What Is Market Research

Without current market research your business may not respond to the evolving nature of your business environment. You'll be able to recognize cataclysmic change but will you note and react appropriately to evolving change?

A strategic market analysis should be conducted on a regular basis, the period of which is contingent upon the nature of your business. If you're in the tooth paste business you wouldn't need to review your market as often as you would if you were in the cellular phone industry. An analysis should review all aspects of your relationship with your marketplace.

To discuss a strategic market analysis we're going to use a case study: the case of Joe's Mouse Trapbusiness.

Joe's manufacturing the world's best mouse trap but the world isn't beating a path to his door. Joe would like to know how to develop his business.

First, just because Joe has the best mouse trap, doesn't in and of itself mean it's a good business to continue in.

Once we understand his marketplace and his role in it, we can better understand and develop his business.

Strategic Market Analysis:

Market Research is comprised of several aspects the first of which is getting a sense of the market environment:

  •     How many competitors are in the mouse trap business with a viable alternative to Joe's trap?
  •     Who are the dominant trap manufacturers?
  •     What is the projected size of the market?
  •     What are Joe's customers looking for in their mouse traps?
  •     What are end users of mouse traps looking for?
  •     Are there outside influences that may impact the market in the reasonable future?
  •     What sort of reputation does Joe's business and his trap have in the market?
  •     How are Joe's competitors bringing their product to market?
  •     How are Joe's competitors marketing their product?
Once we have our initial answers we can deal with our most important question: what are the projected costs of business development and how do they relate to our ROI goals?

Perhaps Joe's best strategy is to license or sell his trap to one of his competitors. Perhaps it's to sell his traps not through distribution but through direct sales. If it's determined that he is best served by continuing in the sales business, does he use a sales staff on payroll or does he contract with an agency and representatives?


These are some of the possible issues that you'll need to deal with in your market research. Let's assume that we've run the numbers and Joe's best interests are served by staying in the mouse trap manufacturing business and selling through a distribution network with the assistance of a sales force. Now he has a starting point for his business plans and the development of his marketing materials. Conducting a similar process, you will have a better understanding of your market environment and be able to confidently move forward with your business development.

For discussions and resources related to development and management of your business visit The Small Business Resource Library. You'll find practical discussions of topics of interest to small business owners and those considering starting their own business.

The discussion of each topic is supplemented by a collection of materials reviewed and evaluated for their real world value.

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