An Introduction to Conducting Marketing Research
The custom decoration industry is continuously growing when it comes to competition, suppliers, and new products. Both new and old decoration businesses conduct market research periodically to help put themselves in the best possible position to succeed. Researching competition, new suppliers, new products, and new decoration methods are just a few topics on which a decoration business can conduct market research. Knowing the ins and outs of the decoration industry not only helps you better communicate with customers, but it puts your business in a better position to succeed.
Marketing Research: Competition
Both the best and the worst thing about the decoration industry is that anyone can get into it. The decoration industry is one that has low barriers of entry, making it easy for anyone to purchase equipment and offer custom decoration services. That level of competition can be overwhelming and intimidating to new decoration businesses. Attending industry trade shows is a good way to learn not only about new products, equipment, and processes, but also about your competition. The decoration industry primarily consists of smaller, mom-and-pop, shops who operate out of a basement or garage. Now, there is no shame in operating a home-based decoration business, as it greatly reduces overhead costs. In fact, it is rare a decoration business does not at least begin in a home before later moving into a commercial location. Also, just because someone operates out of their home does not mean they cannot make good money. There are many mom-and-pop shops who have worked out of their homes for decades and make a higher profit than larger shops.
The majority of decoration businesses are made up of mom-and-pop shops, but there are large shops at the top who make their money through high production volume. When considering these large shops, however, it is important to not confuse volume with profit. The larger production shops are profitable, but their unit profit is typically much less than smaller shops. Nearly every decoration process offers quantity discounts, and the big shops are often willing to print for peanuts in exchange for large volumes. Since large shops want large volume orders they often turn away smaller orders. This is where those mom-and-pop shops come in. Smaller volume orders come with higher unit margins, but they also typically come with more customer interaction. Customer interaction allows the business to create a relationship, but it can also lead to lost time and lower profits.
Marketing Research: Suppliers
In the product decoration industry, you are only as strong as your supply chain. Without quality products, affordable prices, and dependable service, it would be impossible to maintain a successful product decoration business. Pricing is one of the most important factors, but too many businesses sacrifice better and more reliable customer service for cheaper products. If your business cannot depend on timely delivery or product quality, then it is not worth a slightly improved margin. Also, pricing will change over time as the market (especially cotton) and dollar values fluctuate, but quality service and dependability do not. For instance, pricing used to be based largely on cases (twelve of a specific color and size). Today the industry standard is price per piece with discounts available on bulk purchases of the same product.
Marketing Research: Products
Screen printing is the primary decoration method for apparel and other products, but it is screen print transfers that are quickly and quietly taking over the garment decoration industry. Screen print transfers give decoration businesses the ability to print on-demand while having traditional screen printing’s low unit costs. Screen print transfers only require a quality heat press that can deliver consistent time, temperature, and pressure. For the screen printer, a different type of ink and transfer paper would be the only difference from their typical process as they could still use their existing equipment to print transfers. There are other garment decoration processes to consider, and this leads us to an important point. The decoration process you use is dictated by the quantity, quantity of colors, and material type of the product being decorated.
An Introduction to Conducting a SWOT Analysis
A SWOT analysis is an excellent method for evaluating the internal and external factors that affect the ability of a decoration business to reach a goal. A SWOT analysis is an internal and external analysis that a business performs to assess its strengths, weaknesses, opportunities, and threats. A SWOT analysis helps weigh positive (strengths and opportunities) and negative (weaknesses and threats) influences as well as internal (strengths and weaknesses) and external (opportunities and threats) factors against one another to determine the viability of the objective. These four categories are organized into a grid with internal factors on the top, external factors on the bottom, positive factors on the left, and negative factors on the right. This helps compare and analyze all aspects of a particular objective.
The strengths of a business are internal factors within an organization that the business is good at. These typically include its core competencies and any competitive advantages it may hold. Core competencies are those processes or skills that are central to a business and that it performs well. Often, core competencies become competitive advantages, which are any aspect of a business that provides a leg up on the competition. The most common strength for product decoration businesses is usually their expertise on one or more decoration processes.
Weaknesses are internal factors within an organization that the business is vulnerable to. Another good way to think of weaknesses in this context is that they are the absence of strengths. If a business does not have the best price point or the fastest supply chain, then those are weaknesses because they can be improved. Physical constraints, like facility size, are common for product decoration businesses.
Opportunities are external factors that open doors for an organization to improve and/or expand. For instance, the development of new technologies within an industry would be a significant opportunity. The evolution of product decoration equipment is a significant opportunity for product decorators. For example, a heat press for athletic balls has recently been developed. This development creates a whole new market for decorated products.
Threats are external factors within an organization that can threaten the business. In fact, the development of new technology could also be a threat if that technology were to undermine a business’s products and services. The rise of internet businesses like DiscountMugs and CustomInk is a significant threat to small product decoration businesses.
No method of analysis is perfect, however. SWOT analyses, for example, do not account for the relative value of all factors. Not all strengths and weaknesses are equivalent, and a SWOT analysis does not have the capability to differentiate their individual values. For instance, an embroidery business might count a location with low rent as a strength, and an old embroidery machine as a weakness. The old embroidery machine is a far more pressing matter, but SWOT analyses have no built-in way to account for this. This does not mean that SWOT analyses are in any way unhelpful, but it is important to understand that it does not provide a perfect or complete representation of all aspects of the objective that needs to be considered.
Conclusion
To start any business, an entrepreneur must take the time to learn about his or her prospective industry. The best way for an entrepreneur to familiarize his or herself with an industry is to conduct marketing research. As a part of marketing research, an entrepreneur can learn about the industry, its products, its processes, its related markets, and the competition. All of this is vital information regardless of the specific industry. No business can survive or thrive without an acute understanding of what it is selling, who it is selling to, and who it is competing against. Conducting marketing research is therefore one of the most important steps in the formation of a new business.
