will it cost to deliver your services or produce your products, how much will it cost for your basic operating expenses and how much financing will you need to operate your business.
In your business plan, be sure to clearly describe who you are, what your business will be about, business goals, and what your inspiration was to buy, begin or grow your business.
Step 4: Determine your target audience.
Once you know what makes you stand out from your competitors and how you'll market yourself, you should decide who to target with all this information. That's why your market research plan should clearly delineate your target audience. What are their demographics and how will these qualities affect your plan? How do your company's current products and services affect which consumers you can realistically make customers? Will that change in the future? All of these questions should be answered in your plan.
Step 5: List your research methods.
Rarely does one research avenue make for a comprehensive market research plan. Instead, your plan should indicate several methods that will be used to determine the market share you can realistically obtain. This way, you get as much information as possible from as many sources as possible. The result is a more robust path toward establishing the exact footprint you desire for your company.
Step 6: Establish a timeline.
With your plan in place, you'll need to figure out how long your market research process will take. Project management charts are often helpful in this regard, as they clearly divide tasks and personnel over a timeframe that you have set. No matter which type of project management chart you use, try to build some flexibility into your timeframe. A two-week buffer toward the home stretch comes in handy when a process scheduled for one week takes two – that buffer will keep you on deadline.
Step 7: Acknowledge ethical concerns.
Market research always presents opportunities for ethical missteps. After all, you'll need to obtain competitor information and sensitive financial data that may not always be readily available. Your market research plan should thus encourage your team to not take any dicey steps to obtain this information. It may be better to state "we could not obtain this competitor information" than to spy on the competitor or pressure their current employees for knowledge. Plus, there’s nothing wrong with simply feeling better about the final state of your plan and how you got it there.
Outsourcing the work
If the thought of trying to create your own market research plan seems daunting or too time-consuming, there are plenty of other people willing to do the work for you.
Market research firms can charge into the thousands of dollars for a market research plan, but there are ways to get help more affordably, including:
- Outline your plans carefully and spell out objectives.
- Examine as many sources as possible.
- Before paying for any information, check with librarians, small business development centers or market research professors to see if they can help you access market research data for free.
- You may think you'll need to spend a hefty sum to create a market research plan, but there are plenty of free and low-cost sources available, especially through university business schools that will guide you through the process.