Small Business Startup
Reviewing the Market

(Date posted: March 17, 2009)

During this step in your small business startup, you review the market for your business idea. For this purpose, the market is represented by the advertisements of your competitors. This review will disclose certain key information that can improve your chances for success.

Before starting this step, you should have found a potential business idea. This is a product (goods, services, or information) that appears to satisfy your requirements and a current need of likely customers. The previous step shows you how to do this.

The desired result of this step is a summary of certain key information gathered from these advertisements.

You will use the following topics to complete this step:

Guidelines
Procedures
Example
Go or no-go decision

You will use the information from this step in the next three steps.


IMPORTANT

Before using this information to start a business be sure to read the following notice: Disclaimer

Guidelines

Study advertisements to see what customers want

Established business firms and advertising agencies have already discovered what customers want. You can profit from their knowledge. All you have to do is study advertisements for comparable products. These will show you what customers want and what motivates them to buy.

Discover the key information

You want to glean the following information from these advertisements:

  • The media used for their advertisements
  • The hot buttons they place in their advertisements
  • The sales propositions used in their advertisements
  • Prices charged for their products
  • Standard and optional features of their products

Deciding how much information to gather

The information you gather will help validate your potential business idea, improve your proposed product, and help decide how to advertise it. This information will also decrease the risk and uncertainty of your small business startup. The amount of information needed depends on what you already know and what kind of business you expect to start.

For a low-cost, low-risk business, you may only need to review four or five advertisements. If you are already familiar with producing and selling a comparable product, two or three advertisements may be enough. If you want to minimize your risk, review a few more advertisements.

Need to understand the customers' point of view

Different people have different points of view. Don't be surprised if likely customers have values, preferences, and priorities that differ from your own.

Don't expect to get final answers

Don't expect to get final answers from reviewing these advertisements. The most you can expect is to develop informed opinions.

You won't get definitive answers until you have completed your small business startup and can study your own customers.

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Procedures

During these procedures, you will begin the process of replacing guesses and assumptions with informed opinions. You need these informed opinions to guide your own small business startup.

Where you are asked to get paper and pen or pencil, you may prefer to use a spreadsheet or word processor program instead.

Finding advertisements to review

  1. Look over the list of various media and decide which ones you want to study.
  2. Go to that media and look for advertisements of products similar to your own product.
  3. If you can't find any suitable advertisements in the media selected, try another media.
  4. If you have exhausted all promising media, you may want to interview business people or likely customers instead. (A compelling interview takes the place of two advertisements.)

Gathering the key information

Get five sheets of notebook paper and a pen or pencil. Head up each sheet with one of the titles from the list below. Then as you gather the information for one of the five items, write it down on the proper sheet. Continue until you have all the information needed.

  • Media used for advertisements
  • Hot buttons used in advertisements
  • Sales propositions used in advertisements
  • Prices charged for products
  • Standard and optional features of products

Analyzing the key information

If you haven't been able to gather sufficient information, you may want to reconsider your idea for product.

If you have gathered sufficient information, you have established that a market exists for your proposed product. Now you can use this information in subsequent steps of your small business startup.

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Example

I used my own small business startup for this example. The competitions for my proposed e-book are firms selling e-books or plans about making money or starting a small business. Thus, I reviewed advertisements for these types of products.

Media used for advertisements

I chose the Internet.

Hot buttons used in advertisements

The hot button words were:

  • Exclusive offer
  • Get rich
  • Making money doing nothing
  • No skills or training needed
  • Passive income

The hot button pictures I liked best were the expensive homes and cars (and the good-looking women, of course.)

Sales propositions used in advertisements

These were propositions were:

  • Money back guarantees
  • Offer expires in three days
  • Testimonials

Prices charged for products

Prices ranged from $49.95 to $1,200.

Standard and optional features of products

The plans mainly talked about making lots of money. Some plans simply claimed that you could make money without doing any work. Other plans offered to explain how to use affiliate programs, multi level marketing programs, pay per click, and Google AdSense.

Analysis of offers

The number of advertisements proved there is a market for good information on making money or starting a business. The main problem that likely customers face is knowing which offers are legitimate. However, even some legitimate offers can be expensive, with no guarantee of success.

My strategy will be to concentrate on getting the free website mostly completed first. This will establish my expertise. After that, I will offer my own e-book on having more money and starting a small business.

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Go or no-go decision

This decision concerns the summary of key information you prepared in this step.

Go on to the Refining the Product step in your small business startup if you can answer "yes" to the following questions:

  • Were you able to locate the desired number of advertisements, or conduct sufficient interviews?
  • Are you satisfied with the key information you have summarized?
  • Are you confident that your product will satisfy a current need of likely customers?

If you have answered "no" to any of the above questions, go to this topic on another page for what to do next.

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