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Market Research: It Can Make Or Break Your BusinessBy Tom Egelhoff
Two years ago they decided to explore moving to a new location and up scaling the restaurant. They contacted a friend of mine who does market research and rejected his proposal to do the research and feasibility studies because it was just too expensive. In less than a year they were out of business. So what major mistakes did they make that market research could have told them? First of all they were near Montana State University and that was a large part of their business. Students not only drank their beer at the restaurant but also bought it at the local grocery and convenience stores. When they moved the students unfortunately didn't follow them. The next mistake was up scaling the restaurant. It turned out to be too up scale for the few students that did follow them and the high end dining market was already pretty well saturated in the area. In addition they moved into a location that was attached to the back end of a bank. Their signage faced the parking lot not the busy main street so they had almost no visibility. Being attached to the bank most people thought it was corporate headquarters not a restaurant. So, in hindsight that is always 20-20, the cost of my friends' market research and feasibility study would have told them not to move and improve on the target market they had already captured. Had they paid the fee they might still be in business and making a higher profit than before. I'm not telling you to go out and spend thousands on market research and feasibility studies but I would like to talk about what you can do yourself in-house that may keep you in business a little longer. Right now we are going through some tough economic times. With a war and a weak economy some changes are being made both by retailers and consumers that you need to be aware of. According to Dunn & Bradstreet in a down economy 5% of businesses thrive, 70% survive, and 25% go out of business. So which group will you be in? In Bozeman, Montana over the last five years, North 19th Street has gone through some major changes. What were once wheat fields are now home to Costco, Target, Borders, Michaels, Pier One, Old Navy, and new this year, Home Depot. So now traffic that used to go down North 7th Street now goes out North 19th instead. For some businesses on North 7th the only advertising they had to do was a store sign, now they have had to consider some form of additional advertising or promotion to attract customers back to their businesses that used to drive by every day. So you can see the importance of knowing in advance that some changes are going to take place and you are going to need to take stock of how each change will affect your business. Obviously these changes didn't take place over night so by being aware of what's happening in your area and acting on it ahead of time may make the blow of these changes less catastrophic. Here are some things you can do to keep tabs on what's happing. Your city's planning department does yearly studies of traffic patterns. Those rubber things you see stretched across the road from time to time. Take a look at the last five years of traffic patterns and see what's happening around your location. Has traffic increased or decreased? What road improvements or changes are scheduled for the next five years? Will these changes affect traffic patterns going past your location? The building division provides a listing of building permits. What's being built near you? Who's building it? Competition? If so, you will have the information long before they break ground. You can also find out if your competitors have any remodeling planned. This can be a perfect time to take customers away from your competitor while they are in a mess with construction. Knowledge is power. Knowing what's going to happen next week, next month, even next year can give you a leg up on the competition. Market research can keep you in the 75% rather than the 25%. Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your Business Or Service In A Small Town, and The Small Town Advertising Handbook: How To Say More And Spend Less. He is also a seminar and workshop presenter and trainer.
Would you like Tom Egelhoff to speak on this topic at your business function or convention? Click here for information, topics and pricing.
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