Although the driving force behind each feasibility study may be different, the scope and methodologies used to address the objectives follow a similar path. The objective of a feasibility study is to define the viability and success of a new venture.
The venture could be a product, service, business idea, building, or any other concept you are looking to launch.
What better way to do this than with reliable data to create evidence-based and fact-based decisions?
Despite the fact that your venture may be a new product launch, a new service launch, a new location for your organization, another type of expansion, or determining the best use of vacant land, Drive Research recommends using traditional market research options to propel strategy.
Here is an example of how Voice of Customer (VoC) research can drive product innovation.
No matter what your end-goal is, feasibility studies typically have similar traits which include core components of market research.
Each has its own unique objective to supply the data required but the components also lend insight from one another to intertwine findings together. The multiple methodologies provide separate looks and perspectives at the viability and offer different types of data (quantitative and qualitative.)
Here are the 4 components of market research we suggest for any type of feasibility study.
Although each can be contracted separately, the real value is cross-examining the data from each component to provide your organization with a comprehensive 360-degree view of the market research. Opting to select only 1 or 2 of these components will leave your organization wanting more. Utilizing all components of the market research allows you to evolve your findings and compare results from one component to the next.
Before we get started, feasibility studies are intended to (1) eliminate risk and (2) increase your chances of success.
Could you launch a new venture and be completely successful? Absolutely.
Using a feasibility study decreases your chance of failure, eliminates risk, and designs marketing and strategies to further increase the ROI of your investment. You may consider an ROI of advertising of 2X or 3X to be great, but what if it could be 8X or 10X?
The insights gathered from market research provide you with a comprehensive report breaking down all of the pros and cons to your concept and lays the groundwork for a successful launch.
In fact, many of our clients using feasibility studies for two common reasons: (1) to eliminate risk and help formulate strategy and (2) obtain third-party data to speak to the potential success of the concept.
The first reason we already touched on, but the second is often required to receive loans or funding from a financial institution. These institutions often require a third-party report with objective data to speak to the potential success of the venture. Without this report, a new business can often struggle to obtain a loan or funding.
1. Stakeholder In-Depth Interviews (IDIs)
Those who know Drive Research, know we are big fans of the in-depth interview (IDI.)
Among the market research options available to you on the qualitative shelf, we argue you won't find a better value than a series of IDIs. The cost is reasonable, the turn-around time can be quick, and the quality of data is outstanding.
In terms of a feasibility study, you'll want to focus your IDIs on your stakeholder audiences. These audiences may include economic development contacts, developers, and other experts in the market who are knowledgeable about the space.
Drive Research recommends conducting 8 to 12 one-on-one IDIs, each lasting anywhere from 20 to 30+ minutes. Doing the math, even with 8 IDIs you'll receive over 4 hours of feedback to analyze for your feasibility study. They'll likely provide some expertise and advice on what can further improve the viability of your new product or service.
These are qualitative in-nature so they are meant to be exploratory. However, the feedback can guide the next steps of the feasibility study and provide relevant strategic advice.
Another benefit of conducting stakeholder IDIs is acquiring ownership from this audience. In order for your venture to be successful, you'll likely need the support from this same audience you are interviewing.
What better way to get buy-in than to get their advice and use it to guide decision-making? We're all about aligning interests and strategy.
Ownership and alignment are key, particularly with new concepts. IDIs ensure you receive feedback and input from key stakeholders and lets them know their voice was heard as part of the development.
2. Demographic Analysis
This is probably the most common and well-known of the components.
When you are launching a new product or service, it makes sense to understand who you are selling to?
Surprisingly, the U.S. Census Bureau website offers free data on nearly every level of geography you can possibly imagine: county, census tract, etc. This source was included in our article about free market research resources for start-ups and small businesses.
How many of these people fit your target market profile? Find out by using demographic analysis as part of your feasibility study.
When conducting demographic analysis it's important to cater your analysis to your target market. This will help you understand the supply of available audience who may use your product or service. Depending on your venture it could range from less than 1% of the population to 100%. It will also help you identify pockets and geographies to market to.
For example, if your new location caters to high-income households, you may be able to spotlight the 2 or 3 ZIP Codes in your market which offer the highest population of high-income households. These findings can be integrated into future marketing reach-outs.
Demographic analysis might also include a special look into visitors and convention bureau's traveler information (e.g., who is visiting the area, where are they coming from, how much of an impact will they have on your venture?) posted on their websites.
Other demographics include data like traffic patterns and traffic counts for specific locations.
You'll at least want to cover the basic demographics in your analysis regardless of your product or service which is set to launch. These basics include:
- Population trends
- Household information
- Number of people in the household
- Number of children in the household
- Household incomes
The demographic analysis is truly dependent on the type of product or service you are offering. Some demographics may be relevant while others are not applicable.
Work with your feasibility study firm to determine the right list to review.
3. Competitive Assessment
All feasibility studies include some level of analysis of the competition.
