It is always very interesting to obtain a client's perspective on the market research needs of the business and what are the pluses and minuses of that client's approach. While I exist to help fill the gaps or provide guidance on doing so it is essential for those like me to assess trends in gaps. One long standing one is taking leaps of faith on new business development.
This week I worked with a client who operates a physical location in an extremely competitive line of business. They are doing well enough that they've survived the first challenging year and are even considering opening a second location. That's where the story gets interesting.
The business owners do well enough with competitive intelligence to be aware of alternative choices, their pricing, service quality and so on. They have done secret shopping and stay top of social media in their field. However, their consideration of a second location has apparently not involved significant site evaluation (I'd say they are picking based on proximity to others in the same line of work) and, worrisomely, hunches. They told me they are looking at not only a second location but one that involves an entirely different type of product. The supporting justifications were (a) we like this product ourselves and (b) there's one sort of like it in the nearby city.
No! no! no! For something like this we must return to a business plan and do a sober, objective assessment of the market for the new location and new product. Can this be supported by the market? what impact might it have on the existing store? Where are existing customers coming from? and more.
Bottom line: every new step in business development must be taken with the same thought, care and analysis as the original opening. Thorough market research is needed to assess location, product line, competition, and customers.
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