OK, so we’re not all Bill gates and Zuckerburgs. But there are a lot of potential entrepreneurs out there whose innovative ideas can make it really big – provided they take the right route. And, yes, we’re talking market research.
Can you really benefit from Market Research?
Assessing and analysing the market before you plunge right in has three-fold benefits. One, it helps determine whether the product or service you’re planning to launch is a viable business proposition. It answers the basic question: is there a market for your idea? Second, market research tells you how potential customers will respond to your idea. And, third, if you need funding for your start-up, market research will help potential investors (venture capitalists or angel investors) decide whether to back your idea. They will fund your start-up only if they are convinced that your business has potential.
Here are some tips that will guide you through the market research phase of your venture.
1) Begin with secondary research
First you need to ask yourself whether the market you are planning to target really has space for your product or service. Most entrepreneurs tend to assume their new venture is ‘revolutionary’ and that it will click. They also tend to ignore the competition and this can backfire in the worst possible way. So make sure you get a fair idea of what kind of competition you’re up against. Next, assess their strengths and weaknesses and ask yourself whether you have something different and better to offer. Customers always need a reason to buy into you instead of an established player.
This kind of research is called ‘secondary research’. Basic information such as customer demographics, established players in the business and trends in the usage of products and services in your domain is usually available online with government agencies, trade bodies and industry associations. Some of this data is free while some of it is subscription-based. Do not hesitate to take those subscriptions because this data is invaluable both before you launch your business and also when it is up and running.
2) Follow-up with primary market research
This is the most crucial part of research as it gets into the specifics of your business. It is a litmus test for your venture. It is advisable to take the traditional approach and conduct field studies, create focus groups and conduct interviews of potential customers via questionnaires. You may think this is old school and time consuming but successful entrepreneurs vouch for its merits.
Nowadays, it is also a good idea to make optimum use of social networking by creating a page for your product and sharing relevant information and pictures. You may want to also create a closed group if you want the opinion of people who you think are discerning customers. They can offer valuable feedback for your product on your page. This is a fairly new marketing concept and marketing gurus call it ‘concept testing’. This approach has proved incredibly useful, especially for start-ups in recent years.
3) Get acquainted with your customers
Before you get ready to sell your product or service, you simply must anticipate the types of customers you will encounter and how to handle them. You initial market research is likely to throw up two basic categories:
1. The Purchaser: This type of customer is mainly concerned with the cost of your product or service. He is usually aware of the going rate in the market and will ask you to justify your price. To win over this customer, you have to convince him either that your price is competitive or, if it is higher than your competition, you must reveal the value-additions you’re offering.
2. The Expert: This kind of customer is concerned with the quality of your product or service. He has used the stuff your competitors have offered in the past and will have his opinion on the pros and cons of a product or service like yours. To convince this customer, you have to know every detail about your own product, right down to the technical details, and be prepared to answer a volley of questions on why you think your offering will have an edge over your competition.
If you can satisfy both these types of customers, the battle is half won. But more often than not, market research yields such compelling results and aspiring entrepreneurs often find themselves going back to the drawing board.
It may sound a little tedious and it definitely calls for perseverance. But don’t be discouraged. If you research your idea thoroughly and are convinced it is viable, chances are your venture will be much more impactful than you had ever imagined. How’s that for a morale-booster?
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