Since most feasibility studies are new products or services being marketed to existing markets, you'll likely have a competitor in your market area. Using a competitive assessment as part of your feasibility study will give you more insight and help your organization understand how much or how little of an impact they'll have on your project.
The basic competitive assessment is heavily weighted to online research. The assessment scours the internet for marketing examples, pricing, PR, and other forms of information which can be used to inform the feasibility work.
If your venture is large enough, think of using information from Hoover's.
In addition to the secondary research, the competitive assessment can be structured to include some mystery shopping. The mystery shopping details calls or in-person visits to competitors to assess levels of knowledge, service, and overall customer experience.
Knowing areas of weakness of the competition will help you better capitalize on short-comings.
Much like a game of chess, a competitive assessment helps you not only understand what moves to make now but identifies competitive strategies 2 or 3 moves ahead.
Setting up a mystery shopping project is fairly straight-forward. First, work with your market research company to identify the competitors you want to focus on.
Second, the consultant will work with you to create an evaluation form or scenarios the mystery shoppers should play out when calling or visiting the competitor location.
Following the experience, the mystery shopper fills out the evaluation form and rates his or her customer experience (CX.)
The evaluation form typically asks the mystery shopper to rate the competitor on a variety of factors customized to your business. In addition to service-level factors, if the competitor was in retail it may ask the mystery shopper to rate items like cleanliness, store layout, etc. These factors would be much different than if the mystery shop was taking place in a bank branch where the shopper engages with the teller.
Finally, the online survey is the all-encompassing component.
Why? Because it uses findings from prior components to fuel additional insight.
The survey allows an organization to follow-up on issues or ideas from the stakeholder IDIs, address interest and appeal in your venture among your targeted audience identified in the demographics, and provides an opportunity to measure awareness and usage levels of competitors in your market. It's the final bow.
Although telephone surveys provide better data quality they are often not worth the additional time and cost. With online panels running rampant in the industry, you'll have your choice of which panel company to use for your survey regardless of whether your study is regional or national.
The survey itself can be customized to the feasibility study needs. Typically online surveys last anywhere from 5 questions to 25 or 30 questions. Drive Research encourages clients to keep surveys under 5 or 7 minutes to ensure engagement remains strong and no survey fatigue sets in. The online panel company can seek out your targeted audience and manage invitations and reminders if needed.
Don't be left without critical Voice of Customer (VoC) feedback from your feasibility study. Online surveys provide context to your numbers. It provides the "why" and "how" behind the "what" data you acquire in your demographic analysis and competitive assessment.
Online surveys are budget-friendly, offer a quick turn-around, and produce measurable data.
For these 3 reasons, online surveys and mobile surveys have reduced the need to conduct a phone survey. Although phone surveys offer two-way communication and a more in-depth discussion, as a client you'll have to pay for every hour a caller spends on the phone conducting a survey. Whereas with online surveys, you pay for one click of the mouse to send invitations to 10,000 contacts.
So it is easy to see why online options are preferred given the additional cost associated with telephone surveys.
The survey results are broken down by demographics including geographies. Your feasibility study firm should work with you as a consultant on these findings and not leave you with a bunch of charts and graphs with no analysis.
The feasibility study company should identify themes, make conclusions, and use the survey data to guide the next steps in the strategy.
It's important to note, feasibility studies are not cookie-cutter projects. You should work with a feasibility study consulting firm that can help customize the steps to your specific needs. Each proposal developed for a project is custom.
Be wary of the firms that state a common single-price for your feasibility study because it may not be customized to what you need.
Most studies have commonalities (e.g., demographic analysis or market analysis, competitive assessment, etc.) but Drive Research likes to offer traditional market research methodologies in conjunction with the secondary data. It is what separates us. By including feedback from both experts and potential end-users it will ensure your venture obtains critical Voice of Customer (VoC) data.
Many firms will propose feasibility studies that solely look at demographic data, market data, etc.
They'll tell you that approximately 257,000 adults in your 30-mile radius fit your target market profile. Without any type of IDIs or survey what you won't know is how many of those 257,000 adults will consider being a customer, what they like least about your competition, and what it would take to get them to use your product or service. Traditional market research helps maximize your dollars and eliminate risk.
Solely basing your decision on market numbers is a mistake. The VoC feedback you receive by incorporating expert and end-user feedback is invaluable in helping your organization design marketing strategies and operational strategies.
In these areas where traditional feasibility studies lack foresight, Drive Research excels.
Who Can Help Me With a Feasibility Study?
Drive Research is a feasibility study firm in Upstate New York.
We work with a number of different industries to assist our clients with their feasibility study needs.
Thinking about launching a new product or service, opening a new location, expanding into a new market, or developing a plot of land?
A market research feasibility study can get your organization the answers it needs.
Questions? Contact us:
- Message us on our website
- Email us at [email protected]
- Call us at 888-725-DATA
- Text us at 315-303-2040