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MARKETRESEARCHWhat is market research?Market research is the process of collecting information that will assist you to gain insight so you can betterunderstand your market, customers and the environment in which your business operates.Why do you need to do market research? The POSITIVE impact you can expect, if youTo make informed decisions! conduct market research: Conducting market research isn’t a one-off 1 To improve your understanding of task. As your business grows and changes, you your market and customers will need to constantly review the data on your market, competition and customers as these are 2 It helps you to identify always changing. You need to stay on top of the new and potential customers trends and changes to ensure that you are not left behind. The impact of doing this correctly should deliver the following results: The data collected should help 1 You develop the right service or product, that best meets the3 you to operate your business needs of your customers better 2 You place your business in the4 It allows you to get to know and most appropriate location understand your competition5 To decide what prices, promotions 3 You create an effective business and marketing activities to use model6 It can save you a lot of money later 4 Your pricing is more accurate on, as you: 5 You deliver a superior customer6.1 Will have a better idea of what experience and service your customers want6.2 Can test new markets before entering them6.3 Can test beforehand if an idea is viable or not. 3MARKET RESEARCH

DO YOU KNOW YOUR CUSTOMERS (TARGET MARKET)?Before you start any research, you need to ensure you know who your customers are. Business is aboutyour customers. It is not about you or the product. Your business has a better chance of succeeding if yourservices or products are designed to meet the needs of your customers. You can do this by:1Interacting more with your customers 2Understanding their likes, dislikes, wants, needs and problems3Conducting Definition: Target market research A specific group of consumers at which a business aims its products and services source: small business encyclopedia 4 MARKET RESEARCH

MARKETRESEARCHHow do you go about doing research?There are two ways to collect information. You can conduct either Primary Research or Secondary Research!What is Primary Research?This is new research, conducted from ‘scratch’, which is done to collect answers to specific questions, or tomake new discoveries. This type of research requires you to go out to interact and engage with your targetmarket or subject matter. How do you do primary research? When the information you require is not available you may have to do your own primary research. Primary research can be done in a number of different ways. The method you choose will depend on what kind of information or answers you are searching for, as well as the budget you have available. 1 Market research questionnaires What do you do when you want an answer to something? You ask a question. We ask questions every day, but as small business owners we often don’t ask enough questions that will help us to understand our customers better, or provide us with answers to enable us improve our business performance. Questionnaires are an important and effective way of gathering information from current or potential customers. That is why they are the most commonly used method in research. A questionnaire allows you to get information on various topics, for example: - How to price a product or service - Whether people would use and pay for a certain new product or service - How people currently deal with a certain problem or issue – which you may be looking to solve Questionnaires are used in face-to-face interviews, focus groups and telephonic interviews, or via online, email or written surveys. 5MARKET RESEARCH

2 Online market researchWhy should It allows you to reach many people and in different locations. you use It is budget friendly: the cost is minimal compared to traditional surveys. It enables you to focus on your specific target market – depending ononline sites? which social media sites you use. You can receive instant results and analytics because some sites provide graphical analysis of the responses received. It is suitable for the use of either simple surveys or longer questionnaires.The cost will vary, depending on what you want to do and Cost your budget. But online market research is significantly less expensive than traditional ways of doing research. Time Time to create survey questions and theninvolved posting them on email or social media sites. SurveyMonkey: www.surveymonkey.com Some greatFree Online Surveys: www.freeonlinesurveys.com tools to try Google Forms: www.google.com/forms/about out! Zoho Survey: www.zoho.com/survey 6 MARKET RESEARCH

MARKETRESEARCH 3 Focus groups Why should A focus group is ideal for:you use a focus - Getting an in-depth perspective from members of your target group group? - Getting feedback on a specific product, service or questionFocus groups come at a cost and this will vary Cost: depending on whether you, for example, need to rent a venue; provide the groupwith some sort of remuneration; and use the services of a professional researcher. Focus groups come at a cost and this will vary Time depending on whether you, for example, involved: need to rent a venue; provide the group with some sort of remuneration; and use the services of a professional researcher. 7MARKET RESEARCH

