NEW VENTURE GUIDE
by the UALR Arkansas Small Business Development Center
The Basics of Marketing Research
There are four components to studying a market:
Personal knowledge
Knowledge of competition
Knowledge of customers
Research at the library
Personal knowledge of the industry develops from having contacts in the business, personal experience and a general feel for the business. Understanding the industry is vital to assessing the market for a product or service.
Competition. A survey of the competition may be needed to determine if there is a niche or room in the market for another business. This can be done by observing competitors' businesses. How busy are they? What problems do the businesses seem to have? What type of customers do they have? Observation helps to determine the size of the market and problems businesses have in serving that market.
Customers. Another useful tool in planning a business is interviewing owners of similar businesses outside your planned market area. If your business will draw customers from a 25-mile radius, similar businesses in towns 60 miles away generally will not be competing for your customers. Business owners may be quite willing to discuss their businesses and to share advice. Often, they have insight and experience that can be invaluable to a new business owner. Also, after developing a profile of a typical customer, talking with a few people fitting that description will help identify needs of customers.
Secondary research, or research at the library, is necessary to quantify the market and to verify your findings from the above three steps. The following tools are designed to help with research at the library. Library research should not be neglected nor should it be the sole source of information used in developing a business or marketing plan.
Research at the Library
Local and university libraries contain publications which can provide much of the information entrepreneurs need. Materials that are not in your local library may be obtained through interlibrary loans. Check with the reference librarians.
Use the following list as your guide to doing secondary research on a specific business or industry.
Identify the appropriate North American Industry Classification System (NAICS) and Standard Industrial Classification (SIC) code for your business. The SIC system is gradually being replaced by the NAICS system. These classification systems are assigned by the U.S. government to specific lines of business. Since most government and industrial statistics are gathered and reported by the NAICS or SIC code, identification of the correct codes for your business will enable you to locate important data. Both the NAICS and SIC code manuals are available at the ASBDC Research Center and most public libraries.
Check for the current periodical literature on the subject.
Check the Small Business Sourcebook or the Encyclopedia of Business Information Sources to identify major books, trade journals, and organizations for specific business categories.
Explore the rest of the ASBDC website on the Internet. We provide links to useful sites containing small business-related information.
Write or call the appropriate industry trade associations.
Write or call for a media kit from trade journals.
Write or call franchisors for information on their franchised businesses.
Obtain the financial ratios for the business category. Trade association financial studies, if available, usually provide the most detailed information. Two other popular sources include Risk Management Association Annual Statement Studies and Dun & Bradstreet's Business and Financial Ratios.
Examine census material for income, age, family size and more of populations in areas as small in size as zip codes the Census of Population and Housing, Census of Retail Trade, Census of Service Industries, Census of Wholesale Trade, and Census of Manufacturers.
UALR's Arkansas Small Business
Development Center Research Center
The UALR Arkansas Small Business Development Center's (ASBDC) lead center in Little Rock includes a reference library for public use. The Research Center, as we call it, contains many publications dealing with small business. Work space is available for your use, and photocopying is available.
The ASBDC Research Center is located at 2801 South University Avenue, Little Rock. It is open Monday through Friday from 8:00 a.m. to 5:00 p.m. We suggest you call our office at 324-9043 or 1-800-862-2040 to ensure that the library materials you need are available.
ASBDC Industry and Topic Files. As a given subject or business is researched, the ASBDC staff creates files on various industries and business topics. They are available for your use.
CD-ROM Databases. The ASBDC Research Center has three CD-ROM stations and several CD-ROM titles. These include phone directories, international business databases, census data, tax references, and some frequently used directories such as the Encyclopedia of Associations. Through our relationship with the UALR library, we are also able to provide access to research databases like Lexis-Nexis and ABI Inform.
