business is the right venture for you, take some time to test your creative ability to make baskets. Purchase the materials to make two sample baskets, such as unique containers, basket stuffing, ribbon, cellophane, gourmet products, or other small gift items that reflect the look and theme that you have in mind. Experiment with making the baskets until you have a feel for what makes a visually and aesthetically pleasing package. Use these samples when doing your market research by showing them to family, friends, and, most important, to members of your focus group (see section d. later in this chapter).
b. Determining Your Market
The next step is to determine who your potential customers are — and if you have any. Do you know there are enough customers out there waiting to buy your gift baskets? Before you risk time and money and disrupt your life, you need to determine your market.
Many start-up operations are based solely on instinct and optimism. The enthusiastic new business owner may have only a vague idea about who the customers are or, indeed, if there will be any customers at all. Flying on blind faith, they rely on just plain old luck to see them through, and sometimes, it does just that. While every business needs a little luck now and again, banking on it is hazardous to the long-term health of your enterprise.
The benefit to the business you are considering is that gift baskets are not limited to the individual shopper. The corporate sector is rapidly becoming a major purchaser, and that means your potential market is very large. Gift baskets can be personal, professional, and designed to fit all occasions, tastes, and budgets. They are suitable for friends, family, co-workers, and clients. Often you will find that your corporate clients will also become your personal customers, and vice versa. If your initial sale is a success, you will have a loyal and long-term customer.
My own experience shows that repeat customers make up approximately 60% to 90% of my company sales. Think in terms of how much your average customer will be worth to you over the next several years. It pays to cultivate customers into lifelong friends of your business, not only for the sales they will bring to your company, but by their word-of-mouth referral of new customers.
Make sure your gift baskets are easy to purchase. Most people are too busy to find the perfect gift. Once they have determined that you are a reliable company with high-quality product and service, they will use you as a personal shopping service. Your customers can describe their ideas, price range, and the interests and lifestyle of the recipient, and have the perfect gift sent without ever having to leave their homes or offices.
Study the buying habits of the consumers in your area when targeting your market. The key to your success is knowing what your potential customer wants and making sure you can provide the product. This will enable you to develop a loyal clientele who will then promote your services through word-of-mouth recommendations, which is the most cost-effective way to build your customer base.
c. Market Research
Market research will provide you with the relevant data to help solve or avoid marketing problems. Conducting thorough market research is the foundation of any successful business. The most prevalent and practical research method for a gift basket company is the focus group or survey. (See section d. later in this chapter.)
First you must research your competition. Any gift basket company that is doing serious business will be advertised in the Yellow Pages. Phone each company and keep notes on how the phone was answered and how your request for information was handled. Ask to have all printed brochures and price lists mailed to you. Choose the two or three companies that seem to be your biggest competition and order a gift basket from each one. Observe the quality and service that they are able to provide; this process will give you a good indication of what you are up against. Keep notes on all aspects of the transaction and use this information to formalize your own sales and marketing strategy.
Competition is not a deterrent to going into business. It is wise to know who your competitors are and where they are located so that you are on equal footing. Knowing your competition allows you to learn from them. What do they do right? What do they do wrong? How will you be better?
Market research helps confirm market size, minimize financial risk, save time, and point out where and how to sell your product or service. Researching your market can also uncover market segments that you may not have originally considered.
Not taking the time to do some basic market research can permanently forestall success. Obtain accurate demographics (population statistics categorized by age, income, sex, education, family size, etc.) as a credible base for your business plan.
Your market is that segment of the population that potentially may buy your product or service. Finding out who they are and where they are is what market research is all about. Market research is simply the process of collecting and analyzing information. The information gives you the basis for decision making. It will help you pinpoint advertising, develop a marketing plan, and sell your product.
Market research seeks out two distinct types of data:
(a) primary data collected for the first time by personal visits, telephone calls, or questionnaires, and
(b) secondary data from previously published material, such as government statistics and industry reports.
The steps in basic market research are discussed here.
1. Set a time frame for completion
Decide how much time you intend to devote to market research and stick to that time limit. Think in terms of normal working days and eliminate weekends. Do not get so caught up in doing research that it takes precedence over getting the business started.
2. Define both your primary and secondary needs
What do you need to know? By properly defining your needs, you can save valuable time and avoid having to cope with too much information. In order to give your business a realistic chance of success, and to have the information necessary to write a comprehensive business plan, you must define what primary and secondary data is relevant for your proposed business.
Primary data includes the number of potential markets, size of markets, size of total market, market trends, customers and target market, competitive companies, and market share. Secondary data includes demographics, industry outlook, growth potential, economic trends, population shifts, consumer trends, and relevant economic indicators.
For example, if your proposed business is located in an area with a cruise ship industry, you could use that as one of your potential markets and gather all relevant data. The potential market would be cruise ship bon voyage gifts. The size of the market is the number of cruise ships and passengers leaving the port yearly. Market trends would be a shift in average age of cruise passengers, more families cruising, etc. Customers and a target market would be travel agents who purchase gifts for their clients. Competitive companies are the number of other companies in your area that offer delivery of bon voyage gifts to cruise ships. The market share is the percentage of the cruise gift business you realistically think you could attain.
3. Allocate resources
Your resources are personnel and funds. If you are starting a business with a partner or if a family member is available, delegate tasks and responsibilities and try not to step on each other’s toes. One person could make phone calls while the other goes to the library. The cash required should be minimal, but undoubtedly some will be needed.
