Discover the steps to follow to ask yourself the right questions before carrying out market research. You can read our advice about PESTEL analysis and trend analysis on this blog and download the complete guide in .pdf format
Episode #3/9 – After putting your ideas down on paper (see Episode 1 – Define your project before carrying out market research), testing your idea with the help of a prototype and choosing the methods to use for your market research (Episode 2 – Identify a method for your market research), the time has come to enter into the heart of the matter.
In this episode, we are going to tackle the question of studying market trends and environmental studies (also called PESTEL analysis).
Whether you have an idea or you are still looking for one, studying market trends will allow you to understand:
Market dynamics as a whole
- What are the prospects of the market in which you are interested: upward, downward, stable?
- Is it a local, regional or national market with prospects for going gobal?
- Or is it already a global market? In this case, is there a particular dynamic within the leader countries? Therefore, could geographical location represent a key factor for success?
Specific market trends and innovations
The approach to this part is much more complex than the preceding one. The data is much more difficult to obtain and requires greater effort. However, this should not be a reason to ignore it, because it is just as important as the others. Awareness of market dynamics is essential to conducting market research, but identifying buoyant trends within the market is just as important.
Where to find data about market dynamics?
Analysis of general market trends can be found in any magazines focussing on the economy. But what you really need are the trends related to the geographical zone in which you are active.
To take a simplistic example, what use are worldwide figures on yoghurt consumption to you if you are producing and selling an artisanal yoghurt product in a shop in Edinburgh? In this case, the trends that concern the British market (even better the Scottish market) are the ones which will be most relevant.
If these statistics exist, your best chance of finding them will be by contacting a regional or national federation.
Example 1: Study of trends in the restaurant business
Let’s take a simplistic example: the restaurant business. Imagine that you want to open a restaurant. There are multiple possibilities open to you, in particular about the style of food you want to offer.
Did you know that certain types of cuisine, certain meals, and also certain décors and interior designs are “trendier” than others? Wouldn’t it be interesting to choose the winning combination ahead of the pack, the one that will give you the best likelihood of success?
Example 2: What will be the next fashionable dining concept?
A trend analysis can also help you identify the next fashionable concept, the one that will soon be all the rage in your region or country.
To perform market research, you will need to identify trends in other countries. The major North American cities (New York, Los Angeles, San Francisco) and Scandinavian countries (Denmark, Sweden, Finland, Norway), along with the United Kingdom are laboratories for new ideas which, when tested in an urban setting, sometimes catch on.
Being at the forefront of these outbreaks can provide you with a competitive advantage in the marketplace. That is what is known as “Competitive Intelligence” or “Marketing Intelligence”
A business can be subjected to a number of constraints. Unfortunately, some of them may not be within the control of the head of the company: the economic health of the country, the political situation, taxation and its multiple changes, social mores and other constraints of a legal or regulatory nature, technological developments…
Many of these uncontrollable factors can play an important role in the fate of a company, whatever kind of company it may be.
Startup companies that are more fragile in the early phases and generally under-capitalised are therefore particularly susceptible to these risks and they should be studied systematically before launching.
This is the purpose of the PESTEL analysis. Each of the letters of this acronym represents a component of these risk factors that are beyond the control of the business founder: Political, Economic, Social, Technological, Environmental and Legal.
To carry out your PESTEL analysis (which is basically a canvas on which you can systematically review all the types of risks), you will have to think about certain aspects that you may otherwise have neglected.
And that is the purpose of market research: to force you to reflect upon and identify risks in order to reduce them (or to take them into account) in a conscious and proactive way.
Read our next article about studying your competition to perform market research
If you have been following the first episodes in our series, your idea should now be well defined, the research questions for your market research laid out and the first analyses (study of trends and PESTEL analysis) underway.
In our next article about the stages of market research, we will discuss competitor analysis.
If you think that you don’t have any competitors, you would be well advised to follow this episode.