Market Research (and my first post)

[luncan]

Hi, this is my first post here. Finally decided to register after lurking around for several weeks.

I am 18 and currently working on my first muse. I don't have the necessary cash to pay to have my product manufactured at this point so I am writing a business plan so I'll have something to show to potential investors or to apply for an SBA microloan.

I have never written a business plan before but have been doing research online. I'm stuck on the market research portion. The guide I'm using wants me to find information on :

• What is the total size of your market?
• What percent share of the market will you have? (This is important only if you think you will be a major factor in the market.)
• Current demand in target market.
• Trends in target market—growth trends, trends in consumer preferences, and trends in product development.
• Growth potential and opportunity for a business of your size.

The problem is I'm not sure where to find that information. My idea for a muse is to make flash card sets based on word frequency(inspired by an old blogpost by tim, http://cubicleescapeartist.com/blog/?p=20) and sell them online.

I don't know what exactly you would call the industry that belongs to. I know some industries publish journals documenting trends but they are very industry specific. Even if I pick an industry that I think fits my idea best, say education products or something, it is such a diverse area I have no idea how accurate it would be.

Do you guys think this is an important aspect of the business plan or do you think I should try and do market research in a different way. I'm thinking the best way from what I have learned on this site and from the book would be to set up a site with content and just set the cart to redirect to a message saying they are on back-order or something. Then use hits to that page as sales when making calculations and projections.

I just don't know if that will be formal enough for a business plan that I use to apply for a loan.

[webgal]

Welcome to the forum. I just wanted to dive in and say that.

[AntonTheKhan]

I would suggest that you seek out similar products first and learn all there is to learn about them quick.
On the other hand, remember that making this into a software product will be faster and easier, considering that there are many proigrammers out there who can do it.
But again, research similar products. Inquire about reselling these products and ask what the sales volumes are, etc, what is the market size, etc. Then thing how you can capture a portion of this market with your product.

[luncan]

Thanks for the input. I have ruled out a purely software product because I think that being able to carry the physical product with you so you can study anywhere is essential.

I could create a pdf that is formatted so that one could print the flash-cards themselves and that maybe the way to go. It would certainly cut down on the start-up costs.

[AntonTheKhan]

Thanks for the input. I have ruled out a purely software product because I think that being able to carry the physical product with you so you can study anywhere is essential.

I could create a pdf that is formatted so that one could print the flash-cards themselves and that maybe the way to go. It would certainly cut down on the start-up costs.

Sounds good. I don't know what the development costs of creating a software for the iphone or PDA will be but maybe you can think of that as an optin down the road.
The other thing is, make sure you include a lot of bonuses, to make your product really worth it.

[webgal]

I've been trying to create video for the PDA. That apparently is not so easy as it's not that stable. Software like add ons would be easier to develop. I think.

[badhank]

I've been trying to create video for the PDA. That apparently is not so easy as it's not that stable.
What PDA are you creating it for? i have done a few for the palm treo (650 i believe?) and really its trial and error if you want it full screen and with sound.

[webgal]

Thanks for that badhank. I was trying to develop video streaming for pdas in general which, as you know, is like trying to bowl with a basketball because it's a round ball.

It's good to know that among the programmers that it's not a sure thing. I also looked into a mobi site. The whole video streaming thing is out of my technical league.

[badhank]

streaming to pda? i have no clue, i would check to see if youtube does it first then maybe copy what they do. I was talking about encoding downloaded videos so i could watch fight-club on my phone in the airport :)

[webgal]

I tried that you tube route. No luck so far but I've not given up.

[TimW]

Luncan

As someone who was in the market research/competitive intelligence field, you have hit a wall that which many folks encounter...that's why consumer product companies spend MILLIONS of dollars on product and market research, utilizing numerous employees and market research firms to do so.

To further drive home how difficult this *can* be, I was in the industry, and still missed a couple of key variables when I started my online retail company. Luckily, my mistakes weren't huge and I was able to recover fairly quickly.

To your question, Anton boils it down well: find competitive products, research the items and the companies that sell them, and then work your way back "up" the food chain. Company information will lead you to the markets/types of products they deal with. That can lead to some demographics, which then can lead to typical buyers.

Yours appears a specialized product of sorts...the question then to answer is how specialized is the particular set of flash-cards you plan to offer?

I mean, is it for medical terminology in Swahili?
Automotive maintenance vocabulary in Urdu?
Cooking terminology for dyslexics?

This also leads to your main demographic/target market.

For example, my business is online retail of military and police equipment that isn't firearms. So, I needed to determine the market. How to do that?

Find competitors, who often were on Internet forums. Forums led to the types of products that folks were buying, and the types of people who were buying those products.

Online costs are relatively fixed, and once I knew average product margins, I was able to determine how much I needed to sell to cover costs then make a profit. Based on the forum data, I could (sort of) extrapolate the size of the customer market, then determine what sort of inventory I would need to be able to service the market.

That's where I went wrong...I overbought on some things that were at the "end" of the trend, and got left with a bunch of items I had to sell below cost in order to clear out. Now, I maintain a near "just in time" inventory on my OK selling items, and keep deeper stock on items that sell well.

There are several sites online that can explain the market research process, if you haven't already found them. The first point, were I doing this as a research project, would be to find competing items/companies. From there, the rest is (relatively) easy.

TimW
Phoenix

[AntonTheKhan]

Tim, that's great advice. Thank you.
Another thing I have found very useful is to start training yourself to look for niches even if they are outside of your knowledge base. This way you will be thinking market first, then product. Because once you find an underserved and hungry market you can put yourself right infront of the traffic with a viable product. Of course the market has to be online for this to work.
Also think about joint ventures. If you find a market you want to explore but have no marketable knowledge to see in that market, you can bet your behind that you can get in touch with someone who can and someone who can help you create a product.
It can be as simple as using a public domain work, changing it up a little bit and selling it as a new product.

Luncan

As someone who was in the market research/competitive intelligence field, you have hit a wall that which many folks encounter...that's why consumer product companies spend MILLIONS of dollars on product and market research, utilizing numerous employees and market research firms to do so.

To further drive home how difficult this *can* be, I was in the industry, and still missed a couple of key variables when I started my online retail company. Luckily, my mistakes weren't huge and I was able to recover fairly quickly.

To your question, Anton boils it down well: find competitive products, research the items and the companies that sell them, and then work your way back "up" the food chain. Company information will lead you to the markets/types of products they deal with. That can lead to some demographics, which then can lead to typical buyers.

Yours appears a specialized product of sorts...the question then to answer is how specialized is the particular set of flash-cards you plan to offer?

I mean, is it for medical terminology in Swahili?
Automotive maintenance vocabulary in Urdu?
Cooking terminology for dyslexics?

This also leads to your main demographic/target market.

For example, my business is online retail of military and police equipment that isn't firearms. So, I needed to determine the market. How to do that?

Find competitors, who often were on Internet forums. Forums led to the types of products that folks were buying, and the types of people who were buying those products.

Online costs are relatively fixed, and once I knew average product margins, I was able to determine how much I needed to sell to cover costs then make a profit. Based on the forum data, I could (sort of) extrapolate the size of the customer market, then determine what sort of inventory I would need to be able to service the market.

That's where I went wrong...I overbought on some things that were at the "end" of the trend, and got left with a bunch of items I had to sell below cost in order to clear out. Now, I maintain a near "just in time" inventory on my OK selling items, and keep deeper stock on items that sell well.

There are several sites online that can explain the market research process, if you haven't already found them. The first point, were I doing this as a research project, would be to find competing items/companies. From there, the rest is (relatively) easy.

TimW
Phoenix