When you’ve got a great idea for a new product or service, it’s an extremely exciting time. However, as you dream about the success of your business, it can be easy to forget one of the most important questions – will people actually buy it?
The only way you can start to figure out if there really is a demand for your product is by conducting market research.
It’s something that every successful business conducts on a regular basis, but it’s of even more importance to start-ups and small businesses who can’t always risk making mistakes when it comes to launching their new products, services and ideas.
Here’s our guide on how to conduct effective market research as a startup.
What is market research?
Market research is all about collecting information on the people who you think will be interested in your product or service when it launches.
The aim of market research is to discover if there is a need for your business if customers are interested, and what the likelihood of people buying your product is.
There are two different types of market research: secondary and primary. Primary market research consists of getting first-hand information on your customers. This means going out and speaking to individuals, organizing surveys, or holding interviews.
Secondary market research, on the other hand, is where you look information on your customers by using existing sources. You can look at up-to-date trend reports, market statistics, competitor content or sales data to decide whether your business has a chance of success.
Why is market research so important for startups?
Market research is important for any business, particularly startups. No one wants to spend all their time, money, and effort building up a business only to realize that you have no customers.
By conducting research beforehand, you’ll be able to get a good idea of the appetite for a business like yours. It may lead you to change your product offering to satisfy your customers, or may confirm that your product needs no further adjustments to attract customers.
You’ll also be able to answer some of the questions that are important to the future of your company, such as:
- Who is my customer?
- Is there a market for my product?
- What are my customers’ spending habits; is my product too expensive?
- Are there any competitors I should be concerned about?
- Are there opportunities to grow within the market?
By answering all these questions, you’ll be able to refine your business plan, set your pricing strategies, get an idea of who your customer is and what they do, and whether they like your product. All these answers should help you launch with fewer issues, helping to secure the success of your business.
Four steps to conducting effective market research
Market research is important. However, it can take up a lot of time and money, so you want to ensure you’re conducting it effectively.
Here are four steps that you can follow to make sure you gather all the information you need during your research.
1. Start with a plan
You need to put together a plan of action for your market research. This may involve sitting down with your team and thinking about what you want to get out of the research, together with making some predictions – or hypotheses – of the information you think you’re going to find.
You need to see how your research compares to your prior ideas of your customers and market: this will help you understand if your product or service is suited to the market that you’re trying to enter.
For example, you could have a hypothesis on the amount of money you think people will be willing to pay for your product. You may think that’s it $100, and it’s up to your market research to discover whether this is correct.
In the planning stage, you also need to consider which type of market research is most appropriate for your needs.
For some questions, such as what size is the market, or who are your biggest competitors, you’ll only need to conduct secondary market research. However, if you want to find out whether customers are interested in your current product, the best way to find this out will be by conducting interviews or surveys – which is primary research.
2. Identify your target subjects
If you’re conducting primary research and want to speak to people, you need to identify those who fit your target market, otherwise you could be misusing your time.
Think about who your target customer is and try to find test subjects that match this description. You can find people through word of mouth, social media, third-party market research companies, or simply by asking people you know.
3. Conduct the research
Now it’s time to conduct the actual research. Make sure you have a solid plan of what you want to say, what you’re trying to achieve and potential questions that you want to ask your test subjects.
Make sure you have recording equipment if you’re holding interviews or group discussions, so that you can refer back to the discussion later if necessary.
Once you’ve gathered all your information, make sure it’s organised and stored away safely. Always be sure that you’re protecting the subjects’ identities when carrying out interviews and surveys.
4. Be prepared to change your product if necessary
When you’ve organized all your data, you need to look through and see if you can extract any important information that will help you answer some of the hypotheses and questions you came up with during the planning process.
You need to enter this stage with a clear mind, and be willing to change your product if your data shows you that customers are mostly unsatisfied, or think it could be improved.