Claudia Lovell from Capital Consulting
Overview of Market Research
People buy products to meet a need. These needs may be practical, emotional, or matters of basic survival. A solid marketing research effort will examine your product through the eyes of potential consumers. In spite of your passion and expertise, the market is competitive and crowded. The tougher the questions you ask, the closer you will get to obtaining truly valuable insights. Market research should provide answers to some basic questions. Among these are:
- Does the market need my product? Or, do I have to create a need?
- Why would someone buy my product?
- Why do consumers purchase products similar to mine?
- Where would someone purchase my product or my competitor's product? Why?
- Source of Market share am I creating a new market, or am I attempting to steal market share from another product?
- Who are my competitors? Which of these are currently successful? Why?
Market research can be as simple as asking people to sample your product and complete a short questionnaire, or can be as sophisticated as conducting detailed demographic and psychographic analyses of your target consumers.
In all cases, getting out in the marketplace, away from the kitchen, is the first step. Remember that the point of market research is to understand your potential customers, and stepping into their point of view.
There are many sources for research help. Some of these sources are where you might not expect to find them. A few of these are:
- Business students from local colleges: Studentsmay conduct market research for you in exchange for college credit. Be sure tospeak with their professors.
- Collaborators: Who are your suppliers? Remember, it is in their interest to see you succeed.
- American Marketing Association: (http://www.marketingpower.com/).
- On-line survey and marketing tools: These include Survey Monkey and others allow you to create low or no-cost market surveys. Interview your potential customers and collaborators to understand their purchasing habits and attitudes.
- Purchased market research: Many research reports can be purchased on line.
- Marketing/Advertising agencies: Chicago and New York City are generally considered the advertising centers of the United States, but a recent Google search of Advertising Agencies in Vermont yielded more than 300,000 hits.
- Vermont Publications: Vermont Business Magazine and several of Vermont's local metro papers are good sources for advertising and marketing ideas.
- Ad representatives for local television and radio stations: If you advertise in local media, often the sales representatives of the media outlets in which you advertise can be a good source of research, leads, and information about marketing your products. Remember to think about collaborators!
- Your local library: Even in this digital era, the knowledge and resources of your local library should not be overlooked.
This is an abbreviated list of sources that can help you design, plan and (depending upon your budget), conduct your market research. Some sources can help you sort and analyze your data to develop the strongest possible marketing message to your target customers. They can help you design and create marketing campaigns and even just act as an important reality check for ideas, thoughts and strategies that you, the entrepreneur, have so skillfully and creatively dreamed up! Some of these resources specialize in helping you to develop the look and feel of your product, packaging, and marketing materials. They can develop logos, design marketing materials, and help you develop your âbrandâ.
Three seconds. It is estimated that a brand has a mere three seconds to grab a consumer's attention. A great deal has to happen in that 3 seconds. The visual cues, expressed by the packaging, the placement, and even the circumstances and location in which your target customer first encounters your product must all be positive.
So what is a brand? A brand is a promise. It's a consistent, reassuring message that the product is going to fulfill a specific function, every time. Remember, customers purchase products for specific reasons and a brand is a way of communicating with your customer that this particular need will be met consistently over time. Consumers take this very seriously. Many may have heard the uproar over Tropicana changing its packaging or Coca-Cola introducing New Coke. Though these seem like minor missteps, the consumer backlash was so strong it got the attention of these large multi-national companies who quickly responded to the demands of the marketplace.
Choosing a name for your product is the first step in this process. Anchoring the name of your product on a geographic location such as Green Mountain (name of xyz specialty food product here) can be both a pro and con. The state of Vermont has invested a great deal of money building and preserving the Vermont brand. It does have an excellent reputation where it is known. Therein lies the challenge. While Vermont and the Green Mountains are known in the Eastern United States, they are not necessarily well-known geographic locations in Asia and other parts of the world. Think about the core market for your product is it local? In that case the use of a Vermont name and imagery might help boost sales initially. Naming a product after you, such as Betsy's Biscotti is another approach. Here too, you run a few risks. Tying your product to your own name gives an instant reference point and pride of ownership. But what if you decide to sell the company down the road? You will be selling the rights to your own name and you may be forever tied to the brand even with someone else in control of it. In some cases, companies have chosen to create a persona to represent the brand, for example Betty Crocker or Mrs. Butterworth.
This is where testing and market research can come in handy. Ask people for their impressions of your product name; it will give you instant feedback on what consumers might want. Above all, be sure to check with the Secretary of State's office to ensure the name(s) you are considering are not already registered to somebody else in the state. A trademark lawyer can help you choose a name that is free to use and can be protected from other's use.
Packaging is typically the initial point of contact between a customer and product. Pay particular attention to the packaging of your specialty food product. There is a great deal of literature about packaging but some simple principles to keep in mind are:
- Integrity and Freshness: Packaging should preserve the integrity of the product. It should ensure a safe and secure delivery of a fresh product.
