Info Insight: Using Market Research to Your Competitive AdvantagePublished: May 04, 2011
Women entrepreneurs in Peru are getting down to business. Goldman Sachs and the Multilateral Investment Fund of the Inter-American Development Bank (MIF/IDB) -- in partnership with Mibanco (the leading microfinance institution in Latin America), Universidad del Pacífico in Ecuador and Thunderbird School of Global Management in Glendale, Arizona -- launched a 10,000 Women certificate program in Peru that graduated its first group of entrepreneurs in late 2010. The graduates, like entrepreneur Elena Borda, are translating the experience from their training into positive real-world results.
"The greatest value I derived from the Goldman Sachs 10,000 Women program has been the feeling of security that comes from using the business knowledge that I have acquired," says Elena Borda, who heads Exportadora e Importadora Textiles, an apparel manufacturer and trading firm that employs 16 workers in Lima, Peru. The 46-year-old Borda has been in business for 17 years. Having decided to expand into foreign markets, Borda recently visited Colombia and Venezuela, successfully identifying and targeting the right kinds of customers for garments that her company makes and markets.
Segmentation in Colombia and Venezuela
Market research skills have played a critical role in her company's success. "They have given me the confidence that I needed in order to win over clients and sell to them," Borda says. Even in the best of circumstances, acquiring new customers and retaining them over the long haul is a demanding process, but market research reduces the risks and uncertainties. Deploying what she learned at the Goldman Sachs program, Borda segmented various apparel markets in Colombia and Venezuela so that the garments she marketed to potential buyers in those countries reflected the unique tastes and needs of customer segments in various cities and regions in those countries. For example, customers in Colombia's warmer climates were targeted with different products than were customers in its cooler, more mountainous regions.
To stay as current as possible, Borda has learned how to evaluate global fashion trends by using the Internet to track the latest styles outside Peru, and then develop new garments for South American markets before competitors can do so. "We make samples of these garments, and then we visit with clients who approve certain designs for their collections," she says. "The hardest part of the process is to convince the client to make his first purchase order. That can take several months" or even years. "It is not easy to satisfy a client, who must evaluate the fabrics, the sizes, the colors" and so forth. Moving beyond reliance on her company's limited staff, Borda has also developed an informal network of contacts who help gather information about market opportunities and evaluate the products of competitors.
Borda is hardly unique. Market research plays a critical part in the careers of many female entrepreneurs, whether they want to open a new shop, or bring their products into new markets like Borda has, says Mary Sully de Luque, assistant professor of management at Thunderbird School of Global Management, and faculty co-director of Project Artemis, a program for training women entrepreneurs in developing countries. "They have to know which products are needed and wanted."
New technologies help streamline these processes. Until the recent arrival of cell phones, for example, small entrepreneurs like Elena Borda often had to wait months for a telephone landline in their offices, and phone service was often unreliable. "With the advent of cell phones, everyone has access, and that has an equalizing effect," notes Sully de Luque.
In the past, Peruvian society was also "very classist," Sully de Luque adds, with wide gaps between the few who had assets and the many who didn't. That meant fewer opportunities for women of limited means such as Borda. More recently, however, "there is much more blurring of the classes and much more of a middle class," says Sully de Luque. That process has been abetted by the spread of Internet-enabled personal computers, which break down geographical barriers and enable even small entrepreneurs to access valuable information from outside their own localities or domestic markets.
A Good Deal May Not Be the Best Decision
"Information is power," says Sully de Luque, and in the case of entrepreneurs like Borda, power is accumulated by collecting the electronic data required for the rigorous analysis of market opportunities and risks. "The women need to understand how to obtain the information they need in order to avoid the biggest mistakes," Sully de Luque adds. Market research helps female entrepreneurs like Borda evaluate which opportunities are worth pursuing and which are a waste of their limited resources. "Just because there is a good deal available in a warehouse or a shop, that doesn't mean that it is the best decision to make."
In Peru, female entrepreneurs like Borda have not only learned how to use their personal computers to gather more information. They have also learned that success is not just about collecting more and more information; it is about becoming more strategic with regards to collecting information and using that information to gain a competitive advantage. "It gets back to your business processes, understanding who you are, and being more creative," says Sully de Luque. "We are helping to systemize these processes, and instill in them that they are the leaders. This gives them the confidence that they need."
Like all best business practices, market research is a process that never really ends, especially now when leading companies need to keep up with fast-changing customer needs and tastes all around the world. To figure out what customers will want tomorrow and next year, "you have to be constantly in touch with them, calling them by phone or sending them letters or e-mails about whether they want something," Borda says. "The competition is very fierce."
As for the rewards, however, Borda describes the training she has received as "very marvelous."