In my regular Q&A column for the Australian Financial Review, Q&A: Avoid analysis paralysis on 28 August 2012, I recommended that market research be conducted with six groups prior to launching any business. These groups are:
I suggested that there were a set of universal questions which should be asked for each of these six groups, universal in the sense that they applied to any business being considered for launch. Space did not permit publication of these 57 universal market research questions.
Here they are, using the proverbial widget as the product or service:
Questions to prospective customers
1. From which company do you mainly purchase your widgets?
2. How often do you purchase your widgets?
3. On average, how much do you spend per purchase?
4. How did this widget producer last let you down?
5. What do you think is a fair price for a widget?
6. How often have purchased your widgets from a different provider this year?
7. (If not often) What discourages you from shopping around?
8. (If often) If you had to choose one reason for shopping around, is it because you are looking for a better price or better quality?
9. How many widget businesses are in your area?
10. How could my new widget business thrill you?
11. Articulate a risk-free guarantee which would motivate you to buy a widget from my business.
12. Which niches are currently underserved by widget producers?
13. What would a widget producer have to offer to get you to purchase exclusively from them?
14. What do you purchase instead of a widget to satisfy the same need?
15. Why do you purchase this widget substitute?
16. How often do you purchase this substitute instead of a widget?
17. What frustrates you most about widget producers, price, quality or deliverability?
Questions to companies offering substitutes
18. What advantages does your product have over a widget in terms of price, quality and deliverability?
19. How many other companies offer your product?
Questions to competitors
20. How many widgets do your produce each year?
21. How many employees do you have?
22. What is your company’s percentage of market share?
23. What is your customer retention rate per annum?
24. What cost advantage do you have over your competitors?
25. Apart from you, which company is the best widget producer?
26. Which niches are currently underserved by widget producers?
27. What is your company’s sustainable competitive advantage over rivals?
Questions to likely employees
28. For which widget business do you current work?
29. How long have you worked there?
30. For which other widget businesses have you worked in the past?
31. How long did you work at each of them?
32. Why did you leave each of these companies?
33. Which widget producer do you regard as #1 and why?
34. Do widget businesses need hard-to-find employees with higher education and rare technical skills, or can employees generally be trained on the job?
35. How would you characterize staff turnover in the widget business?
36. For which widget producer would you ideally like to work?
37. Where are the best people doing your job currently working and why?
38. What do you look for in a potential employer?
39. From an employee perspective, where is the best location for a widget business to set-up?
40. What is the market salary and bonuses for your role in a widget producer?
41. What are the market salaries and bonuses for other roles in a widget producer?
42. Which widget producer pays the best and which the worst?
43. Which niches are currently underserved by widget businesses?
44. What would it take for you to join my new widget business?
Questions to future suppliers
45. How many suppliers of your product are there in the market?
46. Apart from you, which supplier of your product do you regard as #1 and why?
47. Which widget producers do your supply?
48. What are your prices?
49. What discount would you offer my company if I purchased your product in bulk?
50. For how long are you willing to cap your prices in exchange for an exclusive account with my new widget producer?
Questions to former proprietors
51. What were the biggest rewards and challenges in owning a widget business?
52. Why did you exit the widget business?
53. What earnings multiples have been achieved by owners selling their widget businesses?
54. Which companies have acquired widget businesses?
55. What earnings multiples are likely to be achieved by an owner selling a widget business?
56. Which niches are currently underserved by widget businesses?
57. What factors would you consider in deciding whether to return to the widget business?