5. Surveying the market

SURVEYING THE MARKET  5

It is very important to have  the facts about how many potential buyers are in your projected sales area and to know their  needs  and wishes before you invest. It is better to have the facts than to merely have a feel for how your products will sell. This requires thorough study of the market you propose to serve.
THE TOTAL MARKETING CONCEPT. It involves matching  the firm’s products or services with the needs and desires of those people who will buy them , whether now  or in future. Marketing planning must  include all the ingredients necessary to satisfy  customers, including producing  the product they want, picking the proper  location for your firm, determining  the correct promotion  and  advertising plans, and many other factors that lead to customer  satisfaction. Marketing  costs for small  firms can be as much  as 50 per cent of total business costs. Planners may employ  an outside firm  to study their  suggested market; advertising  firms  and market research  firms often specialize in such surveys.
OBJECTIVE OF A MARKET SURVEY is to determine  a reasonably attainable  sales  volume in a specific  market area for a specific  type of business. This means  finding out how many potential consumers for the planned merchandise or service there are in this market and how many of them can reasonably  be expected to become customers of the firm under consideration.
WHAT IS  A  MARKET? The market or trading  area for  a particular  firm is the area  that  it seeks  to serve  with  its products  or services. From the buyer’s point of view, it is the area  within  which the buyer knows he or she can find desired goods and services at desirable prices. Sellers may desire  to expand their market beyond the limits that  are normally recognized by buyers. Market areas may change  with the development of new shopping centers in adjacent areas. At any given time, a market has its limits  set by the area within which the firm  can economically sell its goods or services.
PROCEDURE FOR MAKING A MARKET SURVEY. The procedure will vary from  factory to wholesaler to retailer. In all cases, however,  it will seek to determine the number of customers in the market area  who may  become customers for the planned business. For retailing,  the steps  should include  the following:
1. Determine the limits of the market or trading area.
2. Study the population  within this area to determine its potential sales characteristics.
3. Determine the purchasing power of the area.
4. Determine the present sales volume of the type of goods or services you propose to offer.
5. Estimate what proportion of the total sales volume you can reasonably  obtain.

“PEOPLE SURVEYS” FOR  COLLECTING  MARKET INFORMATION.  One effective method for gathering market information is the use of “people surveys”,  which are made  by surveying the  population  in a designated market area. Such surveys can rarely  attempt to reach  all persons  in this area; instead the market researches select a representative group of persons to be contacted. Even the highly important  national television ratings, for example, involve the use of only about 1, 200 homes.
Small firm planners may use 3 different types  of people interviews. These are: 1. Telephone surveys,  2. Mail surveys, 3. Personal  interviews. Specific  questions that will provide meaningful  answers that can  then  be analyzed should be built into each type of interview questionnaire.  Each  type of  interview has characteristics  that can be summarized as follows:
1. TELEPHONE SURVEYS. This type of interview offers the advantage of economy and speed in the collection of desired data. To be effective, telephone surveys  demand short, clear, and easily understood questions. A sound questionnaire, a truly representative  sample group, and courteous telephone interviewers are the only requirements for gathering the key data, which are then analyzed.
2. MAIL SURVEYS. Using the mail to gather basic data is more expensive than telephone interviews but still much less expensive than personal interviews, especially when a large market area is  being studied. The rate of return is the key to whether or not it is successful.  Today a 40 per cent return on such mail survey is considered excellent. Experience  has shown that the shorter the interview sheet, the higher the rate of return.
3. PERSONAL INTERVIEWS. Personal interviews require much more time than other types and, accordingly, are the most expensive kind of survey to conduct. But when  a broad section of option is being sought they are usually considered the most reliable. They enable the interviewer to interpret questions, to explore the respondents’ opinions,  and to identify  areas of information that although not anticipated may be valuable in the final analysis of data collected.