The Information You Need
Market Research
June / July 2007
Volume 5 Number 3
You have a brilliant idea you believe will sell easily. As a technical person, you want to validate your idea to get it into the marketplace on limited funds and time. This means you will have to do some market research. If you develop a game plan for your research to ensure you get all the relevant information you need for product validation and marketing, you can minimize—but not trivialize—the time you spend on this task.
Your first step is to write down your product or product idea. Include the technology, possible customers, and potential benefits your product might provide. This information will help frame your research effort.
Next, identify the topics you will need to research. These fall into three broad categories: the market/industry, the customers and the competitors. You may also need to add categories based on your particular industry.
The minimal market/industry information on which you will need to educate yourself includes the following:
— Specific market size: Important for high tech products, especially if you are seeking venture funding.
— Market structure and environment: What types of companies are in the industry? There could be systems integrators, component manufacturers, service companies and more, depending on the industry. Are there dominant companies or suppliers? Where does your company fit in?
— Regulatory/environmental considerations: Will your product need to meet certain standards or be certified by government or industry groups? Knowing this upfront will help you set realistic timeframes for product launches and realistic budgets.
— Types of companies: Are they public, private, big, small, innovative or stodgy?
— Trends: Is the industry growing, shrinking, changing or consolidating?
A typical list of customer topics to research includes:
— Who and what: Target the correct industry segment with your product.
— Location: Geography knowledge will help you organize sales activities.
— Issues: Will your product solve these?
— Means of dealing with issues: This is the start of your understanding of the competition. The fixes may be competitive products similar to yours, manual processes, or doing nothing. All are considered your competition. Understand the decisions behind each one to position your product successfully.
— Decision-making and budget processes: Corporate buying policies can be tricky, and you will need to be aware of the nuances. There could be long sales cycles, purchasing departments that do not understand the needs of the actual users, or certain return on investment criteria.
— Places for purchases: Your target customers may buy directly from companies or through selected distribution channels.
And for the competitors:
— Companies: Remember, it is not always the ones with similar products; it can be something altogether different.
— Products: You need information on their technology and features.
— Strategies for pricing, partnering, distribution, etc.: This will help guide your efforts in effective market planning.
— Customer comments: You want to be able to counter issues, both positive and negative, so make sure your information is as factual as possible.
— Your product vs. theirs: Your efforts should focus more on benefits to the customer and not on technology, unless it brings other benefits such as reduced maintenance.
Now that you have topics you need to research, you will need to figure out information that can be found online and what topics you will need to look for in a library. Following are good online sources for markets, customers, and competitors:
— Trade associations often do their own industry research. You can find them with a Google search or in the Encyclopedia of Associations in your local library.
— The SEC (www.sec.gov) has online 10-K reports for public companies. Far more detailed than annual reports, they contain company and industry information, issues, risks and even lawsuits the company is involved in.
— The United States Patent and Trademark Office (www.uspto.gov); if you do a search by technology keywords, you might also find patents awarded to universities or national laboratories.
— The US government also has industry information available from the Census Bureau at www.census.gov.
Most of the big research and consulting companies (Standard and Poors, The Yankee Group,etc.) have short summaries of their research reports on their web sites that might also give you some high-level information.
These are general resources and a great way to start online. If you use your search engine well, you will find even more online sources. If you haven't filled in all the topics on your research list, however, you will need to go to your library. The best way for efficiently utilizing a library is to work with the reference librarian, who will be able to direct you to the best resources for your market research list.
The key to doing your research is to stick with your list as much as possible and stay focused. This is especially true of any internet research you undertake; people often find an abundance of interesting information in cyberspace, but they waste time and energy following interesting links which may not be relevant to them at the beginning stages of a company.
Betsy Gillette is director of market research and planning for Technology Ventures Corporation.
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