Do you have a burning desire to open a bakery? Are you wondering if there are people out there who will buy your creations? Are you unsure of how much money you could potentially make if you took the plunge and followed your dream?
If you’re really serious about going from a hobby baker to earning money doing what you love, then keep reading because I’m going to share everything I learned about market research during my time opening bakeries.
After you read this article you will have a good understanding of what market research is, how to get started, and why it is so important for learning about your customers and the market you want to get into.
Market Research Will Get Your Focus In the Right Place
If you are thinking of starting a baking business because you love decorating cookies or because being in your kitchen baking gives you all the happy feels, then GREAT! Those are really good reasons to open a business.
But, if you want to stay in business, your focus is going to need to be on your customers. Learning about their wants, needs, and desires will help you give the best service and offer the exact product they want.
What is market research?
Market research is essentially the act of gathering information about your future customers and the market you want to go into. By doing market research you will learn about what your future customers need and want.
Why do you need market research?
Market research is an incredibly valuable tool for gathering information about your future business. Once you know who your customer is and what the market is like, you can make smart decisions, minimize risk, and be more prepared for success.
Market research can:
- Tell you information about your customers – who they are, where they are, and what they want.
- Help with decision-making – the more you know about your customer’s preferences, the easier it will be to make decisions for your business.
- Define and develop your business– during your research process, you may discover holes in the market that you can serve and ways that you can be better than your competition
How do you conduct market research?
To conduct market research you’ll first need to make some decisions.
- What information do you want to know?
- Which method will you use to use to gather that information?
What do you want to know about your market?
What you want to know is going to be specific to you and your business. If you already have some experience in your niche, you may know quite a bit already, if you are new at your hobby, then you’ll have more questions.
Typically, market research covers industry trends and market surveys (like population, income level, unemployment, etc.).
You can use local resources to get some of this information. Check with your local Small Business Association. They were especially helpful for me when I was doing my market research.
If I’m thinking of opening a fancy cookie business, for example, I would want to know:
- Who buys decorated sugar cookies?
- How much do they cost?
- What are the occasions that they like to buy them for?
- What do my competitions cookies look like?
- How much do they charge?*
- What kind of services do they offer? (delivery, shipping, packaging)
- Are they baking from a storefront or from home?
- How do they advertise?
*Please do not price your products solely based on competitive research. Do the work of pricing your products with your overhead factored in.
Click here for a quick refresher on how to calculate the cost of your products.
Decide which method you will use to gather information
There are four different types of research methods for gathering information. Choose whichever method will work best for you.
Surveys– Conducted online, by email, or face-to-face
Interviews-Open-ended and conversational ways of gathering information
Observations- Getting information from visiting an actual location
Focus groups- gathering a group of people and asking them for open-ended input
What you’ll know when you are done with your research
When you are done with your market research, you should be able to:
- Create your own brand identity and separate yourself from your competition.
- Have an idea about the best area to do business in.
- Have a good understanding of market trends.
- Know your customers’ preferences.
- Understand your competition strategies.
Use market research and set yourself up for success
By now you should have more insight on how to find the answer to the questions asked at the beginning of this post:
Can you sell enough products to stay in business?
How do you know if there is a market for your product?
By conducting market research, you will set yourself up for better success with your baking business and save you time, money, and resources.
If you enjoyed this article, you may also like: Selling Baked Goods Wholesale
