Market Research

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Size, trends, niches
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Distribution analysis
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Competition & pricing
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Buyer analysis
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Supply/demand balance
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Legal & social environment
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IP protection

Market research and analysis may be the single most important component of the entire process. Most mistakes result from poor homework - and they are very costly. Put differently, most mistakes result from making decisions based on inadequate information. Every management consultant can tell you such stories:

When Armstrong first went into Europe, it used the same advertising concepts that had been so successful in the US: floors so squeaky clean you can see your reflection. Nothing sold. When they conducted some research, they learned that Europeans don’t like that squeaky clean image, but rather prefer the flat look of a patina which comes with age and is associated with warmth and security. Armstrong changed the advertising, and its product line, and took off.

In Brazil, Lonza supplied a disinfectant which was more effective and less expensive than domestic competitors and had a lovely fragrant smell. It didn’t sell. When their buyers finally did their homework, they discovered that Brazilians associated two factors with disinfectants: a pine odor and a “bloom” when it is poured into water. Lonza’s formulation was changed to “bloom” and smell like pine tress, and did very well.

GM invested in and built a line of trucks in China to sell to farmers. They didn’t sell. When they talked with farmers, they learned that the farmers use these vehicles for everything, including taking the family to town for shopping, etc., and there was not enough space in the trucks for the family. Too late - the investment had been made.

The stories go on and on. These are primarily related to consumer markets, but you can find the same thing in B2B markets.

Our point is that it is difficult to know how to position your product in a market if you don’t understand that market as well as you understand your own, or as close as you can get. This means at least understanding the bullet categories above. Some of the most important questions are:

•	How does the distribution system work? Each country is somewhat different. How does your kind of product get from the dock into a final buyer’s hands? What are the steps, the added value at each one? Find examples to make it concrete in a business sense.
•	Who are the key players in the supply chain at each level?
•	How is the in-country competition doing? Are there lots of competitors or just a few key ones, and how do they differentiate themselves to buyers? What are the price points?
•	How are your own home competitors doing in that market? If they are not in it, why not? If they are in it and successful, why? Not successful, why?
•	What drives the buying decision – price, timely supply, quality, brand loyalty, supplier loyalty, other? What will it take for you to get onto the buyer’s radar screen?
•	How will you protect your IP, including know-how?
•	What is the government’s stance toward your type of product?

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