Last reviewed 3 February 2012

Market research is not a one-off exercise when setting up a new provision.

It is very important that all providers undertake regular market research to ensure that their information is up-to-date. Good decisions are based on good information. Things change and providers need to be aware of those changes.

The need for research

For example, some providers saw a decline in the need for childcare places 2004, due to the downward blip in the birth-rate in 2001. Many providers were caught out — why? — because they did not keep their market research up to date.

What was the reason for the downward birth rate in 2001? Parents were trying for a millennium baby which increased births in 2000 and an increased the need for childcare places in 2003/4. All looked rosy, until the downturn a year later when some had increased provision assuming ongoing growth.

They should not have been caught out as this information was readily available by either:

  • reading the newspaper reports in 2000 and 2001 — by a little extrapolation lower birth rates in 2001 would mean fewer children taking up childcare places in 2004 through to 2006

  • checking the register of births (marriages and deaths) for their local area as a simple, ongoing piece of market research.

It is important therefore that providers (and indeed all businesses) understand the demographics for the area.

  • What age and make up is the local population?

  • How many homes and people (and of the right age group) are in the area?

  • Are there new houses being built and who for (ie families or retirement homes)?

  • What is the birth-rate?

  • What are the employment statistics like?

  • Are there new firms moving into the area: are firms closing or downsizing?

  • Do current firms have problems retaining staff due to childcare problems?

The 2011 census information will be available later in 2012 and now is probably a good time to find and use reasonably up-to-date information.

Know as “desk research” much of the necessary information is available from the local authority; or the local Early Years Partnership. Much information is available on the Internet; but do use quality websites, such as:

Using five simple questions

The other information that needs to be obtained and reviewed is knowledge about the competition.

  • Who are they?

  • Where are they?

  • How long have they been running?

  • What do they offer (service; opening hours; prices, etc)?

  • Why do parents use them?

A thorough understanding of where the provision is within the market place, understanding what its customers want (customers are the parents; children are the end users), as they will pay for the service.

It may be necessary to undertake “primary research” (essential for a new provision). This is done by making contact with prospective customers to understand their needs. This can include paper questionnaires, face-to-face discussions, telephone enquiries to local firms, etc.

At the end of the process a provision should be able to answer the “5W” questions.

  • Who are the customers?

  • Where will the customers come from?

  • Why should they come to this particular provision?

  • What are they looking for from a childcare provider?

  • When will they want to use the provision?

Who?

This will depend on the type of provision. A preschool open for 38 weeks a year for 3 hours per day and taking children aged 3–5 only, may well be wanted by parents who want their children to have the opportunity to develop their social skills and experience time away from mum.

A nursery open from 8am to 8pm and taking children from 3 months to 5 years may be wanted by parents who need to work full time or wish to work full time to pursue a career or return to education.

Where?

The “where” customers/parents will come from again may depend on the type of provision. A preschool will probably have quite a small catchment area, as for a three hour preschool parents will not want to travel long distances to drop off and collect children; indeed they possibly want something within walking distance. A nursery could well attract parents from a much wider area. Would they like the nursery to be close to their home; close to their place of work; somewhere in between?

Why?

This will depend on several factors, such as ease of driving to the provision and parking. Is the location of the provision convenient? Does it have a good reputation within the community? Did someone recommend them? Does the provision’s ethos match that of the parents? Did it have a good Ofsted report?

What?

The “what” they are looking for again is often an individual choice. Some parents like a small homely setting with small numbers of children (ie a 24 place preschool). Others prefer a larger provision so the child can progress through the various “rooms” from age three months, through the toddler groups and on to preschool within the one building. Their ideal may be a 100 place provision.

When?

How many sessions or days do they require? The provision — the preschool may be open 3 hours a day for 5 days a week, but parents may want only 3 days a week. A parent who is at home all the time may just want the preschool to give their child the opportunity to mix with other children. A parent who uses a nursery may be working full time and require 12 hours a day 5 days a week care; perhaps if they work full time, they may still only require the nursery 3 days a week because family are available as carers for the other 2 days, saving on their costs.

SWOT analysis

Another useful tool is the SWOT analysis (strengths, weaknesses, opportunities, threats). Undertake this exercise for the provision and for the competition. A SWOT analysis may look like this.

Strengths

Weaknesses

  • Established twenty years

  • Qualified and friendly staff

  • Low staff turnover

  • Waiting list of children

  • Good Ofsted reports

  • Premises on short-term lease

  • In need of some redecoration

  • Parking can be a problem

Opportunities

Threats

  • Increase number of registered places

  • Offer full day care

  • Move onto school premises with purpose–built unit

  • Someone else starting in competition

  • Unable to find funds for expansion

  • Drop in birth-rate

All this information should feed into the provision’s business plan and will help to target and make effective the provision’s promotional activities.

Informal research

Information can also be gathered on an informal and regular basis. Chatting to parents and prospective parents and understand why they use your provision rather than another. Management when reading and listening to the media should be congnisant of any matter that could impinge on the provision now or in the future. (Consider the story at the beginning of this article about the fall in the birthrate). Staff should be proactive and be encouraged to bring to the attention of their employer any information that may be useful.

More formal research must be part of the ongoing management of the provision.

Finally

Understanding the environment, past present and future will help ensure a viable healthy profitable provision and long term staff employment.

A final quote from advertising executive David Ogilvy: "People who ignore research are as dangerous as generals who ignore decodes of enemy signals."