- Legal Requirements: Packaging must adhere to all relevant legal requirements for disclosure of ingredients and proper labeling. Consider printing both metric and imperial unit measurements, should you wish to export to markets outside the United States. Depending upon the product, various designations may serve important marketing functions including any organic or religious designations.
- Font Size: In the United States the population is aging. Consider the age of your target consumer.
- Appearance: Keep it attractive, and test various looks/packaging concepts. Sometimes choosing an unexpected package for a product is a pleasant surprise for consumers.
- Shipping:Consider shipping weight when choosing between glass, plastic and other packaging materials.
Company Logo and Marketing Materials
It's not enough that your product performs and performs well. In today's rough and tumble world of consumer product packaging, the look and feel of a product must be attractive and speak to your consumer. If you are marketing a product to children, your packaging and message must speak not only to the end consumer (the child), but to the purchasing agent; in this case a parent, or other family member. Developing a clear image through branding and packaging will help with the call to action. A logo is one way of communicating the promise of your brand. A well designed logo helps the consumer rapidly identify your product on a shelf, communicates that within the packaging lies a product that they will want to try or already know. When you think about logos think of brands such a Nike and Coca-Cola or locally (like the cows that represent Ben & Jerry's). These are memorable and convey a visual message about the brand. When you have settled on a design for your logo, it should appear as frequently and consistently as possible. In addition to putting your logo on your product, put it on your business cards, brochures, marketing materials, invoices, create decals for your car, and banners for your table at the farmer's market. The key is to be consistent and to be everywhere. Part of branding happens at the sub-conscious level and you want your brand to be on people's mind.
Identifying Your Target Customers
Once you have settled on the name, look and feel of your product, the hard work of writing a marketing plan begins. Known as the 5 C's, these are aspects of your product and the environment in which you will be selling your product which must be understood:
- Customers: Who make the purchasing decisions. Sometimes there are several people with different roles involved in making the purchasing decisions. Consider each of these roles and what they might need to help facilitate the decision making process.
- Company: What are your company's strengths and weaknesses?
- Competitors: Who are your current and potential competitors? What are their strengths and weaknesses?
- Collaborators: Who are your company's potential partners? Who should you enlist to help you and how do you motivate them?
- Context: What cultural, technological and legal factors limit or enhance what is possible?
A SWOT analysis is a useful tool to help assess the Strengths, Weaknesses, Opportunities and Threats of your product and of your competitors.
Understanding your strengths and weaknesses, as well as those of your competitors, will help you uncover opportunities for your brand. Perhaps your competitor has a very stingy returns policy. You could offer an unconditional money back guarantee. Perhaps your competitors products are only sold in minimum purchase quantities of 12 dozen or more (and their product is perishable!) Sell yours in smaller quantities. These types of insights will begin to form the basis for your marketing plan. Through the process of creating a SWOT analysis attributes of your target consumer should emerge.
As you begin to identify your target consumer, develop a person for each consumer type. This is a fictional character whose attributes you will define, who represents one segment of your customer base. For example, you may create a persona named Suzy Steak Sauce. You will want to describe her attributes including age, lifestyle, income, purchasing habits, likes, and dislikes. Each time you make a decision about your product, your company and your marketing message, turning to each of the personas you have created is a great way to think about the impact of any decision on a particular segment of your customer base.
In general, you will want to know what variables will affect your target consumer's purchasing behavior:
All of these sociological and economic variables will have an influence on how and when a target customer is likely to purchase your product.
- Economic Variables: How much discretionary money does your target customer have to âexperiment with your unknown specialty food product?
- Geographic Location: Where are your products located? Is there a farmer's market, organic market nearby? Would your target consumers be able to purchase your product through mail?
- Where/when/how often do your target consumers shop?
- Is your product a necessity or a luxury for your consumer?
- Are your consumers part of a culture or socio-economic group which might place a high value on purchasing a locally produced specialty food product?
- What are your consumers ages and lifestyles?
Finally, a well researched marketing plan should address each of the following elements of the Marketing Mix:
The Four P's of the Marketing Mix
- Product (or Service): The total package of benefits obtained by the customer.
- Place (Channels): The network through which a product goes to market.
- Promotion (Tools): Selecting the appropriate way in which to communicate with customers.
- Price: Once a company has created value for its customers, pricing is a mechanismto capture some of that value for itself to fund future value-creation efforts.
When starting out, ask a lot of questions. Understanding your consumer's needs, wants, likes and dislikes will help align your product in their minds. As much as you love your product, remember: in order to market it successfully, you must always think from the point of view of a potential consumer.
Click & Stick: How do you make your marketing message stick in this cyber economy? What are some of the tools available to help get your message across?