How do you go Step 1: Set a clear objective for the focus group discussion.about running a Step 2: Develop questions to ask in the session. Keep these to 5 or 6 questions. focus group? Step 3: Plan the session properly by establishing the: For detailed - Date, time, length: Choose a date by consulting with the information on participants so that they will be able to attend. The length setting up focus of the session is important: generally one-and-a-half hours groups, go to: is suggested as suitable. - Venue and setting: Choose an appropriate venue, ideally with audio-visual aids, that is quiet, and where people will feel relaxed. Don’t forget to provide refreshments. - Agenda: Ensure you have a clear agenda, and share it with the group before you start. Include timelines per agenda item to ensure you keep to schedule. - Ground rules: Be upfront about the ground rules you set – it will encourage everyone to participate. Be respectful of others, remain focused, stay on topic and stick to the schedule. - Number of participants: Rather than large groups, have smaller groups and hold multiple sessions. The suggested number of people per group is between 6 and 10. - Budget: Set your budget upfront as this will determine how many focus groups you can hold. Among the costs to account for is the provision of a stipend or small gift for participants. Step 4: Identify participants for the focus group and invite them Step 5: Find a co-facilitator. Step 6: Decide how to collect or document the data. Ideally, use a voice recorder. http://www.wikihow.com/Run-a-Focus-Group http://managementhelp.org/businessresearch/focus-groups.htm 8 MARKET RESEARCH

MARKETRESEARCH 4 Surveys Why should Surveys are ideal when your business is already operational and you wantyou conduct a to get feedback from your customers about their experience of your product or service. I’m sure you’ve noticed how some apps and ISPs ask survey? you almost immediately after you have used their service to respond to a survey about the experience. Surveys can also be relatively inexpensive, depending COSTon what type of survey you conduct, how long it is, and whether you do it or hire other people to execute it. Time If managed well, it should take very little time as a surveyinvolved normally does not involve many questions.This can be done in a number of ways: online, social How do you media, email, text messaging, telephonic or direct conduct a interviews, or customer-feedback forms. survey? 9MARKET RESEARCH

5 Observations Observation is another way of conducting a survey. It is a simple and cost-effective way of gathering different kinds of information about your clients, customers or competitors – without directly interacting with them. Why would It is ideal when you need to observe a social habit or behaviour, oryou go about you want to count something. Such as the number of people wearing certain types of sneakers or driving a certain type of car. Or to find observing out how people shop – or even how a certain business operates. something? COST The cost is minimal as this would normally involve either yourself or employees to sitting and observing a particular activity or behaviour and recording the observations. Time Depending on what you are involved observing, this can be anything from an hour to a number of days. Different Location Scouting: ideal when you are looking to open a business in a certainobservation location. You can go to a location to determine whether it has high or lowtechniques foot-traffic. Mystery shopping: a method used in the retail space, involving a fake customer who observes certain behaviours or assesses specific operations. 10 MARKET RESEARCH

MARKETRESEARCHWhat is secondary research?Secondary research involves existing data or research conducted by someone else. As much as it is calledsecondary research, this is a good place TO START when looking to conduct research. This way, you get to seewhat is out there without wasting your time and resources by conducting a study on something about whichinformation is already available.Where can you find existing research?This century is not called the information age for nothing. There is informationall around us and it is easily accessible – if you look in the right places or just askpeople around you. 1 START ONLINE: Look for online industry journals; publications by consulting companies; company websites; online newspapers and magazines and university publications. 2 OFFLINE RESOURCES: If online is not your comfort zone, then go to the library or bookstore like Exclusive Books or CNA to access books, industry journals, newspapers and magazines. 3 SOCIAL MEDIA: If you are like me and spend a substantial amount of time on social media, think about following key publications and organisations on Facebook, Twitter or LinkedIn. I’ve found some amazing research gems – shared by research companies, individuals and companies that I follow. 11MARKET RESEARCH

