One of the common reasons why businesses fail is due to venturing into business ventures without carrying out market surveys. More than 95% of start-ups in the country simply deep dive into projects without scientific evidence of the existence of a market.
In most cases, entrepreneurs base investment decisions based on what is trending.What are other people doing? Ndezvipi zvirikupa mari? Are Covid-19 masks the in thing? Then plunge in without enough information.
So why do entrepreneurs avoid detailed market researches?
Little appreciation of the concept and associated benefits
Generally considered an expensive process
No developed SME Experts industry, so few market researchers available
To those knowledgeable-the process can be time consuming
Lets take you back to a few years—do you still remember the sack potato which once took the country by storm? How many people got burnt?
Market researches should have pointed out the grey area of wild animals and related legal restrictions. Of course pointing this out when many people are venturing and benefiting is a futile exercise.
In this article, we hope to assist you with conducting market researches on your own but our advice is always for you to get experts advice.
Market Existence: Is there a market for the products or services you intend to bring to the market? Is there a gap sufficient enough for you to invest funds and get a reasonable return? If there is no market, then you better hold on to your resources.
Size of the market: If for instance you have established that there is a market, what is the size of the market? This is where you need scientific evidence rather than guess work. You need a helicopter view of the whole industry. For instance The Herald reports today(24 July 2020) that Zimbabwe has a housing backlog of 1.4 million people and it will take between 15-20 years to clear the backlog. If it is agriculture, then responsible ministries such in charge of agriculture publishes regularly information on market sizes and gaps-Output forecasts and actual figures. The donor community also chips in with estimates. ZIMTRADE helps with foreign markets market researches.
So we have an overview of market sizes on a national level but this is not enough—you need to zero in on your area of interest. For instance the supply of soap to Ruwa or Norton. How many people live in your area?
What are the changes in the market? Business going online or new suburbs being built? New shops coming up?
Active Market Players Analysis : In your area, who are the active suppliers? In the case of Ruwa, we may find that many people buy soap from local shops—Spar and TM and other tuckshops. Are they meeting the demand? Are customers satisfied with their products—quality, prices and other conveniences. Is there a gap to supply own soap? For instance if a bar of soap is being sold for US$1—can you also manufacture and sell at the same price or even lower?
What are the changes in terms of economic environment? Disposable income changes and preference for lower priced products? Can you tap into online business opportunities? For those used to buy from the CBD, how does the lockdown restrictions affect buying behaviour?
Conducting the research
There are key stakeholders involved in conducting a market research and they are;
The buyers: You need input from the people who will buy your products and this process is no stroll in the park. Your sample size should be big enough for instance if a suburb has 100,000, then reaching out to 10 people is not good enough but a few hundreds can help but this can be an expensive process. Solicit their feedback, what are their pain points in buying existing products? Can they buy your products? Having samples of the products can help. Document information collected.
The suppliers: Who are the key suppliers in your industry? You may obtain crucial information of prices, availability of products and changes in their business. Document information collected.
The competitors: Who are the major competitors in the industry? What are their business models? Are they expanding or contracting? What are the challenges they are facing and how are they dealing with them? What is the level of competition in the industry? Document key insights for decision making.
Regulatory agencies: What are the regulatory forces in the country? For instance price controls? We witnessed the ban of kombis—what were the public statements issued in the run up to the ban? What are the priorities of the government? Is your business legal? What anticipated legal challenges can come your way? Refer to our VUCAH Skills articles.Just like the quail birds, you risk investing into a project that can later one be banned and adversely impacting your operations. Highly unlikely to have an opportunity to interview regulatory agencies so your source of information likely to be search engines and general knowledge.
Boots on the ground approach
Unfortunately you cannot conduct researches without getting your feet on the ground. You need time on the ground observing events or carrying our researches. Structure your research so that you have desktop work as well as on the ground. Engage student interns in cases where you cannot afford to engage market research consultants.
Report Compilation and Review
If you were actively involved in your market research, then you are going to need a different pair of eyes for review. It’s difficult to critique a document you would have been involved in drafting. You need someone who will review the adequacy of your report –the independent eye that picks out grey areas you missed out and provide an objective and balanced assessment.
Launching your product
Often times, start-ups prepare projections that span more than 6 months but is this realistic given the dynamic nature of the environment?
Instead of investing all of your funds based on market research evidence—rather choose to test the market with a few product samples for learning purposes. Investing funds for learning purposes? It’s a tough decision as this means resources usage but its important rather than proceeding full throttle. Read more about the lean method.
On a parting shot, this information is just elementary stuff but gives you an overview of how to carry out your own market research. This is an area largely ignored by many start-ups! Even those who can afford to engage experts choose not to but with disastrous consequences!
Do watch out for examples of market researches for our subscribed members.
