Market Research Means Money

I recently made a critical mistake in my progression towards business success: I forgot about market research. I had decided that I was going to make some money with an online store. I thought to myself, where should I start? What can I sell? After a bit of brainstorming, I picked a few things that I thought might be good to sell online. I then proceeded to start looking for suppliers. This may seem like a reasonable course of action, but it is not. It is missing a key component of any business plan.

A basic assumption for the purpose of this article is that there is competition involved with any business. Even if you make your own, unique product, similar products will compete against yours. However, the existence of competition is not necessarily bad. The fact that online retailers are selling items similar or identical to your own means that there is demand for your product. Competition is only bad for you, as a retailer, when the market is becoming saturated (or is already at that point).

Check the electronics market for a good example of this principle. Electronics go for rock-bottom prices online because there are so many different stores that sell them. The difference in prices between stores usually comes down to the cost of shipping. The competition in this area is extreme. If retailers cut their prices any lower they won't make enough to survive.

The first person who had the idea to sell VCRs online probably made a killing. Nowadays, nobody makes anything more than a buck or two per unit. For a home-based business, that's not good enough. Today's electronics dealers depend on volume, and very good supply sources, in order to make their money. Generally speaking, small retailers cannot sell at those prices and turn a profit.

In order to be successful it is essential that you know what you're up against, and that means market research.

If you are selecting your products, then you need to know which stores already sell those products. You also need to know how many stores there are, how much they are charging and, if you can find out, how well they are doing. Could you sell for less (if only a little)? What are other ways you could differentiate your store from the rest?

If you already have your product, then you need to know where and how your competitors are advertising. Are they concentrated in one location? Are there good places that they have overlooked? How much is it going to cost to compete with them for prime ad space?

So, you may ask, where do I begin? The answer is Overture. Owned by Yahoo, Overture is one of the largest and most reliable pay-per-click advertising services. Their program can be an extremely effective, but that is something for another day.

What you need for research requires no sign-up and belongs to no program. There are two web tools in the Overture Advertiser Center that can be amazingly useful. The first is the Search Term Suggestion Tool. This tool allows you to look up a keyword, like "digital camera", and find out how many people searched for that term last month. Not only that, but the tool will suggest a list of related terms, like "digital camera review", for your consideration.

The number of searches per term comes from Overture's partners like Yahoo, MSN, AltaVista, CNN, etc. This is critical information because it tells you whether or not people are looking for your product online and, at the same time, shows you how they are searching for it. This indicates a certain demand for your product.

You may be able to judge the size of the demand, to a certain degree, by the number of searches for your terms. For example (numbers taken at time of writing and may not reflect current rates):

Digital Camera ? 1,337,422 (high interest)

Used Car ? 890,346

Mountain Bike ? 133,553

Blender ? 26,648

Bubble Gum Machine ? 1,502

Chapstick Raspberry Vanilla ? 25 (very low interest)

Keep in mind that users searching for 'digital camera' are not necessarily shopping for one. They may just want information such as reviews or feature lists. It is also good to remember that if people are searching on Yahoo and MSN, as in the case of digital cameras, then you can safely assume that even more people are searching for the same things on Google.

The second tool Overture provides is the View Bids Tool. This tool allows you to take the keywords that you found with the term suggestion tool and see how many ads there are for each term and how high the bids are (in order to be listed on top of your competition you must place a higher bid for the term you want). This tool can help you judge your competition.

For example, at the time of this writing there are 131 ads associated with the term digital camera. The top bid is 79 cents per click. Bubble gum machine has 13 ads with a top bid of 49 cents. Chapstick Raspberry Vanilla, not surprisingly, has no bids on the term which means that the top spot could be purchased for the minimum price of 10 cents per click.

After you have your information from Overture, Google is your likely next step. To my knowledge, Google does not provide any analysis tools to the general public, though information is available to registered advertisers. Despite this limitation, it is easy to find your competition on Google. Simply enter your search term and check the right side of the results screen. The first page should show the top advertisers. Checking subsequent pages will reveal the entire list of advertisers for that term.

Tip: Sometimes advertisers may be targeting your term, but not selling your product. Read through the ads and visit the sites to get a more accurate idea of your direct competitors.

The natural results (the normal, non-ad results) of your search are important as well. Check those to see the top ranked sites in your market. Those sites are probably there because they employ search engine optimization (SEO) techniques. Users are much more likely to click on the natural results than they are the ads. The stores at the top of the list are likely to be well established and may represent some solid competition.

Visit your competitor's web sites and see what they are selling. Check for site quality, organization, ease of use and amount of products sold. Perhaps they sell your product, but it is lost in a vast sea of other related merchandise. That means better chances for your niche store. Maybe their site is ugly or hard to navigate. These are points at which you could gain an advantage over your rivals. Checking other sites will also give you ideas about how to run your own store.

The third step in this process is to check out Yahoo! Shopping. Yahoo! hosts what is known as an online mall. That is, retailers setup stores with Yahoo!'s services and are then included in Yahoo! Shopping's listings. This can be a good way to get fast traffic. For market research, it means easy access to competitor sites. On the Yahoo! Shopping main page, do a search for your product (Braun blenders for example). The results will show sponsored ads and normal listings. The sponsored ads come from Overture, so you should already be familiar with those.