Reliable (inexpensive) sources to look at when planning to conduct secondary research:Research is expensive, and most of the time you have to pay to access information from researchorganisations. But in the next section you will find reliable resources to search for information – which,hopefully, will cost you little or no money.Disclaimer: All the information shared below was sourced in July 2016, and thereforethere may be some changes as and when you go to the websites. 1 Stats SA (Statistics South Africa) www.statsa.gov.za Statistics South Africa is the South African government department that is responsible for conducting research and publishing official statistics for the use of all who need them – including government departments, businesses and non-profit organisations. And since you fall under the business category, this is a great place to start when doing research that relates specifically to South Africa. 2 CSIR (The Council for Scientific and Industrial Research) www.csir.co.za The CSIR is one of South Africa’s leading scientific and technology research, development and implementation organisations. As per its name, it focuses primarily on scientific research. Its directive is to conduct research aimed at improving socio-economic growth, which, for you, the entrepreneur, should be music to your ears! You can download research here: http://researchspace.csir.co.za/dspace/ CSIR Focus Areas Built environment • Natural resources and the environment Biosciences • Modelling and digital science Defence, peace, safety and security • Mobile intelligent autonomous systems Information and communications • Nanotechnology Laser technology • Synthetic biology Materials sciences and manufacturing • Water sustainability 12 MARKET RESEARCH

MARKETRESEARCH 3 HSRC (The Human Sciences Research Council of South Africa) www.hsrc.ac.za Solving social problems through research! If you are a social entrepreneur looking to create solutions that will positively impact the South African or wider African society at large, then the HSRC is one place to start when searching for insight that will help make informed decisions on what you plan to do. According to its website, the HSRC is “the largest dedicated research institute in the social sciences and humanities on the African continent, doing cutting-edge public research in areas that are crucial to development”. The research (unless it’s a confidential report) is available to the public for free. 4 Consulting firms – websites This is where I always start when I am doing industry and market research – I go to the websites of big consulting firms. They have great data, most of it recent and available for free, on industry and business trends, opportunities, and challenges – all from both a local and global perspectives. Make sure to visit the websites of Deloitte, KPMG, PwC, McKinsey, Accenture and EY to gain informed and up-to-date insight that is relevant for your purposes. 13MARKET RESEARCH

5 HSRC (The Human Sciences Research Council of South Africa) It makes sense to go to a university to access research, since they are the guardians of knowledge. If you’re still a student, then you are lucky as you have access to the university’s knowledge base. But if you have completed you studies or don’t live near a university, it may not be that easy. Why not try these three tips? 1 Activate your alumni card to get access to your university’s library 2 Go to a conference or forum discussion. Business schools, like GIBS, regularly host events where industry leaders and experts share their insight, and you can network with the speakers and other attendees afterwards 3 Or visit university websites, since many universities share articles and publications on business or industry trends and research online.6 Public libraries: The internet is an amazing source of information but since it’s not easily accessible to everyone, libraries still have a role to play. If you are in a small town, or even a big city – visit the public library. It will have newspapers, magazines, journals and other publications that you can borrow or just read while there. And some provide free Wi-Fi.7 Industry publications, journals, newspapers and magazines: To stay up to date with what is happening in your industry, why not subscribe to an industry journal or publication? These are normally published monthly or quarterly, and will keep you informed on the key things you need to know about the space in which your business plays. Newspapers and magazines (offline and online) are also a great source of information and are quite affordable.8 Development agencies and non-profit organisations: Organisations like the United Nations and the African Development Bank conduct a lot of research, which can be sourced from their websites. Subscribe to their online publications or follow them on social media. 14 MARKET RESEARCH

