Market Scan, also known as market research, is the process of exploring different aspects of a market to gather information that will help a business. It is typically conducted before setting up a business to ensure the entrepreneur makes the right choices based on existing market conditions.
Purpose of a Market Scan
A market scan primarily covers three critical areas:
- Understanding customers and their specific needs.
- Exploring ways to grow the business and increase profit.
- Understanding the types of goods and services offered by similar businesses (competitors).
How to Conduct an Effective Market Scan
The sources outline a simple process that can be performed either online (via the internet) or offline (on the streets of your town).
- Prepare Questions: Start by making a list of everything you want to know about the industry, other businesses, and potential customers.
- Gather Information:
- Offline Method: Visit local shops or service centres to observe what is being sold, their prices, and who is buying them. At this stage, identify an expert or a customer who can answer the questions from your list.
- Online Method: Use search engines like Google to find information on local services. Use e-retail apps like Amazon or BigBasket (or Urban Company for services) to research the types and prices of existing offerings.
- Conduct Interviews: Speak with business owners to understand their business models and challenges. More importantly, talk to customers to find out what they like about current products and what they feel could be improved.
Key Benefits
Conducting a market scan provides several vital insights for an entrepreneur:
- It identifies who the target customers can be.
- It reveals the common challenges associated with a specific business idea.
- It helps determine the cost of setting up the business and the cost of raw materials.
- It allows an entrepreneur to find out the different prices at which similar goods or services are sold, which helps in building a competitive business.