After determining the product/service you want to sell, you will need to perform considerable research to ensure you understand your target market. The research should be focused on, but not limited to: the market segment in which demand for your product or service will likely be greatest, any known and potential competitors, and any factors or challenges to market entry.
It is crucial to perform enough research to gain a thorough understanding of the product or service providers currently serving your target market and what distinguishes them from one another. Clearly defining your target market allows you to focus your marketing efforts and brand message on a segment of the market that is most likely to choose your product or service over your competitors. It will also allow tailoring of marketing efforts to target that market segment, which will likely prove to be more effective and affordable.
Since you are dealing with a new product/service and likely have limited or no customer data, it will be necessary to look at available data for similar products or services in the market. When attempting to define your target market, demographic factors will likely include consumer age, location, gender, income level, education level, marital status, family status, occupation, and ethnicity. You will also want to consider psychographic factors in your search. Psychographic factors include consumer’s personality characteristics, lifestyle preferences, social class, habits, beliefs, behaviors, and interests. Some of this data may be available, via the internet, at no cost. However, if you want to concentrate your search on a specific market segment, you may find it necessary to utilize a market research service or data provider. While market research can be expensive, there are things you can do on your own to minimize the cost. Having a clear understanding of your target market will allow you to focus your marketing efforts where they will be most cost-effective.
In addition to defining your target market, you will need to identify your competition. Once you have identified your competition, you will want to obtain as much information about them as you can. Depending on who your competitors are, you may be able to gather a considerable amount of information on them via the internet. If your product is a Consumer Package Good (CPG), you can collect competitor data by simply going to the store or online and viewing their product and pricing. However, utilizing a paid research service will likely enable you to learn much more about your competitors and their products/services than you will find on your own, but it can be costly. It is crucial to understand your competitors for a variety of reasons, from marketing and pricing your product to determining optimal supply chain and distribution channels. Knowing how your competitors operate may enable you to replicate the things they have done well and avoid making any mistakes they may have made.
Before attempting to bring any new product/service to the market, it is essential to understand any legal requirements that may need to be satisfied for production, distribution, or to sell the product/service. Licensing, certification, and registration requirements may vary greatly by industry and geographic region. It will be necessary to determine any legal or regulatory compliance requirements that must be satisfied to avoid unnecessary expenses and time delays.