MARKETRESEARCHExamples of the kind of information can you expect to find from secondary research!Demographic information:Demographic information is important as it helps you to understand your target customers, thus ensuringyour products and services will best meet your customers’ needs. The information will assist you in decidingwhere you should locate your business; or how you should price, promote, package or position your productand service. Stats SA is a good place to start. You can get top-level information, i.e., the country’s populationdata, or low level, i.e., population data for different municipalities.Examples of types of data available from Stats SA:Source: Images a – f, data is sourced from the Community Survey 2016: (http://cs2016.statssa.gov.za) A Population growthPopulation 7,3%(In Millions)% Growth 49% B SA Gender split Female51% Male 15MARKET RESEARCH

C Population by age groupAge groups 9% 9% 3%30% 36% 13%0-14 15-34 35-44 45-54 55-69 70+D Access to basic services 9,70% 16,50% 20,08% 90,30% 83,50% 79,20%Access to electricity Access to water Formal housing 16 MARKET RESEARCH

MARKETRESEARCH E Other sources light (energy)For the 9.7% of the population who don’t have access to electricity, the following energy sources are used forlighting purposes: PARAFFIN 28% CANDLES NONE 2% 61% OTHER 1% GAS 2% SOLAR 6% 17MARKET RESEARCH

F Standard of living measureThe “ownership of household goods” data are used to measure the standard of living for households. Cellphone 89 Electric stove 94 TV 77 Fridge 84 Radio DVD Player 77 DSTV 84Washing machine Motor vehicle 77 Computor 84 Vaccum Cleaner Landline 77 84 77 84 77 84 77 84 77 84 77 84 77 Census 2011 84 77 Census 2016 84 18 MARKET RESEARCH

MARKETRESEARCHInternet penetration:We live in a digital age and are seeing more and more businesses online. Hence, if you are thinking of startingan online business, it is important to understand the people who are online. How many are there and howand where do they access the internet? This will help you build a strategy for your online business andestimate the potential size of the market. Source: iabsa.net, South Africans Online June 201628M 38,9M 69,9% South Africans who South Africans who Internet Penetrationaccess the internet via a access the internet via mobile device PC & MobileSocial media usage stats:For consumer-facing businesses, social media plays a key role in improving brand awareness and brandloyalty. But before you jump on every platform, you need to do research to understand where your targetmarket is sitting. Source: Worldwideworx.com, South African Social Media Landscape, 2016Users(In Millions)% Growth 19MARKET RESEARCH

South African Facebook usage stats:Source: Worldwideworx.com, South African Social Media Landscape, 2016 Users in Users who Users whoSouth Africa access on a access via a mobile phone Smartphone1, 13 Million Featurephone2 10 Million (77%) & Tablet3 1- 7,6 Million 2- 1,6 Million 3- 1,4 Million 20 MARKET RESEARCH

MARKETRESEARCHEconomic indicators:The following data are used to judge whether an economy is healthy or not. Economic indicators are largelyused by investors to assess or understand the current and future economic landscape, and whether it wouldmake sense to invest money in a specific country. For a small business it is important to understand theeconomic environment and how it will impact your business.South African Economic IndicatorsSource: www.tradingeconomics.com/south-africa/indicators (downloaded in Aug 2016)Overview Last Result ReferenceGDP Growth Rate -1.2% Mar-16Gross domestic product, looks at the value of goods and services produced by a country over a specificperiod of time. The growth rate is expressed as a percentage. If it is positive, the economy is growing, andif it is negative, the economy is shrinking.Unemployment Rate 26.6% Apr-16This rate tells us the percentage of employable people in a country who are currently unemployed.Inflation Rate 6.3% May-16This measure tells us the rate of which the price of goods and services increases, which then results inthe purchasing power of the currency decreasing.Interest Rate 7% Jun-16This is the fee that a borrower pays a lender on the amount they have borrowed. The rate is expressed asa percentage and the base interest rate shown here is set by a country’s reserve (central) bank.Currency (Rand to Dollar) 13.92 Aug-16 21MARKET RESEARCH

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