By conducting market research before starting any business, new business owners will be able to determine whether or not their idea is going to be successful. By researching the market you wish compete in, you will be able to shape your business plan whilst also influencing your price point and overall business idea. The internet offers a lot of online data for new startups to review market sectors, competition, trends, developments, customer demand and innovation. In addition to reviewing data, field research is just as important which involves high street research, observation, speaking to customers, product testing and building brand loyalty through interactions with customers.
Avoid Starting a Business without Market Research
For many entrepreneurs, having a business idea and imagining the possibilities is easy but conducting market research is somewhat more difficult. Entering a market with a great idea but not having taken the time to fully research the market you wish to enter can cost many businesses. It is important to take time to really plan and research your market. Those entrepreneurs who ignore this and steam ahead into a market will likely see their business fail whilst seeing valuable capital spent on unfocused and untargeted activities.
Market research really allows new business owners to determine their ideas potential. There are various ways to research your market such as web searches, viewing statistical data, carrying out surveys, interviewing and observing and testing the market. It is important to understand the type of customer that your product will serve. There may be different demographics that your product may not appeal to, so include that sample of population in your market research.
A good research plan should set out objectives of the research whilst gathering the information you need to go ahead with your business idea or to improve it. Have a list of questions that you want your market research to answer and also a plan for getting the answers.
Key considerations when Conducting Market Research.
- Determine your potential market
- Review your competitors
- Test the positioning of your product
How to do Market Research for a Startup
1. Observe your Business Market
You really need to have a feel of the business market you intend to compete in. For example the Coffee shop market is one of the fastest growing markets and also extremely competitive. Reviewing other coffee shops and observing customer demand, innovation, price points, consumer behaviour, promotions, décor and USP’s would be key observations when conducting your field market research.
Observing your competition and understanding the strengths and weaknesses of your competitors is essential to making sure your business idea is right from the start.
Observation is more likely to yield better research than questionnaires and online data. Combining the 2 will give you a better understanding of the market you intend in compete within.
2. Interviewing Potential Customers
Good qualitative research can be as simple as talking and listening to customers. Interviews allow questions to be asked that can mine important data. Successful interviews require the interviewer to be sensitive whilst also having good communication skills.
3. Focus Groups
A focus group forms multiple interviews with small groups of people of between 8-10. Participants should be selected based on key attributes that may include knowledge, demographics, socio-economic characteristics and experience. A focus group can help new business owners to analyze from the responses received, exactly where their start up will fit in the market. Focus groups can help entrepreneurs to gather valuable market research that can help shape their business idea. Finding out exactly what customers want is essential for any business to be successful. Unlike interviews, focus groups facilitate the opportunity to gain multiple opinions in one session. Important insights can be gained simply by listening to people’s experiences and comments.
4. Market Research Survey
Conducting surveys is a very common method of market research. Many organisations conduct surveys annually to ensure that customer satisfaction is surveyed regularly and improvements made. This is a great way to improve products, services and also assess the market potential. The most popular form of customer surveys is face to face, other forms of surveys include online surveys and email surveys. Surveys that are personally addressed tend to be more successful. Unsolicited emails (spam) will be ignored so if conducting a survey online, it is important to do this properly. Online survey tools such as survey monkey can be a great to this successfully. Incentives and explanatory letters can be a good way to gain greater success in getting customers to complete the surveys. It is important to keep questions simple and to a minimum. A strong business plan will require thorough market research so ensure that your information is reliable. Having a method to collecting information will ensure that your data is better presented and will help convince possible investors that you market research is detailed but also well formulated.
5. Market Testing
The most successful form of market research is finding real customers to buy and try your product or service. There is no point investing heavily in a product or service if this has not been tested on potential customers. A good way to do this is to normally focus on selling to a smaller part of the market first. This can allow small business owners to test the market and work on making improvements before they launch their product to the wider market. First impressions are very important so if the product does not quite work then at least you have only tested it on a smaller number of customers. If your product works and your customers are happy with your overall package, then you can proceed with confidence and aim at selling to a bigger % of the market. It can be good practice to drop off samples to potential customers and let them trial your product for free. The benefit can be important feedback as well as the opportunity to have them as a future customer.
Market research is a key driver in any successful business and should be continual throughout the life of your business. Markets and consumer demand can change quickly so conducting regular market research will help your business grow. Conducting market research will help benefit your business on various levels, allowing your business idea to get out into the market whilst building reliable data to include in your business plan.
6. SWOT Analysis
Another form of market research is to conduct a SWOT analysis where you focus on identifying the strengths, weaknesses, threats and opportunities. Weaknesses may include design flaws or high prices. Threats could include the economy and external threats such as inflation and exchange rates. A detailed SWOT analysis will allow new business owners to really understand the strengths and flaws of their product or services as well as providing an understanding as to whether their product or service will survive in the current market.
7. Reviewing the Competition
Conducting market research should allow you to evaluate your competition. Being a customer of your competition will allow you to experience the service that customers are receiving. Visit their website and talk to their customers. These are your potential customers. Find out why they shop where to do and why they use this particular product or brand.
You are aiming to find out what your competitors are doing well and then do it better. There could be flaws in their product. Maybe they are too expensive or their service is poor. Beat your competition by doing things smarter. Ultimately you want to be different from your competitors and have a unique selling point that will lure your customers to your product or services. Conducting market research will help shape your business idea.so that it survives and competes in the market place.