Launching a startup? The only article you need for market research

An entrepreneur launches a startup with passion. But passion alone cannot fuel a business. Do you know why most startups fail? The factor that determines success for a newly launched business is market research. This is a concept that most entrepreneurs fail to understand or take lightly, so they do not invest proper time and resources in doing the same.

"I love market research because you really have an idea of what your consumers are looking for." – Aerin Lauder, American billionaire heiress & businesswoman.

Conducting market research is no rocket science. If you grasp the basic steps, you will surely be able to do it. However, you have to take the right steps.

Without further adieu, let's dive into the details.

What is market research?

Let's first get the basics right. Okay?

You have to fully grasp the concept of market research before doing it. Market research is a process that involves 2 steps:

Collecting information and data about your target markets and customers.

And

What people are willing to spend. 

The first step will let you realize the market gap. By collecting information from potential customers, you would find out what they want and then study if their wants have been met. Or otherwise, if related products are already available on the market to cater to their wants.

The second step will allow you to understand the price your potential customers are willing to pay for their needs. You have to keep in mind that customers are all unique. So, your market research should involve understanding your brand's target audience.

Reasons for conducting market research before launching your startup 

Launching a startup without market research is like venturing into the market blindfolded. You might stumble upon something valuable, but the chances of missing out on crucial opportunities are high. Market research acts as the compass for new business owners, indicating the path.

Here are the benefits of doing market research: 

• Reduces Risk

When you know the market needs, competitor strengths and weaknesses, and potential pricing strategies, you can minimize the risk of sinking the ship.

• Validates your plan

Market research can confirm a genuine need for your product and avoid wasting resources on developing something that has no need in the market or if a better alternative is already available.

• Helps in product development 

Insights from your research can guide product features, design, and functionality to ensure they resonate with your potential customers and address their specific needs.

• Shapes the marketing strategy

Understanding the preferences of potential customers, consumption habits, and pain points will help you craft the most effective channels to reach them.

• Setting competitive pricing

Market research uncovers competitor pricing strategies, enabling you to set a competitive price that boosts sales and profitability. 

• Identifies potential problems

Research can disclose potential challenges with product concept, usability, or marketing strategies before any investment, saving time and money.

• Improves investor confidence

A Strong data-driven market research uplifts investor confidence in your business potential.

Therefore, market research is a wise investment that provides priceless insights to steer the complexities of the market and help build a brand that thrives. Skipping this would be detrimental to the startup's future.

Also Read: 10 must have tools for small businesses or early stage startups

Types of market research: 

Now, let's familiarize you with the types of market research available. As already said, this is not a complicated concept as rocket science. So, if you pay close attention, you will grasp all the types that marketers use. 

Primary market research is the process where new and original data are collected. You can do it yourself by using online surveys or forming focus groups.

Secondary market research is the process of studying pre-existing data from a rival company or data collection agency. 

Both processes are practical and useful. Secondary research is sometimes cheaper and saves time. Having said that, it doesn't always give you the specific and unique answers you might need. 

Quantitative research is the one that produces empirical data, i.e., verifiable data (numbers, figures, or factual observations).

Qualitative research gives you abstract data, such as opinions, tastes, and emotional responses of potential customers. 

While quantitative data is somewhat exact, qualitative data is not entirely reliable. However, qualitative research can disclose insights about customer satisfaction and pain points, which will be handy for new product ideas and product development.

Also Read: 5 Must read books for budding entrepreneurs

Market research tactics

There are 5 widely used market research tactics for you to get started. Let's have a look.

Identifying the target audience - The market is vast, and you don't need to sell your product or service to everyone. This is why it's crucial to find out who your potential customers are. They are your 'target audience'.

Here are five steps to help you identify your target customers.

STEP I - Creating an ideal customer profile:

To create an ideal customer profile, you have to start by jotting down the important characteristics:

Age: Which age bracket do your ideal customers fall in? Are they young, middle-aged, or elderly people? This is crucial because customers in different age groups will have different responses to your product or service. 

Gender: Gender can play a role in how potential customers react to your messaging. The needs and goals of specific genders are often the opposite. So, if you promote your brand in a way that fails to address these differences, you could end up reducing the effectiveness of campaigns.

Income level:  Understanding the disposable income of potential customers can influence your marketing strategies. Low-income families may prefer cheaper products or services. While customers in higher-income brackets may respond strongly to exclusive marketing practices.

Location: The buying habits vary from location to location. Urban and rural communities might have different purchasing preferences.

