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I'm thinking in making my own "market research study" (if that applies) by no spending money but time. My resource: the web.

The idea is make the most complete possible list about my possible competitors (let's say for a niche market, suppose "Project Management software" or "Personal Finances software").

So, will look in search engines with the respective keywords, plus downloads sites and the companies websites themselves.

I think of populate the list with the next data columns...

-Product Name
-Company Name
-Product Type (or subtypes/subniches that applies)
-Current Version
-Years in Market
-Min Unit Price (the free/community or basic edition)
-Max Unit Price (the pro/enterprise/premium edition)
-Number of editions (I've seen software with as much as 6 editions!)
-Web Ranking (position in search engines)
-Total Downloads (as reported by downloads.com or sites alike)
-Has Phone Support? (it says about customer care, prod. complexity and staff size)
-Has Corporate Sales? (..plus it says about size)
-Detected Banners (still don't know how to detect they banners in magazines or blogs)
-Detected Search Ads (same as above)
-Estimated Marketing Cost (Here begins the subjective feelings)
-Estimated IT Staff (just begin to calculate how many people in that company)
-Country of Origin
-Average Country Salary x IT Employee (So we can estimate a minimum payroll cost)
-Estimated operational cost (minimum marketing + minium payroll + taxes + ?)

What do you think about this approach? Suggestions about methodology, more columns to add, etc... will be appreciated!

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Automated competitive analysis. That's a cool idea, thanks for giving me an idea for my next startup! :D – Olivier Lalonde Dec 10 '09 at 0:53
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Haha, I like your thinking olalonde. :-) Note that there ARE services that do this sort of thing... everything from prepopulated databases to active services... – Jason Dec 10 '09 at 20:43

3 Answers

up vote 3 down vote

What is your goal in this market research project? "Market research" is such a wide topic that what you propose might be completely correct or completely wrong. For example, this is more like a competitive analysis project than a complete market investigation (where are the customers in your analysis?).

So it all depends on what questions you want to answer, so start with those. That will tell you if the scope of your research is good and whether or not certain pieces of information are relevant (for example, why is it relevant what the salary per IT employee is in the company's country?).

Maybe if you really want to make a list of players in the field, I would add one thing about the fields you propose: You are assuming that the companies have the employees in the same country (to continue asking why it matter what each employee costs in that country). This may not be the case. The company might be based in one country but have programmers in other countries. They may have switched programmers several times, or may have employed programmers temporarily while development was being done in a high rate of speed. So even if you can get that information it may not tell you anything useful.

Also, rather than focusing on the company itself, I would focus on the clients of that company: How many, how much does each pay, how often, etc... Rather than things such as number of employees. But again, I night be wrong in all of this, it depends on what you really want to find out about these companies.

So it all goes back to the same question: What questions do you aim to answer by doing this research?

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My goal is, for certain software products niche(s), to know the competitors (looking for downloads, sales, employees, cost) and trying to deduct from those figures. Then calculate my effort to compete with them. – Nestor Sanchez A Dec 9 '09 at 21:11
The Average Country Salary x IT Employee is relevant because most of these companies are of USA or Europe, and i'm from Chile where i have the advantage of lower salaries (1/2 or 1/3). Then they operational cost are higher in that sense. – Nestor Sanchez A Dec 9 '09 at 21:14
Plus... if they have multiple version across many years, that means that -at least- they have 2 permanent people (1 technical, the other product/market oriented). Consider that freelance hiring also is available for me. – Nestor Sanchez A Dec 9 '09 at 21:17
About the Customers... the most nearest information I see is the number of downloads of the software or the visits to their sites. Then I should apply some conversion ratio. Plus, Google sitll does not have the service "Customers of website X are...". – Nestor Sanchez A Dec 9 '09 at 21:22
up vote 1 down vote

It sounds like you are doing a competitive analysis, not Market Research.

Perhaps you should write software that crawls the web to perform the analysis you describe on any market place or competitor and sell that solution instead. You may have stumbled on a much larger opportunity there than in the marketplace you are describing.

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The problem is: How can I know how much "xyz software" is downloaded montly (xyz meaning certain software type, like desktop cleaner, antivirus, PIM, et.c). Harvesting such info I think can estimate the size of the market. Else... HOW??? – Nestor Sanchez A Dec 10 '09 at 23:56
up vote 0 down vote

That's a lot of columns... what will you do once you have the data? (Similar to gmagana's response.)

Here's another idea: What niche could you occupy that no one else is satisfying? That is, instead of listing everything that exists, maybe the question is "What doesn't exist in this market?" Where could you win? How could you narrow your own focus to be the undisputed winner?

Some of your factors are interesting, but many are irrelevant to your own success. If Google had made such an analysis of the myriad of web server/crawler services before starting, what would they have done? Would it have mattered? Should it matter?

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Having that info I can estimate how much downloads, then sales I could get if doing similar product and having similar marketing effort (ads, banners, media coverage, etc.), plus estimate other cost (payroll, etc.). I'm not pursuing to discover an unsatisfied niche, else I want to make thinks different (let say "easier", "nicer", "faster" and adding particular rich features). – Nestor Sanchez A Dec 11 '09 at 0:04
I disagree that you'll be able to get accurate ENOUGH numbers for downloads, sales, revenue, etc.. Companies keep that guarded and published numbers are typically embellished. With all the error in the figures, computing A * B yields something that might be wrong by an order of magnitude. Great companies, smart niches, and successful products aren't built by spreadsheet analysis. If you're not pursuing an unsatisfied niche, what's the point? – Jason Dec 11 '09 at 4:00
Of course I cannot get accurate data by doing that (just an approximation), but what is the viable (free/cheap) alternative? About the niche... it's like the "search engines" niche... it existed since 1990s, but google arrived later and triumph over that already created one by doing better. – Nestor Sanchez A Dec 11 '09 at 18:41
So do one better. If there are so many competitors you need spreadsheets to keep it all straight, the market is by definition "very large" and you should just go out in it, find and angle, and see how far you can go. – Jason Dec 11 '09 at 20:18

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