Getting Started with Market Research
Once a month, our panel of mentors answer your practical business questions. Send us your questions!
Dear BAM Mentor,
I’m developing a business plan for a BAM company. What are some ideas, tips or resources you would suggest as I conduct market research and analysis, especially in a BAM setting?
~ Anticipating Analysis
Dear Anticipating,
The question of market research comes up constantly and is both a very important part of a business plan and at the same time can be a big waste of time. Let me explain.
If you are doing a business plan to guide your launch and actions, then all you really need is to figure out a few basic things:
1. Who else does what you plan to do?
2. In what ways are you better, faster, cheaper, easier to access, etc.?
3. What price point will your potential customers accept? What do your competitors charge?
4. Where, how, when will you distribute your product/service? Does it fit with where, how, when people want to buy?
5. How many potential customers are there? How many of them will you be able to convert into actual customers?
6. What laws, taxes, licenses, etc. exist that will affect your business?
Beyond these few things much more research will not give you ROI. So don’t do it.
However, if you are seeking capital in the form of investment or a loan, you will likely need to go beyond what I’ve outlined above. Here are some other things you will need to examine:
- What are the demographics of your target area? Population? Age distribution? Per capita and per household income?
- How will you address the laws, taxes, licenses, etc. required to operate in a particular geography?
- What is the profile of your competitors? Names, size, locations, strengths. weaknesses?
- What are the buying habits and capacities of the target market? Do they need/want and can they afford your product?
- What is the NBA, i.e. next best alternative to your offering?
- What segments of the market will you pursue and what is your unique value proposition for each? In other words, what different buyer groups will you attack and what benefit will each group derive from you?
If I can give you one piece of advice it is to do as little market research as your business requires. Don’t waste time or money over-processing what may be a simple idea. For example, when I helped a Christian brother in Kyrgyzstan launch an egg reselling business his market research consisted of two points. First, no one in my village is selling eggs. Second, I have eggs.
By way of resources, there are two places in particular that may help. One is the ICCC (International Christian Chamber of Commerce). The other would be the business development arm (they go by different names) of the Consulate or Embassy of the country in which you intend to operate.
~ Mike Baer
More Responses on this topic:
The basic idea of a business plan is to help you think through all of the different issues that will make a strategic difference to your proposed business. There are literally hundreds of issues to think about and that can be daunting. The business plan helps you structure your thoughts, assess the risks and opportunities and, perhaps most significantly, helps you see what you still need to research and learn.
I’ll try to address some of the most significant issues for a cross-cultural BAM startup.
Almost everything in a business starts with the market:
- Are the people out there who need your product or service?
- Are those people able to pay?
- Are they willing to buy it?
- After they buy it will they pay for it?
Many have gotten enticed by a significant market need and missed the fact that the customers they identified don’t have the resources to pay (think third world wheelchair users) or aren’t willing to pay because they don’t see the need that is so obvious to you. [Read More…]
If I could ask you to understand anything about this, I would encourage you to understand the “why.” Motives determine outcome. If the company motives don’t line up with solid business principles, undergirded by correct biblical understanding; your hard work may never get past a good read by the intended audience. It could end up in a desk drawer. Or worse, it could alienate an entire culture, damaging years of relationship building. And please, whatever you do…don’t spiritualize motives. Just because we choose to spiritualize a motive does not justify it in God’s eyes. Nor does it guarantee successful execution. The sage advice of noted author and TED speaker Simon Sinek provides great clarity on the reason we want to start with the “why.”
Lesson Learned #1 – Ask lots of bad questions which lead to really good questions, and Google comes in handy at this point. [Read More…]
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