Know the market before you leap

Successful strategies are developed not only on knowing your own customers, your own organisation and your own performance. It is important to know the market thoroughly, on an ongoing basis.

A well conducted market assessment exercise will help to define the existing market size, segmentation of products and customers, growth, emerging trends in terms of new products and usage, competitive scenario, distribution practices and other relevant information. This will provide the management with insights into making strategic decisions.

For an existing organisation it helps to benchmark key metrics with other successful players, both locally and globally. For a company considering entry into a new business or geography, it will provide a strategic go/don't go decision.

A strategic market assessment takes about six to eight weeks. It is not a customer survey to build up the information down-up. It is more of a top-down approach using the Delphi methodology, wherein you meet with the industry participants, and experts to get their views on the market and then arrive at conclusions. In case of industrial products, some large end users can also be included for primary interviews. The goal is not to achieve 99.9 per cent accuracy, but to arrive at a realistic conclusion, to enable strategic decision-making.

The process starts with conducting a thorough secondary research. In this age of the internet, there is huge volume of information available, virtually on any subject. The information available will include macro economic data, demographics, published reports by other firms/analysts, etc. Most information is available at no charge. However, some relevant reports may need to be paid for. A thorough background information is critical, so when you conduct primary interviews you don't go in fresh, and have an intelligent conversation in the limited time available.

Next is to conduct primary interviews. Have a contact database ready for this. Before the start of this exercise, you need to be clear how many conversations are necessary and at what levels. Sometimes you may not have all the contacts at the beginning, and the list may build up after having initial interviews.

As far as possible, do go with appointments for these meetings. And don't be late! Factor in the traffic delays and parking problems before hand. Conducting the interview is an art and has to be learned over a period of time. A long questionnaire may put off the respondent. But do take a set of points, so you do not forget what you went for. These interviews can be conducted face to face or over the phone. It's a call you may take depending on the time availability.

After the interviews, analyse the information collected from secondary research and primary interviews to arrive at the final conclusions. Some of these may need to get cross validated with the interviewees one more time. So do not burn bridges after the first interview!

Market assessment is a strategic business tool and its importance cannot be neglected. A wrong decision can cause losses worth millions. However, be sure that you have engaged the right resources to conduct this exercise. Investment in training the marketing staff to do this exercise or outsourcing it goes a long way for the business success.

- The writers are managing director and director respectively, of Cedar Management Consulting International.