Market Research

A clear and founded Market Research is an essential element of any successful business planning. Market Research helps the business owner understand the target consumers, their behavior, how the market is organized and if the business idea is feasible for that market and that audience.

Why Conduct Market Research?

It helps answering the following questions:

• Is there a desire or demand for the proposed product or service?

  Understanding market demand and views of customers is a first step that needs to be conducted before tackling the market head-on. Here, a business should identify the nature of the proposed value and the fit between this and the target customer and the target market .

• How many people would be interested in the proposed product or service?

  Understand your Market well and its size. The Adoption Curve (Diffusion of Innovation) clearly shows how target audiences react to innovations and new products and service and how they progress through the life of this product. If you are still at the beginning of the slope, you should sustain through the chasm before you can see any significant traction. Otherwise if the late majority phase has passed, the product should take less priority for a new more innovative product.

• Where are the target customer at, and how to reach them?

  Once you have identified an avatar/customer profile, you need to look your customers up. Where can you find customers similar to this avatar at?

• Identify and understand saturation in the market

  Market saturation needs to be identified to determine the market entry and marketing strategy.

• Competition trends

  Understanding competition and what competitors are doing to attract customers is no less important than understanding customers themselves. Competitors form the evidence that the market is viable and there is demand to the product/service proposed.

Types of Market Research

Market research can follow one or more of the following approaches:

• Primary Research

  Primary research is one conducted first-hand by yourself using surveys, questionnaires, and interviews with prospective customers,

• Secondary Research

  The second approach is to use other existing sources such as online report, statistics, data from trade associations. This can be either done in combination with primary research in order to collect data on competitors and market statistics that are difficult to conduct first-hand; and can be done as an alternative to primary research when time and resources are limited to conduct full primary research. The best approach would be to use a mix of the two approaches.

Market Research Data Forms

Market research can include a multitude of numbers (Quantitative) and narrative data (Qualitative). Quantitative data tend to be structured and well defined, data driven and numerical.
 
Qualitative data address other areas such as:

• Who are the customers,
• What is the industry like,
• Who are the competitors.

Market Research Methods

There are multiple methods to conduct market research, and with the power of the internet and social media networks it has become easier and more insightful than ever. Here are a few common methods that are often utilized in market research activities:

• Surveys

  Surveys form a very common and inexpensive approach to conduct data analysis. Such surveys can contain multiple questions and question format for collecting quantitative and qualitative data in order to analyze potential customer preferences and tendencies. For emerging startups, there is plenty of options available to choose from, such as:

  • Google Forms is an easy to use and free tool from Google that is not advertised as a "survey" tool in particular, but it is often used by startups and entrepreneurs for its ease of use. It requires that you have a Gmail account to use it.
  • Survey Monkey is another tools that is a dedicated survey collection platform that is often used by researchers and entrepreneurs. Survey Monkey is free, but has a paid version upgrade with a number of additional features.
  • Social media platforms, such as Facebook and Twitter, offer survey collection features and it is often used for its ease of use and wide reach. Using such a mechanism is free given that you have an account on the platform, but with boosting this survey as an ad, you can get a lot more responses. A concern here is that data offered from such surveys is limited, so it may give an idea for budding entrepreneurs on the direction they need, but more advanced experienced entrepreneurs may consider alternative tools in conjunction.
• Interviews

  Interviews with target customers (online or offline) can provide a great source for qualitative values on how the proposed products and services are viewed by the customers.

• Focus Groups

  Focus groups are controlled groups selected with characteristics similar to the avatar(s) defined by the business. Here, the business does interviews and data collection from these groups to gain valuable insight.

• Observation

  When the product has an MVP at least, selected targeted customers can be brought in to test it out and be observed on how they use its different features and to what degree this product/service fulfills their customers' needs.