| If you’re considering the
purchase of a franchise one of the preliminary activities you need
to undertake is market research.
Market
research is the process of gathering and analysing the sort of information
you need to get an understanding of a number of different business
issues and to enable you to make better decisions once you’re
a business owner. Market research is even more vital when looking
to purchase a new franchise, as it can often mean the difference
between success and failure. Outlined below are the key steps to
performing market research and an indication of how each step can
be applied to purchasing a new franchise.
1. ESTABLISH THE NEED
FOR MARKET RESEARCH
In order to establish if market research is needed, a number of considerations
have to be taken into account. These include whether this is the first
time that a new franchise is moving into an area, whether the demographics
of a particular area are well understood and if any market research has
been performed beforehand on competitors. If any of these areas (to name
just a few) are poorly understood or have not been looked at before then
market research is needed. For example, if you’re thinking of purchasing
a franchised hairdressing salon you need to do some research on other
hairdressing salons in the same area – what do they offer, at what
price etc – in order to be certain that you can successfully compete
against them.
2. DEFINE THE PROBLEM
AND SET RESEARCH OBJECTIVES
Defining the problem and setting the objectives of your research are
two of the most important aspects of market research. Without identifying
the exact problem or the specific objectives, businesses can often waste
a large amount of time and money obtaining information that is irrelevant
to the issues that need to be examined. One basic objective for new franchises
conducting market research is “Will the demographics of the area
where I propose to locate my new franchise be interested in (and therefore
create strong enough demand for) the service that I am about to offer?”.
In other words, will people in a certain area want to buy my product/service?
3. IDENTIFY SECONDARY
AND PRIMARY DATA
Secondary data refers to information that has been collected for some
other purpose (other than for your franchise) and is existing information
available through outside sources. Secondary data is mainly used to collect
initial background information on the problem at hand. Methods of accessing
secondary data include obtaining information from industry associations
and bodies, government departments, Yellow Pages, the Australian Stock
Exchange, online databases, competitors’ web pages, trade journals
and so on. All of these sources provide new franchisees with valuable
information on competitors and potential customers, and on demographic
and environmental factors that impinge on business success. For example,
the Australian Bureau of Statistics provides detailed information on
every geographical location in Australia. Government sources are also
useful for finding information on council regulations (e.g. regarding
building construction).
However, secondary data should only be used to gain information about
the ’bigger picture’ and should not be used on its own to
make a business decision. Rather it should be used in conjunction with
primary data which is much more specific in nature.
|
