Using Market Research to Advance Economic Development Goals
Market research is critical to assessing demand to support commercial, industrial or retail development while informing broader efforts to strengthen a community’s business and competitive environment. The first objective of market research is to identify the type of businesses your community is best positioned to attract and assess their potential demand for space. This analysis quantifies the level of real estate demand and the type and quality of space needed. A second benefit of market research is to better understand customer and business needs and their perceptions of your community. This understanding is based on the factors that drive where customers choose to visit and shop and where businesses decide to locate. With this improved understanding, economic development practitioners can identify steps to enhance community strengths and address weaknesses. Third, market analysis helps uncover new growth and development opportunities to target.
Principles for Market Analysis
Our approach to market analysis integrates supply side and demand side conditions and recognizes that different factors drive demand for each development use. While an area’s income and retail spending potential drives retail demand, office and industrial real estate demand is driven by business and employment growth within and across key sectors and industry clusters. Thus, different economic data and analysis is needed to properly assess demand for different economic sectors and development uses.
We also recognize, supported by economic theory and experience, that successful economic development is based on agglomeration. Agglomeration works in two ways: (1) a critical mass of activity is vital to attract and support consumers, businesses and new development; and (2) related entrepreneurs, enterprises and industries operating in close proximity benefit from sharing information and generating specialized resources.
Tools to Expand Understanding and Broaden Your Strategic Scope
Beyond assessing the market support for specific projects, several analytical tools provide further insight into market opportunities and your community’s competitive position. Key tools include:
Customer Surveys have multiple benefits:
- Profiling consumer traits and preferences
- Better defining your competitors and potential competitive advantages
- Identifying key specialties, agglomerations, and advantages
- Obtaining customer feedback on community problems, strengths and weaknesses
- Generating ideas and preferences for improvements and initiatives
Business Surveys provide valuable information:
- Providing additional data on the downtown or business district’s customer base
- Identifying business growth trends and specific expansion plans
- Determining critical resource needs to support business growth and competitiveness
- Obtaining business feedback on local problems, strengths and weaknesses
- Generating business ideas and preferences for improvements and initiatives
Benchmarking Analysis compares a specific development site or business district to its major competitors. This analysis helps identify the unique characteristics, strengths and weaknesses that can be incorporated into revitalization or development plans. For example, unique retail or business niches can be identified by comparing the size, distribution and sale of businesses in your district to other competing areas.
Key Informant Interviews and Focus Groups provide critical feedback and more detailed market intelligence on the preferences and perceptions of key customer segments or stakeholders. This information can uncover hidden assets or potential problems and heighten understanding of key competitors. These formats also provide a way to test and gain buy-in for plans, projects, and new marketing ideas.
Putting It All Together: The Revitalization Agenda
A better informed and more strategic revitalization plan will result from integrating the findings across these multiple tools, such as:
- Important agglomerations, niches and strengths to build on
- Business expansion and recruitment opportunities to fill market gaps
- Critical problems and weaknesses to address
- Activities and projects with the greatest potential for support
- Ways to strengthen existing customer loyalty and tap new customers
- More effective ways to market your business district
Learn more about our Market Analysis and Feasibility Study experience
Karl F. Seidman Consulting Services advises clients on the planning, implementation, and evaluation of economic development strategies, policies and programs and on the analysis, planning and financing of real estate development projects.
Karl F. Seidman Consulting Services has completed over forty projects for federal, state and local governments, foundations, community development corporations, business associations, and private firms and developers.