So you've come up with a fantastic product or service idea for your new business. It's great to see you believe in your startup idea and making it successful. It's fantastic to have such determination and confidence before starting up. However, you shouldn't join this league before performing some market research first.
There’s a lot to know when talking about Market Research. The first step is to determine whether or not there is a market for your product or service. The first step is to carry out in-depth competitor analysis and locate a suitable platform for your business. Also, it’s important to plan a clear strategy for differentiating your idea.
It may be more beneficial for startups to extend their horizons by studying existing firms' best practises. By learning their experiences, you can save time and money while getting closer to your ambitious objective.
So, in this blog, let’s discuss how to do market research for a startup.
What is Market Research?
Market research will assist you in better planning of your business. It all comes down to obtaining information about your customers' opinions, purchasing patterns, and physical location. Furthermore, market research also assists you in staying on top of industry trends and what your rivals are up to.
Hard truth first, market research is indeed complicated, but it is mandatory for any business in order to steer the company in the right direction.
When you perform market research, you will have to answer the following questions:
- Who are the people who might be interested in doing business with me?
- What are the shopping and purchasing habits of my customers?
- What is the size of my target market?
- What are the prices that potential customers are willing to pay?
- Who are my direct and indirect competitors?
- What are the advantages and disadvantages of my competitors?
Know that your market research has the potential to make or break your startup business. Because only with proper market analysis you will be able to better understand your customers and market conditions. And it will help get your startup off the ground.
Your analysis will also assist you in determining what sets you apart from the competition. That way, you'll be aware of what makes you unique. You may also be mindful of what you need to do to distinguish yourself.
Market research can help you take your small business to the next level, whether you're starting a new venture, launching a new product, or expanding an existing one. You have reduced the risk of failing your business by half once your target market and the audience have become accurate.
Now with that being said, how to do market research the right way?
7 Steps To Conducting A Market Research
It takes time and a lot of research to conduct proper market research. It's not something you can achieve in a day or a week. Following seven market research steps will guide you through the journey in finding the perfect market analysis that will lead you to achieving successful market-fit for your product or services.
1. Determine The Goal Of Your Research
Why do market research? Try to define the sole purpose of doing such an analysis. Businesses do market research for a variety of purposes. They will help you assess company risks (such as threats), solve issues, and generate opportunities.
Determine whether the analysis is for internal or external purposes before beginning any market research. Improvements in cash flow and business operations are examples of internal goals. Trying to get a business loan, however, is one of the external purposes.
Your research is an essential component of your small business plan. It demonstrates to lenders that you know your industry inside out and that your company has immense potential to grow.
The goal of your analysis determines the type of research you conduct. Let's say you're running a study for internal use. You won't need to collect nearly as much data for internal purposes as you would for an external goal. So before you begin your research, you have to know whether your study will be internal, external, or both.
2. Take A Look At The State Of Your Industry
In your analysis, sketch out the present status of your industry. To demonstrate where the industry is headed, provide indicators like size, trends, and predicted growth. Make sure you have proof to back up your assertions.
This section will show investors and lenders that you've done a deep research on the industry in which your company operates. It will also demonstrate whether your startup is worth their time and money.
3. Identify Potential Customers
The truth about the business is that not everyone will become your customer. But that's fine! It would at least help you determine who your potential customers are when conducting market research. This stage of the process where you research your potential customers is known as target audience research.
You must have a thorough understanding of who your customers are and where they are based. Your research should also give you a good idea of who your potential customers are. Consider the following:
- Age is a factor
- Occupational or Title
- Gender is a factor.
- The location
- Level of education
- Relationship or family status
Find out your customers' needs, interests, personalities, and demographics once you've narrowed them down to who they are.
You can then safely move forward with the creation of customer personas based on your research. It’s okay to have multiple customer personas for a single business. Create different personas to represent your typical customers after you've compiled a list of varying customer characteristics.
You can better cater to future customers and market more efficiently if you pinpoint your target market. Your potential customers may change or evolve as your company grows. Check in with your target market every now and then to make sure they're still a good fit for your company.
4. Perform Competitor Analysis
You haven’t conducted a thorough market analysis if you’ve missed out evaluating your competitors. Businesses must first understand their competition and be aware of who they are attempting to target.
Take the time to look into what other companies are available within your niche. Consider things like your competitors' product or services, location, target customers, and market disadvantages.
Make a list of your primary competitors. Examine each one of them on the list and determine their advantages and disadvantages (which is also called SWOT analysis). Move forward to understand what distinguishes their company from yours? Why would a customer choose your competitor over yours? Do they pose a threat to your company?
After you've listed your competitors' strengths, weaknesses, opportunities, and threats, rank them from most dangerous to least dangerous. Then, determine the advantages and marketing position of your startup.
5. Collect Additional Information
When it comes to conducting market research, information is your greatest ally. The more data you collect and possess, the better off your company will be.
The information you have should be objective, relevant, and accurate. You should be able to back up your findings and make decisions based on reliable data.
To get more information, look for reliable sources. You can make use of a variety of resources, including:
- Collect data from government data collection agencies like The Bureau of Labor Statistics (BLS) and The Census Bureau
- Websites for state and local commerce
- Articles in trade journals
- Competitor advantages and disadvantages
- Surveys or questionnaires aimed at a specific market
- Interviews or focus groups with people in your target market
6. Examine The Information You've Gathered
It's time to review your findings after you've completed your market analysis. Make a list of all of your research and divide it into various sections. Include sections on the reason for being your target market, and your competitors.
Here are some additional items to include in your findings:
- An overview of the size and growth rate of your industry
- The percentage of your projected market share
- Your thoughts on the industry
- Discounts you intend to provide
- Purchasing patterns
- The expected growth of your company
- The costs of your services
- The maximum price customers are willing to pay
- Your clientele groups
- Results of your other findings
You'll be able to forecast other aspects of your business based on your research, such as your cash flow cycle, gross margin, and customer buying habits.
7. Put Your Research Into Practice
Conducting market research may appear to be a difficult task, but it will benefit your company in the long run.
Sure, you'll devote a significant amount of time to your research. It is, however, well worth the effort. Don't let all of your hard work go in vain. Put your research into practice.
Examine how you can use your findings to improve your company for internal purposes. Make use of your analysis to see if any of your business processes can be made more efficient.
Prepare to speak with lenders about your research and conclusions if you analysed them for external purposes.
Don't just put your analysis in a box and put it away for "later." Revisit your market analysis from time to time to make any necessary adjustments.
Is Your Business Prepared to Conduct Market Research?
It is advisable to obtain vital facts before spending a considerable amount of time and money in a company. Getting real-time feedback might help you make speedy changes to your product throughout the early stages of your company. It also helps you to detect mistakes and faults earlier, allowing you to take corrective action.
Hopefully, you kept track of any gaps and ideas through your market research and now have a comprehensive list. Because there is very little time for mistakes in highly dynamic industries, businesses must respond quickly and creatively.
Many business owners have approached us with their ideas and asked for our assistance in turning them to reality. For them, NeoITO is more than simply an outsourcing partner. Once you've joined our team, the successful development of your product is not just your top priority, but it's also ours.