An acrostic from RESEARCH to encourage studying a new concept before leaping to launching
Research is an active verb. Remember that. You may jump to wrong conclusions if you rush into a new venture before carefully researching it. Think of what each letter in R-E-S-E-A-R-C-H stands for before you start up...
R is for research. Don't leap-- instead, do research. Think: what is intuition? It's a sense of the marketplace. How is it developed? By keeping ones ear to the ground. You must inform your intuition--Develop your sense of the marketplace by studying it. Chance favors the prepared mind. Even highly intelligent people do fail in their ventures when they don't do basic research.
E is for Examine the trends. What are the political, legal, environmental and societal factors that could affect your offering? And if you have an idea based on a particular trend, is that trend complemented by other trends? For example, the nonsmoking trend is complemented by the fitness trend. This means that it is more likely to continue rather than fizzling out as fads do.
S Seek out opinions. This is termed collecting primary data. Using methods such as focus groups, questionnaires and interviews, find out what people think about your idea. In the case of market creation, you may not spend much effort on surveying your prospective customer, but you can still ask the experts. Other people who have been in business longer than you, have valuable insights to offer. For consumers, statistical laws indicate that to assure nearly 100% accuracy, roughly 300 responses for each demographic characteristic should be solicited. A demographic is a feature of the consumer such as his/her age, sex, family status, education, occupation, or income. Sometimes geographic info or job title can be pertinent. To gain an accurate concept you must sample 300 people ages 25-30, 300 people 30-35, and so on. Also, survey 300 males, 300 females; 300 high school graduates, 300 college; 300 from the east, 300 from the west, etc. The idea is to survey a large enough number from an adequate sample in each group since groups are not homogeneous. If you are seeking validation of secondary data, that is, of written information, how much is enough to verify your primary research? For consumer markets, 25-50 personal interviews, 50-75 telephone interviews, and 100-150 mail surveys.
For industrial or commercial products, do secondary research first because users, specifiers and buyers in commercial markets are far less demographically diverse. Their preferences or subjective interests are very narrow. They only need products and services to do their job, and their attitudes have a single focus: performance. Thus it takes fewer interviews to validate assumptions and costs less. Here, you are looking for repetition of attitudes, opinions or facts. This can be derived from 5-10 personal interviews, 10-15 telephone interviews and 25-50 mail surveys. A low sample rate works because questions are narrowly focused on performance, competitors trends, price, delivery etc. There is less invasion of the respondent's ego, biases or privacy.
E Evaluate the competition. At a minimum you need to know the names, logos, colors of your competitors to avoid duplicating their image. Do you have a significant differential? Is the niche you seek to fill of negligible interest to major competitors? Would you be able to defend this offering against an attack by a major competitor?
A Analyze the marketplace. Is the segment you want to serve of sufficient size and purchasing power to be profitable? Does it have growth potential? Here is where you figure out your pricing which is a key to your success. Be sure to charge enough to cover advertising and promotional expenses.
R Review your resources. Do breakeven analyses and payback period analysis. Do you have the financial and material resources and the skills to effectively serve your target? Also, know your products and services, their attributes and benefits. All this brainstorming leads to message development and a better grasp of your marketing challenge.
C Check out your target. Understand your customer. What makes him or her tick? Maybe you have a good idea but you need to refine it. Look at the lifestyle, values and personality characteristics of your target.
H Hypothesize. After you have done your research, then hypothesize. A hypothesis is an unproved theory. It's a proposition tentatively accepted to provide a basis for further investigation. Either your hypothesis will be, "I don't think this idea will work—" or "I think it will be a good idea."
After you've written your hypothesis, be honest. If you suspect you've got an unworkable idea, go back to the drawing board, refine your idea or start with a new one, and then do your research again.
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