The Importance of Market Research

Spanx: A Case Study

Spanx, for those unaware, is a shapewear brand specifically designed to be worn under clothes. It is one of the only female-owned billion-dollar companies in the world, with the founder and CEO Sara Blakely still in charge (before 2021). 

In her interview with Guy Raz on the podcast How I Built This, she asserts that gumption and persistence are all you need to build a billion-dollar business just like her. Three significant events that this blog post will focus on are her market research, her pivotal sales meeting, and her realization about her product suitability.

The entirety of her market research consisted of going to one employee at a high-end department store Neiman Marcus and asking them about a potential product. She would have been better served by asking employees from multiple stores and from different brands. This market research led to Blakely choosing Nielman Marcus as the pilot brand for her product, and this is what she focused on for a great deal of her time.

In the sales meeting with a Nielman Marcus representative, the only reason the contract was signed was because Blakely convinced the representative to go to the bathroom for a live demonstration of the product. This could have very easily gone wrong, and she only succeeded because the representative happened to want to agree.

After the sales contract was signed and her product was on the shelves, Blakely realized that her focus on Nieman Marcus had been the wrong decision - her product was not meant for the hosiery department in a fancy store but a more convenient section. She took homemade stands, filled them with her product, and stuck them near the checkout at Target. Target did not have a contract, and the product only stayed because everybody thought that somebody else had approved it.

If Sara Blakely had done proper market research, her product would have been aimed at the right market and target audience, namely Target and other ready-to-wear brands. Because she did not talk to more than one person for her research, she was left pursuing something that was a misuse of time and effort and made her business less easily successful.