1. FRANCHISE
110 November 2015
Avoid footfall
pitfalls
Online research
is free and readily
available, but make
sure that it is up to
date and from a
credible source
Dynamis’Melanie
Luff
examines how to anal
yse
yourpotential
marketbefore
you jump in and purcha
se
afranchise
2. FRANCHISE
talkbusinessmagazine.co.uk 111
M
arket analysis is one of
the most important parts
of any start-up. When
investing in a franchise,
the franchisor may help
you to choose a location, but it can be
difficult to make certain that there will
be a demand for your product or service.
Before buying a franchise, it’s highly
important to research the market. This
can be a laborious process, but it’s a
worthwhile endeavour.
Market analysis provides a snapshot
view of your customers: who they are,
their numbers, and the potential for
growth. It also enables you to ensure
there isn’t an excess of competition
and, if relevant, whether you will get
sufficient footfall.
Good market research is a sure fire
way to grow a successful franchise.
TARGET MARKET
It’s extremely important to gain a clear
understanding of who your target
market is. Many entrepreneurs make
the mistake of trying to target everyone,
ignoring the fact that their business
won’t appeal to all. By narrowing
down your criteria, you can hone in
on your target demographic, avoiding
the one-size-fits-all approach.
MARKET SEGMENTATION
Once you have established your
potential customer base, you will
need to define them to get the best
picture. Divide your market into
different segments by looking at them
in geographic, demographic, and
psychographic terms.
Reaching your potential customers
with a targeted message at the right
time is a key part of gaining, and
maintaining, your sales.
Take into account where they live,
their age, income, race, gender, marital
status, household income, level of
education, lifestyle, beliefs, and any
behaviours that could affect their
purchasing patterns.
Segmentation allows you to target
your audiences with personalised and
specific responses, catering to more
individualised consumer needs. It also
allows you to tailor your marketing
efforts and set price patterns within
each of the different market segments,
and subsequently, establish your
customers’ interests and buying habits.
This will put you in a position to explain
to them why your business meets their
needs better than your competitors.
DETERMINE SIZE AND
GROWTH POTENTIAL
Being able to quantify your market and
create a market forecast is key. These
forecasts start with the number of
potential purchasers in each segment,
and making a projection for the change
over the next three to five years.
You will also need to consider your
potential for market growth; are the
number of people in this segment on
the rise? Think about things like:
• How many people are retiring or
leaving work?
• Has their purchasing behaviour
changed in any way? (i.e. are people
still eating out, or spending money
on leisure?)
• How much are people spending
per annum?
Through making projections, you can
present your potential pricing structure
and gross margin, establishing the
difference between your cost and the
sales price.
At this point, it’s important to be
realistic, yet optimistic. Optimistic
projections serve not only as a guide,
they can also be motivational.
Also remember to keep in mind
that the demand may change over
time. Keep updating, and consider
what protective measures you could
implement to stop your franchise from
being affected by external factors.
EXAMINE YOUR COMPETITORS
In an ideal world, you would be
trying to access a market with no
competitors, where their needs aren’t
already being met, but often this isn’t a
realistic vision.
Getting to know your competitors
will give you an advantage; it’s always
great to know what you’re up against.
So who are they? How will they
impact you? And what can you offer
that they can’t?
Consider the size of their market,
how similar their product or service is
to yours, their growth rate, and their
strengths and weaknesses.
Their weaknesses can be your
strengths - use their pitfalls to excel.
However, it’s also important to establish
your barriers, and anticipate what your
potential problems could be. Examine
your own weak spots as well as your
competitors’, and make sure you’re
honest with yourself.
Understand your competitors and
what they are selling. The best way
to do this is to try out their products
or services. Becoming a part of their
market and customer base is the easiest
way to find out first-hand what you
are up against.
GET INFORMED
There are plenty of resources to help
business owners conduct market
analysis, such as:
• Trade associations - trade associations
often hold data collected from their
members. This information could
help you to gain a good insight into
your particular market.
• Official figures - the Office for
National Statistics (ONS) is a
Government-run database and a good
place to start as it provides free data.
• Onlineresearch-onlineresearchisfree
andreadilyavailable,butmakesure
thatitisuptodate,andfromacredible
source.Tradepublicationsoftenhave
freeandunrestricted access.
• Paid-for research - there are websites
that you can pay for data and
industry statistics.
IT DOESN’T END THERE
Once you’ve done all your initial
research and bought your franchise,
continue to research your market.
This will enable you to keep targeting
your existing customers, and secure
your place ahead of the competition.
Contact:
www.dynamis.co.uk
Understand your
competitors and what they’re
selling. The best way to
do this is to try out their
products or services