Starting up your own business

Know your market

The market for a product or service is the number of people who wants to buy it. Preferably, you should find a niche market, that is, one which you can specialise and dominate in and will make you a profit.

Market Segmentation
To find a niche market requires market segmentation. This will enable you to identify a group of customers within your target market that has similar characteristics and tastes. You should then design your product and service to suit them.

Markets may be segmented in many ways including:

geographical (location and culture)
demographic (sex, age, race)
geo-demographic (concentration of particular types of people),
psychographic (lifestyle, beliefs, attitudes)
behaviour (loyalty, buyer readiness)

To have a successful grouping or market segmentation, it needs to be:

distinctive (significantly different from other segments)
tangible (must be worthwhile, commercially sound)
accessible (by distribution, location)
defendable (against competition, so competitors will not poach customers)

State of the Market
The next step is to know about the state of the market regarding its market size. This is the total demand that exists, or is likely to exist for your product or business idea. It is usually expressed in terms of units sold or total amount spent annually on the product or service. It is important to identify not only present demand, but also possible future demand. Is it a mature, growing or declining market?

You also need to know about:

1 Your customers

Who are they? Where are they? How many? What do they currently spend? What are they willing to spend? What do they earn? How often are they likely to buy your product or service? How do they decide whom to buy from? What would make them loyal to one provider? Who do they buy for? When do they buy? What is the preferred method of payment? Why do they buy?

2 The competition

Who are they? Where are they? What are their products and services? What are their prices? Who are their customers? What are their strengths and weaknesses? Analyse your competitors and then compare them with your business.

3 Market expectations

What do your prospective customers want? How much and when? What price do they expect to pay? Which packaging is attractive?

To answer these questions requires market research that will help you turn your business idea into something more viable.

Useful Links

The Market Research Society
British Market Research Association
Chartered Institute of Marketing
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