If you have come up with an amazing idea for a product or service, congratulations.
This could be the start of a great startup journey.
Having a product or service idea is the easiest part. What you do now, from idea to viable product, is critical.
There are important activities that are necessary to guarantee building a successful startup.
Unfortunately, most new businesses fail in less than two years. Only companies with a laser focus survive.
How can you achieve that laser focus? Through market research for startups.
What is Market research?
Market research is the process of gathering and analyzing necessary data to provide useful insight into how your potential customers will react to your product or service.
As a startup founder/co-founder, you mustn’t confuse market research with “marketing research.”
The former focuses on the markets — the demand for a particular commodity or service — while the latter deals with marketing — your business’s appearance, presentation, advertising and so on.
For startups, there are four types of market research:
- qualitative and
- quantitative research
It is important to know and understand what they mean for your particular startup.
Let’s take a deep dive into understanding what each market research type means.
Primary market research helps you to get answers to the big questions, such as:
- Who are your ideal customers?
- How can you reach them?
- What products do they need?
- What influences their buying decisions?
- What would make them pay for your product?
- Who are your competitors?
- How do they operate?
- What are their strengths and weaknesses?
Running this type of research for your startup will help you get an intimate picture of the market niche in which you are about to compete.
Secondary market research for startups involves using pre-existing reports, studies, information, and data to gain valuable insight and understanding about questions that you cannot address through primary research.
Although secondary research is necessarily niche-specific but rather focuses on a wider spectrum (Industry, region, country and so on), it can give you a general idea of how the markets for your startup affect your bottom line.
Good sources of secondary research include:
- Government agencies/policies
- Industry associations
- Trade organizations
- Chambers of commerce
Qualitative market research is the research process focused on collecting information about your target market’s buying habits, opinions, wants, and needs. Ultimately, it helps you understand why they purchase a particular product or service.
Quantitative research collects numerical data to make statistical analyses. The result from the analysis gives you more insights into trends and pressure that affects your market.
WHY DO STARTUPS NEED MARKET RESEARCH?
Imagine going on a road trip to an unfamiliar territory without a road map to take you from point A to point B.
The function of the map is to show and guide you on which direction to follow, what route to use and maybe how long the journey will take.
For your startup journey, your market research is your road map get turned around,
For a car trip, not having a map might not be a great mistake. But for a new business startup, it can mean the difference between building a startup’s success and failure.
How should you conduct Market research?
Begin With SWOT Analysis For Your Startup
A “SWOT” analysis is a good way to carry out primary market research for your startups.
SWOT stands for:
Platforms like Google, Quora, Reddit, and many others are powerful tools that are a good source of information about your niche market.
With your SWOT analysis and the internet at your disposal, you can easily identify the competitors within your space, how they’re doing, what they’re doing differently, and where you have a competitive advantage.
Follow With Gathering Quantitative Data
Using standardized questions is the best way to carry out quantitative market research, this helps you to properly compare and contrast trends in the data more easily.
You can distribute these standardized questions in many different ways, including:
- On your website
- Social media
You can improve your survey response rate by following some simple guidelines
- Keeping your survey questions short and simple
- Making your “survey” easy to read
- Ensuring your response scales are logical
- Offer an incentive for anyone who completed the survey
Collect Qualitative Data
Focus group, in-depth interviews, or observation groups are some of the ways to conduct qualitative market research.
A focus group is useful for brainstorming and obtaining information on products, preferences, and purchasing for a specific subset of the target market.
An in-depth interview is good for encouraging participants to address topics of interest in your business/product with minimal questioning.
An observation group involves watching live or recorded interactions between a member of your target market and your product.
Each of these methods of data collection has its unique advantages and disadvantage. If you have enough resources, you might consider conducting all three to gain the most benefits.
Examine Secondary Sources
Your secondary research can be conducted at any time (before or after other types of market research).
You can get your necessary information from public sources, such as government agencies, universities, and libraries.
Very often, you can access this information for free or at a reduced cost.
Aside from the sources above, you can also make use of commercial sources, like financial institutions, trade associations and even local newspapers, magazines, and other media outlets.
In conclusion, The right market insights can make or break your startup, which is why market research is one of the most important things you can invest in.
Never leave your market research up to chance. You can schedule a strategy session with our team to help you figure out the best way to get started with your market research.