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Support systems for new activities in rural areas

Part 3 - Various techniques
The main ingredients of a market study
[Technical Factsheet 3]



Introduction
How to use this guide & Table of Contents

 

A. Demand


    1. Size of the market (volume and value) in different countries, regions and the local area.

    2. Breakdown of each market into major products (substitutes and complements).

    3. Price and quality differences between products.

    4. Main forms of packaging and presentation.

    5. Main channels of distribution and prices and formats in each.

    6. Consumer or customer profiles.

    7. Changes and trends in all of the above.

 

B. Supply and competition


    1. Main players, their products, turnover, profits and ownership.

    2. Market share of the main players (by product, distribution channel and geographical market).

    3. Strengths and weaknesses of the main players.

    4. Competitive strategy of the main players (product differentiation, cost cutting, technological innovation, distribution, etc.).

    5. Changes and trends in all of the above.

 

Common problems and bottlenecks


  • Two of the main weaknesses of many market studies are:

    • they concentrate on demand and underestimate or ignore competition;
    • they rely exclusively on desk research.

  • The quality of the existing market data varies enormously between countries. Nevertheless, to be directly useful to companies, it is nearly always necessary to complement desk research with fieldwork.

  • One of the best and least expensive methods of obtaining first-hand knowledge is through selective sampling of wholesale and retail outlets (rather than direct sampling of consumers).

  • Many projects also make extensive use of students and trainees to reduce interview costs.

  • Sector studies normally cover the same ground as production audits and market studies (in slightly less detail), but at the same time provide an analysis of competitive relationships between suppliers and customers of the sector and the way this affects the value added chain.

  • Production audits, market studies and sector studies provide the key inputs for the business plan.

 


EXAMPLE OF A MARKET STUDY FOR
PYRENEEN TROUT FARMERS
(FRANCE)


 

 

Desk research

    This covered all the points mentioned above.

    The main conclusions were:

    • trout consumption represented about 6% of the total fish market in France;

    • demand had grown very rapidly, but the image of the product had degenerated from being a high-quality natural food to one of the most commonplace fish on the market;

    • as a result, many supermarkets used it as a loss leader to attract customers;

    • the main growth area was for portioned trout in individual packs.

The field study

    This involved 40 trout retailers and distributors and covered supermarket chains, individual fishmongers and fish wholesalers.

    This allowed information to be gathered in the following areas:

    • sourcing (number of suppliers and frequency of deliveries);

    • daily volumes, seasonality and trends in policy towards suppliers;

    • quality standards and levels of satisfaction with existing products;

    • perceived differences in the quality of Pyreneen trout (50% of retailers and distributors thought the differences were insignificant; nevertheless they were interested in a label if there was a real difference in quality);

    • prices and margins (margins were worryingly tight in the fastest growing areas. A substantial number of distributors would be prepared to pay up to 10% more for guaranteed quality);

    • distributors' recommendations as to the criteria and methods to be used by the quality label;

    • reactions of distributors to the different quality labels;

    • distributors' recommendations as to the best ways of promoting the quality label.

Output

    A 40-page easy to read report with plenty of graphics and concrete examples.

Budget and staff

    One-day senior consultant ECU 780
    Junior consultant (20 days) ECU 7810
    Travel ECU 1250
    TOTAL ECU 9840

The collective project

    The production audit and market study were used as the building blocks for the final development plan for Pyreneen trout farmers. The plan covered the following areas:

    • the quality label and the recommended system for controlling quality;
    • target customers;
    • the recommended product range;
    • prices and margins;
    • volumes of production;
    • marketing and promotional strategy;
    • the organisation of production;
    • technology required;
    • investments;
    • the promotional and marketing budget;
    • a three-year forecast of income and expenditure;
    • the recommended legal structure.

    Methodology: two one-day meetings with the 12 producers to discuss the conclusions of the production audit and market studies. Three day-long meetings to discuss and prepare the final plan for the collective project. Two days to prepare the final report.

Output

    A 27-page easy to read report with plenty of graphics and concrete examples.

Budget and staff

    Senior consultant (7 days) ECU 2660

Other costs

    Graphics for the report (1 day) ECU 780
    Legal expert (1 day) ECU 780
    Design of the label ECU 1095
    TOTAL ECU 2655


    Overall, it took 6 months from the commissioning of the work to a keys-in- hand, ready-to-launch project. Daily rates could be reduced by using student placements, but the supervision costs and the time taken would increase.

    The key variable is not so much the daily rate (which varies depending on the country and area), but the quality of the results in relation to the budget and the total time taken.


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