N4 Entrepreneurship & Business Management 1. Introduction


Success in the business world can never be guaranteed. There are many reasons why businesses fail but one of the most common reasons is that there is not a big enough market for your specific product or service. It is therefore important for the entrepreneur to try to determine beforehand whether a market exists or not. This is not easy since we are dealing both with the future and with people, both of which are unpredictable. However, if you can somehow find out how many of your products you can expect to sell in a month, it is fairly easy to determine whether your business is going to be successful or not. This future sales figure or forecast can be estimated in various ways, but is needed for the following reasons: • Determine whether your future business can make a profit • Plan your purchases that are needed given your sales forecast • Calculate the finance needed for your business


Without this information it will not be possible to make the right decisions on where to open a business or how to market and sell a specific product. If you get this knowledge before you open your business, you can save a lot of money if, for example, you find out that your idea is a bad one. It can also provide you with a definite competitive advantage if you have a great business idea. In fact, marketing research is a vital element in the success of any new business.


PAUSE FOR THOUGHT


Every minute spent on research will save you a year of pain of wasted idea development. Source: PetesWeekly.com


Entrepreneurs require different kinds of information in order to: • understand the various business environments • anticipate any changes within the environments • forecast the impact and direction that any change might have • make changes to their business plans as a result of these changes in the business environment.


More specifically, marketing research can be used to investigate: • whether customers will buy a new product • why existing products are not selling • better methods of marketing existing products • the changes in customer needs • and minimise the risks of a new competitor.


1.1 Marketing versus marketing feasibility study


The difference between the two concepts is best explained by comparing the definitions of the two terms. They are:


Marketing Marketing is the flow of information from the business to the customer i.e. the customer is informed about a new product the business is selling.


Market feasibility study A market feasibility study implies a flow of information from the customer to the business, i.e. the customer provides the business with information regarding preferences, tastes, willingness to pay a specific price for a product, etc.


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