Thinking about adding services or employees? Considering an expansion to your clinic? Conducting market research before making significant changes to your practice provides important information about your customers, your competitors and your industry.
The United States Small Business Administration (SBA) defines market research as “the process of analyzing data to help you understand which products and services are in demand, and how to be competitive.” Devoting time to conduct market research helps reduce business risks, points to current and upcoming problems and identifies sales opportunities.
“Market research provides a lot of information that is crucial for good decision-making regarding the direction of an existing practice, or perhaps even for launching a new practice,” explained C. Jill Stowe, PhD, associate professor of agricultural economics with a joint appointment as associate professor in the Department of Economics at the University of Kentucky.
“Ultimately, the feasibility of any business changes can only be understood by understanding the potential customer base and their needs, the market potential, and importantly, a business’s competition,” Stowe added.
Researching your marketplace begins with defining the industry in which you run your business. It includes examining trends. “This means being honest about and aware of your own business’s strengths and weaknesses, but also identifying industry-level opportunities and threats,” she said.
The Big Picture
There are two basic types of market research: primary and secondary. Both can influence your decision-making and provide a glimpse into the “big” picture.
Primary research collects information directly from potential and existing clients. You can collect this information yourself or hire a firm to do it for you.
Interviews in person or over the phone, online or in-person surveys, focus groups and questionnaires are the most common methods for gathering this type of information. Open-ended questions encourage participants to provide more than “yes” or “no” responses. They also provide respondents with an opportunity to share suggestions and explain which services they want.
Secondary research focuses on gathering statistics, reviewing reports and studies, and considering data. This information is often available from government agencies, trade associations, colleges or universities, and local chambers of commerce.
Websites maintained by the government provide nationwide and regionalized data about specific industries and overall economic conditions. For example, current employment statistics can be found at www.bls.gov/ces. Major economic indicators such as the Consumer Price Index and Productivity and Costs are available at www. bls.gov/bls/newsrels.htm#major. Data about Income and Earnings is available at www.bls.gov/bls/wages.htm. IBISWorld, a fee-based database (www. ibisworld.com) is an alternative for general information.
“It is important to understand not only the local industry, but also the regional, national and global industry,” Stowe said. While not all trends might be relevant to a veterinarian’s local market, staying aware of the pulse of the industry on a larger scale will help a veterinarian position his/her clinic in the best way possible to take advantage of and react to changing forces.
Gathering usable information specifically about the equine industry is challenging. “One of the things I have found during my time on the faculty at the University of Kentucky is that good information in the equine industry is scarce,” Stowe noted. However, over the past decade or so, many states have conducted statewide industry studies with their regional United States Department of Agriculture National Agricultural Statistics Service (USDA-NASS) offices. Reports archived within the USDA-NASS website offer some information on the expected size of these markets.
What the Data Says
Whether the data is collected through primary or secondary research, the feedback will largely produce one of two results: demographic or psychographic information.
Demographic data refers to the specific characteristics of potential clients. This includes attributes such as age, level of education, income, etc. It can provide clues to the largest potential client base. For example, the 2015 American Horse Publications (AHP) Equine Industry Survey sponsored by Zoetis received 10,662 responses from horse owners age 18 and older across the United States. In total, 63% of the respondents are 45 and older. Specifically, the age of horse ownership divided out as indicated in the accompanying chart.
The average age of potential customers allows business owners to make certain assumptions about their target audience and their approach to veterinary care for the clients' horses.
Similarly, household income suggests the threshold of costs that potential clients can afford. Households with combined income of less than $75,000 represent just under 50% of the sample, according to the 2015 AHP Survey.
Individual studies might only provide a portion of the needed information. While the average age of horse ownership is not likely to vary dramatically across the country, total household income might vary. Thoroughbred racehorse owners in Lexington, Kentucky, Saratoga Springs, New York, or Ocala, Florida, are more likely to invest in specialized veterinary care than recreational owners in rural communities. Looking to local studies or even governmental economic surveys can provide more specific details in those situations.
Regional studies such as the 2010 Maryland Equine Census, made possible by the cooperative efforts of the Maryland Department of Agriculture, the Maryland Horse Industry Board and the Maryland Field Office of the USDA-NASS, reported regional data and provided supplemental data specific to a geographic area. According to the 2010 Maryland Equine Census, the value of the equine inventory on May 1, 2010, was $714 million, up 5% from 2002 … The value of all equine-related assets totaled $5.6 billion, including the value of the inventory, up 8% from 2002 … Total equine expenditures were down 33% from 2002. You can find more by going to nass.usda.gov and searching statistics by state for Maryland.
Business decisions can’t be made solely on demographic data, but the decision to expand or downsize can be supported by this type of information.
On the other hand, psychographic data offers insight into what motivates clients to spend money on their horses and/or how they make decisions about veterinary care It is equally important as demographic data. Marketing companies heavily rely on psychographic data to create campaigns that emotionally appeal to buyers.
When the respondents of the 2015 AHP Equine Industry Survey were asked what they felt were the most important issues facing the equine industry, unwanted horses and what to do with them, the cost of horse keeping and overbreeding ranked as the top three.
Interestingly, while disease outbreak was not commonly identified as one of the top three issues, it was listed as an issue of concern about twice as much by respondents in Iowa, Minnesota, Montana, North Dakota, South Dakota, Wisconsin, Illinois, Kansas, Missouri, Nebraska, Arizona, Colorado, Idaho, New Mexico, Nevada, Utah and Wyoming.
The study does not draw any inferences regarding this data. However, veterinarians operating in one of these states could follow up with additional research to determine whether clients in those areas would be willing to invest in biosecurity consultations, risk assessments, etc.
Similarly, respondents’ answers to vaccination- and deworming-related questions can offer veterinarians insights into the opportunities surrounding these services.
According to information from the 2015 AHP Survey, a majority of respondents vaccinate once a year (58%-72%, depending on the vaccine). However, it is not uncommon for respondents to vaccinate against these diseases twice a year (about 20%), with the exception of rabies (only 3.6% of respondents vaccinate against rabies twice year). Very few respondents vaccinate their horses more than twice a year for any disease. Leptospirosis (a new equine vaccine after the survey was conducted) and strangles were not vaccinated against by as many respondents; 45.4% of respondents did not vaccinate against leptospirosis, and 39.5% did not vaccinate against strangles.
The same survey went on to conclude, “While slightly more than 50% of horse owners and managers still rely on rotational deworming, nearly 80% of respondents indicate that they are concerned about drug resistance in parasites; this figure is nearly identical to the 2012 survey. About 50% indicated that their veterinarians had recommended a fecal egg count; almost 54% had actually had a fecal egg count performed.”
It is not the responsibility of independent studies to draw or offer specific conclusions. Instead, the goal is to provide data that equine business people, including veterinarians, can use to draw their own inferences and inform their decision making.
The bottom line is that conducting market research allows you to make informed business decisions related to expanding or reducing services offered. The most successful businesses conduct research on a continual basis to stay current with market trends and to maintain a competitive edge.
A solid understanding of your target market and current economic conditions is key to your business’ growth and success. You can use industry surveys to help you understand general trends and perhaps ask those questions of your clients and potential clients.