Every entrepreneur at some point will do market research. If you are on the verge of opening your startup business, the question becomes, have you done market research and better yet have you done it the right way?
The importance of conducting market research cannot be overemphasized as the entrepreneur can only make the best decisions with the right knowledge. Getting data about your target market is one thing, sifting through it to come up with a reliable conclusion is entirely different.
One of the biggest mistakes that business owners make is assuming that if they come up with an idea and build a business around this “great” idea, that customers are naturally going to come. It is no wonder then why many startups fail to survive their first few years.
Consumer research is a necessary factor to ensure your business not only survives but thrives.
But where do you start?
Suppose you have a product. Ask yourself, does it offer a solution or alleviate a pain or problem? This is called a pain point study and your goal should be to find it.
For example, if customers want a competitor’s product but it has already sold out, does your product help solve their problem?
Finding data should not be a painstaking experience. After all there is the internet. Use it to find the keyword that your target audience uses to search for their products. The internet will also help you find out what solutions your competitors have come up with.
Put yourself in the shoes of your customers. What blogs do they read? What companies are they following? what are they saying in the reviews that they leave? All this information will help point you in the right direction.
I don’t want to say that you must hire the services of a professional when conducting market research. As a startup, you will probably have limited resources. However, if you can, then the prudent thing to do would be to indeed hire a professional.
Professionals have more experience and are better equipped to notice trends. A customer who is being interviewed as to why he bought a deodorant may have heard another customer say that the reason he bought was that the product is effective at offering 24-hour protection. However, the customers' true reason for purchase would be because he liked the smell. That is why professionals are needed.
And back to where we started shall we? Now with all the data in front you, where do you begin?
It is difficult to draw conclusions if you do not understand your target audience, how they feel, think, behave and the motivation or the why behind their purchase decision.
Once you understand these, then you can sift through the data and identify patterns that confirm what you probably thought. Also, you may learn something new about your target market which you can then exploit and create a product that best offers a solution to their problems.
What to do when you don’t have the cash for market research
Now we know that market research is crucial but what if you simply do not have the funds to hire a market research company considering that some might charge you thousands of dollars?
The only other rational step is to perform the research yourself. Start off by identifying and visiting the places where your target market hangs out such as forums and discussion boards. Quora, Reddit, Facebook, Twitter and Instagram are excellent places to begin.
Google will also give valuable insight as well as providing great secondary data on your target market.
Now that you’ve found your target audience, see how big the discussion forum is. Is it comprised of a few members or are their hundreds of thousands of people talking about the same thing? This can help you gauge the size of the potential market.
Second, read through what they are actually talking about. You will likely notice their complaints and their pain points. With this information you can create a product that best alleviates their problems.
You can also use the knowledge to not just create the ideal product but also tailor your marketing strategy. For example, by taking note of how the customers are expressing themselves and which words they are using, you can use these same words in your marketing to reach out to them and grab their attention.
Join the conversation and offer advice as to how best to deal with the problem. It is better if you can show proven results and then add a link to your website where they can go and purchase your products.
The advice you offer will get the people in that forum curious. They will trust you which increases the chance of them clicking on the link.
A point to note is that you should avoid spammy links. These will lower the groups trust in your advice, causing them to click less and significantly lower your chances of making a sale.
Another major benefit of directing customers to your site is that you can also offer them even more content which they can access by submitting their contact information such as an email. This provides you with a great avenue to reach out to potential customers directly by tailoring ads specifically to them.
Make use of Google Analytics to see how many people are visiting your site. Next compare this with the number of visitors who are providing you with their emails. If the conversion is decent then you know your idea sparks interest and customers will be willing to buy from you.
This is how you can conduct market research without worrying about hiring a third-party research agency and spending a fortune which you would have otherwise directed to product development and marketing.
How to spot a business opportunity in the market
So, you’ve managed to come up with a business idea, one which you think will take over the market. With guts, a little bravery and touch of wit, you can turn your idea into a thriving business.
And the great news is that it doesn’t matter if the market is dominated by big players. Have the right information with you and you can compete for a share of that market as well.
But how do you come with a good business idea in the first place? Granted you may want to have your own business running but how do you decide what to sell?
The first step is understanding that it’s not going to be an easy task entering into a market with already established big players. You will need to be able to find opportunities in such a market and gaps waiting to be filled.
Understanding that the road is going to be tough will help prepare you mentally for the challenges ahead and keep you motivated even when you feel like giving up.
Research is key to identifying such market gaps and they will help you set foot in a seemingly unconquerable market. From there your business can set root and grow.
Data should be the backbone on which your business supports itself. Making assumptions should only be a guiding principle for coming up with hypotheses. It is the data itself that is going to reveal the true nature of the market.
You cannot just assume that one thing is happening because of another reason. You need raw, old-school data to confirm what you are thinking otherwise your whole enterprise will be based on guesswork.
