Market Research Tips & Tricks – Market Definition and Target

Below please find summary notes from a discussion I had with a student having trouble with market research.

Q: My market is really hard to find information on, because the market doesn’t exist.

A:

1. Come up with categorizations which, based on your knowledge and reading some articles, make sense. E.g.

- Private music lessons

- Music store music lessons

- Instructional DVD

- Online

2. Then, figure out what information you want to know. For instance:

- Total market size – music lessons.

- Breakdown of 4 categories within this market.

How to obtain?

- Expert/entire industry view: Music associations / music teacher associations. If they are not the right people, they might know who are. Develop a list of questions that you want to know about. Be ready to change your approach and questioning mid-call depending on knowledge level of the person. Practice with a few folks first (call randoms).

-Expert/entire industry view: Reporters who cover the industry. Analysts who cover the industry.

-Tip:  Start early, keep calling. Don’t expect them to call you back.

- Tip: They might not know the exact numbers, but – you can do the math. If one person at an association knows the total music lesson market size. And an analyst knows the size of the online music industry, then, you can start piecing it together like a puzzle.

3. Your target market

- Pick a geographic area, a demographic, etc. as your target. Use the addressable market ppt slides as a model of how to construct a bottom-up analysis.

- Trick: Have a tough, all-over-the-place market? Call a sales rep that sells to that market. Example:

You to music store guy in LA: “Hey, do you happen to know how many music stores there are in the area?”

Him: “No dude. I have no idea.”

You: “Yeah – that was out there. How did you wind up there?”

Him: “I was a gamer and I got into Guitar Hero and decided I wanted to live my dream.”

You: “Cool! So, you have the technology insight. Where is music and technology going?”

Him: “Well, from the production side – it’s major.”

You: “What about from the lessons side?”

Him:  “Huh?”

You: “I mean – you came into this from Guitar Hero.  Do you think that more people will take the next step and take music lessons online.”

Him: “Actually, yeah. That’s all they were talking about at this online music conference I went to last year.”

You: “What’s that called”

Him “Yada yada yada.”

You: “Hey, you know what I just thought of? Would one of your reps – who sells you amplifiers, etc. know how many music stores are in the area?”

Him: “Oh – yeah.”

You: “Who is the most on-it, smart rep you know.”

Him: “Definitely yada yada who works for yada yada.”

You: “Excellent. Thanks. Oh – one last thing, back to the music lessons.”

Him: “Yeah?”

You: “Is that a big deal at your store? Is there a lot of revenue from music lessons or is it just to get people interested in instruments.”

Him: “Well, we’re more involved than some stores. We hold a “rock camp” each year. Most stores just use music lessons to draw in folks.”

You: Would you say music lessons are about  10% of the store’s sales?

Him: You’d have to ask the lady who does our books, but, yeah – that is probably about right. I run the cash register most days.

You: Thanks so much. I am just getting to know this industry and you helped me a lot. Would you mind if I checked in with you if I had any additional questions?

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So – now, you know

- Trends in online music lessons

- A conference where you can learn more (note: call organizer of conference)

- A contact who knows your target market and stats on it.

- The beginning of some information on the % of revenue music lessons might comprise for a typical store. (And you can multiply that by number of similarly sized stores and bump up or down based on rock camps, etc.).

- You’ve got a target market size – or the beginning of it – and some ideas about trends and people to call.

This is why I was saying in class GET ON THE PHONE and DO IT EARLY.