Fansumers, viral videos, and social computing: These are just some of the many buzzwords pinging around the marketing world today. Making sense of them is not easy, since new practices evolve rapidly and often overlap with one another.
But the concept behind the buzzwords is clear. Online technologies allow customers to communicate in new ways with one another, and companies must decide whether to ignore, co-opt or dive into new waters of interactivity. (1)
The web and the impact of social media can no longer be ignored. In addition to high-touch, hands-on sales approaches such as selling your product at farmerâs markets, or conducting in-store demos and trade shows, the internet and social media must now be an integral part of any comprehensive marketing plan.
Where to start?
As you begin to settle on your logo and marketing materials, incorporating an internet strategy into your marketing mix is essential. Consumers expect to look you up on the web, and having a well designed (but not necessarily overly complex) website is the first step. It should speak clearly about your product and about your company. It should offer nutritional information about the product and most importantly state clearly where the product can be purchased. If you are going to sell your product via mail-order, the check out process must be simple, secure and it should work with a minimum of hassle (be sure to test your site's check out process). Contact information should be clearly visible on the landing page including a mechanism to gather consumer feedback comments section and Frequently Asked Questions (FAQs)
Using your website as a base, you can quickly branch out into creating other forms of cyber media such as creating a Facebook page for your product, setting up a twitter feed, writing a blog, or posting relevant RSS feeds to your own site. For the less shy and more ambitious posting a video on You Tube may even be an option. Again, consistency is the key. Your website should have the same look and feel as your product, your packaging, should boldly display your logo and always reference back to your website.
As you undertake the effort to develop your brand on-line, don't be shy about studying your competitors and other successful companies and drawing ideas from them. The good news is that social media is free and can be a great way to grow your presence quickly beyond your local market.
- Social Marketing: How Companies are Generating Value from Customer Input: Knowledge@ Wharton (http://knowledge.wharton.upenn.edu/article.cfm?articleid=1864) © Knowledge@Wharton December 12, 2007.
Your relationship with your customers is the equity you are building in your company and your brand. In many ways, it is the most valuable asset your business will own. For this reason it is essential that lines of communication between your company and your customers are open and responsive. Policies such as how to return product or basic ingredient and nutrition information should be readily available both on your product packaging and via your website. A direct relationship between you and your customers, generally speaking, will flow smoothly. Some small companies may find themselves in a position to use distributors to sell and deliver their products. Adding this layer between you and your customer can be challenging. However, if handled correctly, distributors have the resources and capabilities to maintain, and in some cases, even improve relations with your customers.
CLEARLY defining roles and responsibilities upfront is the key to building the foundation of a long-term, successful and profitable distributor relationship. Too often, distributor relationships end unhappily because expectations were not set clearly from the beginning. Take time getting to know your distributor. Try to get to know them personally as well as professionally, after all, they will be the face of your company in the market and you would not want to do business with anyone you would not invite over to your house for a meal!
The following subjects should be discussed in detail and put in writing:
- Product Describe all the product(s) covered or excluded under the agreement.
- Pricing Clearly define how your product will be priced, when and how price increases will be communicated.
- Territory - Geographic territory to be served by your distributor, including all vertical markets served. Also include any excluded territories
- Quality Guarantee Do you provide a 100% freshness guarantee? Or, do you guarantee only for a specific sell by or fresh until date? This should be specified.
- Unsold/Unused Product - What is your policy regarding credits and/or buy-backs of any unsold product? Do you have a process for handling this?
- Customer Service Support What type of Customer Service Support will be provided? Will it be available 24/7 or only during certain business hours? Will Customer Service be offered via your website? A call center? By you personally?
- Marketing/Advertising Support How much free product will be given (Allowances)
- Sales Channels What are the various channels of distribution your distributor will be permitted to service? Are there specific types of accounts that you prefer to service direct? These should be clearly defined. What are their core channels of distribution? Are there certain channels they will not service?
- Credit Policy Payment Terms should be clearly defined and accurate. A detailed records of all invoices generated should be kept by you.
- Product Availability Are there any limitations to your ability to provide product to a potential distributor? Do you require a specific amount of lead time to fill orders? Do you agree to keep a minimum par level of stock on hand at all time? Do you retain the right to refuse an order?
Remember, its not just about a distributor picking up your product; this is a chance for you to evaluate their strengths as well. What do you know about this distributor? What markets do they serve? How many sales people do they employ? What current products do they sell or represent? Will they be handling competitor products as well as yours? If so, how do they plan to promote your product vs. your competitors? What is their growth potential? What are their offices/warehouses/delivery vehicles like? What is their reputation in the market? Ask around. What is their ability to handle smaller volumes initially?
A good distributor relationship can be a fast track to profitability and long-term sales. It is also the chance to expand the reach of your product. Strong distributors are an excellent source of market research and feedback on your product. A well-written, well-defined distributor relationship agreement can be a wonderful partnership enabling both parties to thrive and grow.