The normal listings come from a combination of Yahoo! Product Submit results and Yahoo!'s web-crawler search database. What is important in this list is actually displayed just below the top sponsor listings and just above the normal listings. There should be two numbers: the number of products found and the number of stores they were found in. For 'Braun blenders' there were 989 matches from 76 stores (at time of writing). Those numbers give you an indication of how many stores you're up against.

Note: If there are too many matches, the number of stores will not be displayed (ex. 'sony dvd player' yields 3,660 matches). Of course, numbers that high shout, "big competition," even without store numbers.

Here again you have the opportunity to scope out competing stores. The thorough researcher would get their names and site locations. This may seem time consuming, and it is, but it will help with future research.

Our final recommendation is to visit eBay. Once there, find the eBay Stores area (located in the Specialty Sites box on the homepage at time of writing). Enter your search term to see how many eBay stores are selling your product. 'Braun blenders' shows ten items in eBay stores (not bad compared to Yahoo!). In addition, the search may show regular listings below the store results. These results should give you some idea of the popularity of your product as well as the feasibility of selling it on eBay.

Quick Recap:

Overture (free analysis tools)

Google (ads and natural results)

Yahoo! Shopping (number of stores)

eBay Stores (same deal)

Remember, some competition is good because it shows that there is an interest in your product. Too much competition is bad because it means low profitability. The spot where you can make good money is somewhere in between (most likely on the low end of the competition scale). Unfortunately, I know of no exact way to calculate your chances of success. For those who can afford it, hiring a market research professional might help considerably with that calculation. In any case, a solid business plan built on thorough market research will certainly boost your chances significantly.

About The Author

Jason Carr is a small business owner, dedicated student of e-commerce strategy, and producer of BeginBiz, an online resource for those looking to start an internet business.

beginbizadmin@startnetbiz.com

limo prices to midway Crystal Lake west of Randal .. Lockport Chicago limo O’Hare

In The News:

Creating an email alias can help clean up your inbox by organizing emails based on purpose, like creating different aliases for shopping, newsletters and work.

A multipurpose robotic system promises to transform how items are stacked onto pallets, aiming to maximize space utilization and reduce shipping costs.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

The number of people affected by a UnitedHealth data breach in February 2024 was actually higher than previously reported and was the largest medical data breach in U.S. history.

A phishing campaign uses Google Calendar to schedule fake meeting invitations that appear legitimate, redirecting targets to phishing sites.

Toll road text scam: Fake messages claim unpaid fees, seek payment via fraudulent links. Kurt “CyberGuy" Knutsson says this scam is becoming increasingly sophisticated and widespread.

Kurt “CyberGuy" Knutsson says these steps ensure that your friends and family get to the exact moment you want them to see. Try it out and streamline your sharing experience.

Tech expert Kurt “CyberGuy" Knutsson offers tips on how to protect your identity: Be vigilant, monitor accounts, use smart security, know theft response.

Tech expert Kurt “CyberGuy" Knutsson says cybercriminals are exploiting iMessage phishing protection, tricking users to reactivate links.

It's hard to imagine life without in-flight Wi-Fi these days – but sky-high web surfing comes with its own set of privacy concerns. Here's how to protect yourself.

Over 400,000 cases of credit card fraud were reported in 2024 to the Federal Trade Commission. The CyberGuy explains how to protect against becoming another victim.

A nondescript metal box transforms into a fully functional electric motorcycle that blurs the line between vehicle and urban infrastructure.

Many apps unrelated to location still ask users for tracking permission, and Texas Attorney General Ken Paxton has filed a lawsuit seeking to end this alleged practice by Allstate.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Melody, the artificial intelligence-powered robot, is life-sized and represents a move toward creating robots that resemble people in appearance and interaction.

Here are five easy smartphone rules from the National Security Agency that you can follow to better protect your mobile device from hackers and scammers.

A U.S. robotics company has developed "Jennie," a robotic pet powered by artificial intelligence that's designed to comfort those facing mental health challenges.

Healthcare records for more than 184 million Americans were breached in 2024, but you can take steps to minimize that risk. Kurt the CyberGuy explains.

The Skyrider X1 from Rictor claims to be the "first amphibious flying passenger motorcycle," and it combines land and air travel in one sleek design.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Home inventory and restoration apps help itemize and track every item in your home in the event you have to make an insurance claim after a natural disaster.

The White House launched a new cybersecurity safety label, the U.S. Cyber Trust Mark, intended to help consumers make informed decisions on smart device safety.

Today's tech can help make life so much easier — if you know how to use it. Here are a few tips on the quickest and best ways to make your phone, laptop and other devices work for you.

Tech expert Kurt “CyberGuy" Knutsson offers Windows 11 restart fixes: Update drivers, run system scans and check hardware.

Sony and Honda's Afeela 1 EV launches with advanced tech and entertainment for $89,900. Tech expert Kurt “CyberGuy" Knutsson gives his takeaways.

Market Research Means Money

Pay-Per-Click Advertising