Once you sit down and analyze the information you’ve gathered, you may notice a gaping hole in a market that you may not have noticed otherwise. And not only do you stand to find missed opportunities, but you will also come across problems that you were not aware of before.
Beware of vanity metrics. These are results that give you the impression that you are indeed successful but in reality, it doesn’t reflect in your revenue. For example, you might have a business website that attracts a lot of traffic. However, while this may fool you into thinking that customers are interested in your products, the conversions continue to remain low.
Again, the right data will tell you everything you need to know. Never be afraid to let your research take you into unknown territory in your quest for information. Once you are out of the rabbit hole, you will be smarter than when you went in.
When it's all said and done, getting into a market with already established brands is by no means an easy task. It will require perhaps even greater determination than with the average entrepreneur. The trick is to know how to approach it with the right mindset. Get this right, gather information and analyze it well and you may find a gap just waiting to be filled.
And those big players, your competitors have something to offer as well.
Why copying your competitors is not such a bad idea
Copying your competitors doesn’t mean you do what they do, steal their strategies and plagiarize their work. No sir! Then that would be unethical and to a certain degree illegal.
However, look at things from a different angle. Your competitors are selling what you aim to be selling. The fact that they are doing a far better job than you means that they know something you don’t.
If you were to sell your products in the same way they did, you would make money. And this is exactly why it is important to keep an eye on your competition.
Do not study one enterprise but several businesses in your field that are doing well. You will notice patterns and similarities which you can incorporate in your own business.
One of the main benefits of studying your competitors is that you get to learn about some mistakes they make and avoid these with your business.
Take for example a situation where your competitor invited potential clients to an opening of a new location. They wrote a 5-page campaign detailing why people should come to view the new place. During the day of the event, no one shows up.
This could have been due to the fact that your competitor didn’t offer a good incentive on why people should go or because the 5-page campaign was just too long for people to read through. It could actually be both those reasons.
Now you know!
If you are planning to invite potential customers to your store, at least now you know what NOT to do. Competitors can help you avoid certain pitfalls.
But avoiding pitfalls is not the only thing that you stand to gain. You will also learn about what makes your target audience tick.
Take our earlier example and this time assumes your competitor invites the target market to their new premises by offering a 15% discount on all items on offer. They also design attractive postcards instead of the 5-page campaign.
When the time comes, the new business premises is simply flooded with customers. Now you know what interests your target audience and you can employ this strategy in your next marketing campaign. Again, you will not be plagiarizing but learning the concept and applying it.
Another great way to keep an eye on your competitor’s marketing strategies is to subscribe to their mailing list. You will be acting like just another potential customer and you have a direct view of what they are sending or offering your target audience.
You may notice that certain advertisements are similar even while they are not exactly the same. Designs and approach are similar due to the simple fact that such strategies work.
With this information, you can then tailor advertisements in a way that will best reach out to your audience. And you know you can trust this method because it has been proven to work.
When to do market research
The question as to when is the right time to do market research might seem simple and straightforward. “At the beginning before you launch your business” is the obvious answer many people would give.
However, to ensure that your business stays afloat longer than its first year which many a startup business has been unable to do, you need to conduct research at every stage of your business development. Plain and simple!
The first time you perform market research is when you are seeking to identify a gap in the market. This should be a pain point or a problem that has not yet been solved. Once you find this gap you will have that aha moment and immediately begin thinking of a product to fill that gap.
Ideas are great but they need to be backed up by real, concrete evidence otherwise all you will be working with is a hunch. As we’ve continued to say throughout this post, information is key. Aim to conduct secondary market research which will give you a good introduction into the market.
Then go ahead to perform primary market research by interacting with potential customers either through social networks or direct meetings. It will provide you a clearer view of what the market looks like.
Ask yourself if you can actually create a product that will be accepted by your target market. This stage is critical because there is really no need of coming up with a product where customers have no use for it and are not willing to buy.
Simply put, the target customers should need your product.
And how do you know that your product is needed and customers are willing to buy it? By having both quantitative and qualitative data.
The third stage is product improvement. Once you have come up with a product and customers have started to show a liking to it and are making purchases, it doesn’t mean the end of doing market research. There is still a lot that can be done to improve customer experience and make the product even better.
By interacting with your customers, you can ask direct questions on how they feel about the product and what can be done to improve the user experience. Often, they will be willing to give their personal opinions on the matter which you can use to your advantage.
The last stage is where you scale your production and sales. Many businesses have failed trying to scale too fast and lacking the right information on the market.
Just because people are buying doesn’t mean you should immediately start to mass produce. Research more on the market size and see if there is still a large portion of the market that has still not yet been served. Sometimes you might come across other information on a different gap which you can then use to differentiate your product.
Scaling needs to be gradual as it often means greater expenses in hiring more staff to work on increasing production and operations, so make sure it happens at a rate that the business can manage and sustain.