Changes in tastes, lifestyles, and habits are constant and volatile. By anticipating and responding quickly to such changes, you greatly increase your chances of having a successful business. Demographic and lifestyle changes are constantly evolving, but often their consequences are not readily apparent. You will be able to anticipate many potential opportunities years in advance by studying changes, such as the aging baby boom population, ethnic shifts, and movements of populations to different geographic areas.
Consider these ways to find market information:
Monitor demographic changes - Population statistics change more rapidly today than in the past. For example, Peter Francese of American Demographics, Inc.®, points out that the fastest-growing age group in America is people eighty-five years or older. For this market, assisted-living centers, recreational activities, and delivery services are fertile ground for new opportunities.
Engage in people watching - Watching people's behavior and listening to conversations provide ideas on needs and desires in the marketplace. Successful entrepreneurs are excellent people watchers. For example, at social functions entrepreneurs do more than make small talk. They use the occasion as an informal focus group, asking questions and listening to others. These questions help identify opportunities.
Travel the information superhighway - Online information provides a great source for the latest information in various industries. Spot new trends on the Internet, exchange information on electronic bulletin boards, and shop various e-commerce sites.
Keeping an eye on lifestyles and consumer habits can lead you to a good idea or help you refine one you already have. The activities and action steps in this module are designed to show you how to monitor the market for opportunities.
Sally Smith and a business partner in Iowa used a research process called reverse marketing to identify their business opportunity. Instead of developing a product or service and then determining its distribution and audience, Smith scrutinized the marketplace first. "The idea was to identify what people wanted to buy and work backward from the delivery point," Smith explains. "I started with the consumer group I knew best-baby boomers-because I was one of them."
She began reading voraciously-everything from newspapers and trade publications to trend books like The Popcorn Report. She interviewed successful CEOs of large companies and talked to members of trade associations, economic development agencies, and chambers of commerce.
As she researched, certain facts grabbed Smith's attention. For example, the mail-order industry was experiencing significantly higher growth than traditional bricks-and-mortar retailing. Drilling down deeper, Smith discovered that food was the best-selling category for catalogers. Then she looked at large, privately held companies selling through direct mail, which included Omaha Steaks®, Harry and David®, and The Honey Baked Ham Co.® "The dots began to connect," Smith says. "They were shipping meat, and here I was, sitting in a state known for its pork."
Next, Smith visited the National Pork Producers' Association to find out why no one was selling pork through catalogs. "They gave me a long list of reasons why it couldn't be done, but they also told me something else," Smith says. "The industry was about to kick off a $10 million advertising campaign, 'The Other White Meat,' to boost the image of pork." More dots connected as Smith saw how she could benefit from those marketing dollars.
The Iowa Pork Producers Association® had trademarked a specific cut of pork known as the "Iowa Chop," which gave Smith the signature product she needed for an exclusive mail-order meat business. It also sparked the company's name, Chops of Iowa.
Launched in 1989 in Des Moines, Chops of Iowa was so successful that it acquired its own USDA plant at the end of its second year. Four years after starting the business, Smith and her partner were ready to deploy their exit strategy and sold Chops of Iowa to a regional corporation-one that Smith had identified during her initial research process.
"Quantify and qualify everything you can through research," Smith says. You may have a gut instinct about something, but validate that hunch through research. And conversely, validate research findings through your feelings. When you are looking for opportunities, "Head and heart go hand in hand," Smith stresses. "They complement and support each other."
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