Many small business owners feel that they don't need to do market research since they already have a feel for their customer market, given their long experience. Experience, though useful, can lead to a false sense of security; information gathered randomly over the years may be out of date, vague, biased or, of a "folk tale"? nature. Some initial decisions about our business can be based on our initial market research:

Identify opportunities in the marketplace. For example, if we are planning to open a retail outlet in a particular geographic location and have discovered that no such retail outlet currently exists, we have identified an opportunity. The opportunity for success increases if the location is in a highly populated area with residents who match our target market characteristics.

Minimize the risk of doing business. Instead of identifying opportunities, the results of some market research may indicate that we should not pursue a planned course of action. For example, marketing information may indicate that a marketplace is saturated with the type of service you plan to offer. Or, our proposed new location, on the main road through town, may turn out to be part of a by-pass, or alternate route, being planned to ease traffic congestion.

In refining our business concept, we need to consider where in the delivery chain we will compete, as well as what market segment offers the greatest opportunity.

In the early stages of considering business opportunities, we usually consider a general product area with some flexibility on exactly what niche our venture will fill. A basic decision to be made is where our offering will compete in the process of satisfying consumer needs. The product delivery "chain"? may be thought of as consisting of:

" product manufacture, characterized by large competitors, a large initial investment, and the need for an effective distribution system;

" wholesaling, a function currently undergoing some consolidation, and requiring sources of supply, and a dealer network;

" retailing, a highly competitive area with a number of specialty niches, and;

" services, generally the easiest types of businesses to start, but the hardest to get to a high level of profitability.

Individual businesses are generally identified in one of these categories, even if operating in a manner that falls between two of them, or that combines two or more.

Within our position in the supply chain, there are smaller groups, called market segments, with similar needs. Markets can be segmented along several different dimensions: product-related; geographic; "psychographic,"? or relating to traits, motives, and lifestyles; and demographic, relating to consumer age or income level.

With the information gathered in the research phase, we can refine our business concept further by considering our "marketing mix,"? those decisions to be made for our marketing plan that are generally referred to as the "four P's:"? We will take a first pass at the following decisions to continue our screening, then refine the answers for the business plan.

Product

What is the product that the market needs? How well positioned are we to provide it? How will we differentiate ourselves from the competition? What brand name and packaging will we use? How wide will our product line be? What will be its features, accessories and options?

Price

Will our price be competition-based or quality-image-based? What is the range of pricing options? How price-sensitive are sales? Can we be low cost and high service? What will our terms be? What discounts and allowances will we provide?

Promotion

How will we promote the product? What aspects of the product should we stress? How and where will we advertise? What are the most cost-effective media? Can we afford an agency? Are there some non-traditional promotional methods which could be effective? Does our venture lend itself to personal selling over mass-marketing, cross-promotions with related products? Are there opportunities for free publicity?

Place

Where and how will we distribute the product? What will the distribution "channel"? look like?

Through this process, we can add considerable focus to our implementation efforts.