How to use market research data
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This hypothetical example shows how you can use market research data to:
- assess the potential of your business idea
- identify areas of potential opportunity
- develop informed strategies to overcome obstacles.
Sam's ice cream shop
Sam was a successful civil engineer but wanted a career change. She had always dreamed of opening her own business and considered an ice cream shop.
Sam thought about opening her business at Mount Tamborine in the Gold Coast hinterland. It was a popular tourist destination that potentially offered good prospects for an ice cream shop.
The following information helped Sam refine and enhance her business idea.
Demographic, economic and social data
- Interstate visitor numbers to the Gold Coast rose by 9%, intrastate visitors rose by 6% and international visitor numbers rose by 4% in the year ended December 2012.
- Domestic day trip visitors in Queensland in the same period rose by 15% with expenditure also increasing.
- In mid-2013, there was one specialty ice cream shop in Mount Tamborine and more than 30 food businesses, many of which offered sweets, desserts or an alternative to ice cream.
- Desktop research indicated that, based on proximity to Brisbane and the Gold Coast, the location was a popular tourist destination with an average mean temperature of 22 degrees Celsius.
Based on this information, Sam identified that competition was high and she would have to be creative about making her ice cream shop stand out. She also noted that there were significantly more people making day trips, and therefore potentially more customers. The data allowed her to consider a pricing and marketing strategy for her business.
Australian Bureau of Statistics data
- In the 2011 Census, the most common language spoken at home was English. German was the next most popular language followed by Dutch, French and Japanese.
- Of all the residents of Tamborine Mountain, 287 identified as being employed in the accommodation and food services industry with the largest number in the 15–19 age group.
- Car was by far the most popular method of travel to work.
This data allowed Sam to consider whether the local workforce would be qualified to meet her customers' needs and what transport options may impact on her staff. She could then forecast her costs and determine how to recruit staff local to the area.
- Ice cream shops with a turnover between $65,000 and $250,000 had an average cost of sales of 34% and average total expenses of 82%.
- Salaries and wages account for 11–18% of gross income in the Ice cream retail business. Rent costs consume 12–20% of gross income.
This information helped Sam prepare a budget and cash flow forecasts for her first few years of operation. This data opened Sam's eyes to more of the challenges she would face if she was to open her ice cream shop.
After carefully considering all of the information Sam collected she decided against opening an ice cream shop on Mount Tambourine. It was not the great business opportunity she originally thought it would be and decided to look for an alternative business or location and continued her research.
- Learn more about different research resources for business and industry.
- Use a business planning template to record the results of your market research.
- Learn about the range of useful data to help small businesses from the Australian Bureau of Statistics.
- Find out more about preparing to buy a business.
- Read our business start-up guide.