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A
Primer on Market Research
By Justin Laboe, Herb Research Foundation
Editor’s Note: The following article is an excerpt. To access
the full article, please look for it on the A-SNAPP
resource page.
Any person or business involved in the production, distribution,
or sale of natural plant products needs information to help
them make important business decisions. Farmers need to know
what to grow and how much; traders, wholesalers, distributors,
and manufacturers need to know fair prices for the products
they buy; and retailers need to know what products people want.
Market research is intended to provide this information. Because
of the wide variety of uses—and users—of information, there
are many different types of market research. To help make sense
of all the available information, it can be helpful to classify
market research into the four categories described below.
Consumer Research
Consumer research analyzes the people who purchase products,
defining who they are, where they live, why they buy the products,
what other related products they buy, and how much money they
are willing to spend. This research is used by people responsible
for getting a product into the hands of the consumer. Consumer
research is usually compiled from surveys of randomly selected
individuals or households within a specific geographic area.
Industry Research
Industry research broadly refers to any systematic gathering
of information designed to help businesses throughout the entire
"value chain"—the producers, wholesalers, manufacturers,
and retailers who add value (i.e., price) to the final product
purchased by consumers. Some research is descriptive in nature,
such as directories of businesses or "case studies"
of individual businesses. Other industry research is more analytical
and quantitative. This research might try to estimate the total
value of all retail sales of a particular herb or all natural
products, total wholesale values, or the sum of all money received
by farmers that grow the herb (termed "farm value").
Methodologies for this type of research vary widely.
Trade Research
Trade research is that which specifically addresses wholesale
markets of goods such as natural products. This type of research
can include "spot prices" that report wholesale prices
for a product at a specific point in time. Private market research
firms and government agricultural marketing agencies often generate
this kind of market report. A-SNAPP also generates spot-price
reports for many herbs. Information about international trade
in products is also available from various government agencies.
Production Research
Production research is essential for farmers, wild harvesters,
and producer associations to plan future production and allocate
scarce resources into projects that are most likely to yield
the highest return for their efforts. It is important for farmers
to share production statistics for their crops. This provides
a powerful knowledge base from which farmers and producer groups
can coordinate production and reduce the risk of producing more
of a specific product than the market demands.
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On
May 18, United States President Bill Clinton signed the Trade
and Development Act of 2000, encouraging American trade and
investment in Sub-Saharan African countries that are working
towards the political, economic, and human rights goals specified
by the new law. The act specifically promotes joint ventures
between individual African citizens and American non-governmental
organizations (NGOs), with the aim of strengthening Africa’s
private sector and providing new opportunities for women and
small-business owners. The US currently receives only five percent
of Africa’s total exports. By reducing tariffs and bureaucracy,
the law aims to increase this figure substantially.