Some other important characteristics include marital status, occupation, hobbies, and interests. You have to use your data to identify who your ideal customers might be. Then, use market research to see how your actual customers match up.

STEP II - Conduct market research: 

You can find out your target audience through primary and secondary market research.

Primary research is all about learning the buying habits of customers through direct contact, for instance:

Surveys: Surveys of the target audience can be conducted via paper, email, or web-based services. It helps you gather useful data directly from your customers. You can ask them straightforward questions regarding previous services and strategies they liked. Next, take that feedback for your next marketing campaign.

You can easily use tools like SurveyMonkey or Google Forms to create surveys that capture demographics, product preferences, and purchase intent.

Interviews: Talk to people whose purchasing habits match your business. This approach is a bit more time-consuming than a survey but provides more information for your marketing campaigns.

Focus groups: Approach small groups who fit your customer profile through Q&A sessions and discussions.

STEP III - Reassess your offerings

Now that you have a comprehensive customer profile, the next step is to see your products or services in a fresh light.

From what you have gathered from the target audience, ask yourself:

Which features are most likely to attract my product?
Which may be of less interest or even discourage potential customers?
Which aspect should I give more attention to in my marketing and paid advertising?
Which customers, images, and copywriting should shape my messaging?

This detail can lead to valuable additions to your offering and even generate new leads.

STEP IV - Research your competitors:

An effective way to learn about what areas to focus on and which strategies to employ is by monitoring your competitors. This way, learn about effective strategies already available in your niche. You have to just use those in your marketing plan.
 
A question to consider here:

Which social networks are they using?

Social media marketing has become a game-changer. Researching your competitor's social media will indicate the content that receives the most engagement. Research how often these brands post, what they post, the influencers they work with, etc.

This research will also help you realize the most suitable social media platform for you that already has an existing target audience base.  Now, you can target the same audience with your content, as they are already interested in that niche.

For instance, if your target audience regularly interacts with your competitors' posts on Facebook, it most probably would be the place for you, too! 

STEP V - Leverage existing customer data:

While devising the marketing plan, use all the insights you have collected from potential customers. Identifying patterns to build a more effective marketing strategy.

Use the Google Analytics data. 

You can use Google Analytics to identify patterns among your target audience. Google's demographic provides information about the age and gender of your audience. These analytics will help you know your audience better and can be used to create more relevant content for them. This would generate sales for your business.

Examine customer relationship management data.

Customer relationship management (CRM) software allows companies to manage their interactions with potential customers. Details like name, age, contact information, and certain behaviours (like items viewed and previously purchased) of customers are stored in this software. CRM analytics will help you understand your target audience at a glance.

Which social media platforms do the target audience use?

Knowing your audience's preferred social media platforms can help you determine what analytic tools to invest in.

Facebook allows users to access their demographics and their interests through Facebook analytics. Twitter provides ad accounts with a follower dashboard that reveals the interests of your followers. These analytics help identify your target audience and, hence, formulate definite strategies for maximum content engagement.

Finding the pain points of the target audience - 

Pain points are the problems of your target customers that need to be solved. If you realize the pain points of your potential customers, you can improve the features of your product to satisfy their needs.

Other than talking directly with your target audience, study the customer response to prevalent products of your rivals. You can come up with new business ideas even if you take this step seriously. Considering the likes and dislikes of potential customers will make you more aware of the market.

Probably you will try to solve the same pain points as your competitors for customers. While researching your competitors, look for places they are lacking and try to find better solutions in those areas with your marketing plan.

Analyzing industry trends - Staying updated with industry trends is useful throughout your business life. Find some reliable sources to get all the information you need. It could be a news media company like ours, or experienced businessmen, social media, etc.

Know your audience through face-to-face communication - Getting in touch personally through door-to-door surveys or on-road campaigns is expensive but hugely beneficial. Texting potential customers is a cheaper option. You can also create polls and surveys online, email a questionnaire, or use ad pop-ups on websites.

A/B testing - If you have two different product designs, you can use a powerful research tool called A/B testing, where participants can rate all the options available, from most to least favourite, with a final score calculated at the end for each.

A/B testing can be used in any and every aspect of your business. Typically, it is used to test variants of an image, like product photos, website landing page design, brand logo, etc. However, marketers often use it to test any number of things, from pricing to slogans to new product ideas.

Now that you have all the information needed for market research before launching your startup, you are all set to go. Startup Pedia wishes you the very best!