Hello!
We all used to do our homework before attending the next class during our school days. Doing homework was imperative then. Doing homework is imperative now as well. Replace homework with the market research for startups today. Observe the connection!
Market Research = Homework
A match made in heaven.
Here is a simple warning. Without conducting a good market research for startup, it will fail. You surely don’t want your startup to meet the bad fate as Webvan. Do you?
Without further ado, let’s begin.
Purpose of Market Research
Conducting market research is a step that many entrepreneurs miss in the early stages of their startup's development. And that can sometimes cost them dearly.
Company without sufficient market research may end up having a really nice business idea, fully packed with potential, but it fails miserably because its owners didn't do their homework and take into account certain trends in their particular industry.
So, you have a new business idea, you're planning on starting a business and want to craft a business plan? Great! The first step to getting any venture off the ground is understanding what motivates people and why they choose one product over another. To do this effectively though it's crucial that we start by asking ourselves some fundamental questions: Who am I targeting with my idea/product ? How will these customers gain access or purchase something from me once they're aware of its existence? Am i able seam sustainable operations without additional funding?
What if I say that doing market research for startup or more precisely, market analysis is the backbone of any business? All startup owners must invest a good amount of time and effort in this sole activity.
Being a startup owner, you must understand what actually market research for startups is all about. In simple terms, it is the process of gathering qualitative and quantitative data to assess the overall situation and structure of the market, which in turn helps you gauge the possibilities of ensuring long-term strategic gains for your startup.
Once the data is with you, you can use mathematical and statistical tools to analyze and interpret it. The precise interpretation about the size of the market, the value of the market, possibilities of market expansion, number of sellable and buyable products, gives startup owners the ability to make informed decisions about launching their startups at the right time.
Conducting thorough market research will also allow startup owners to opt for sustainable growth strategies that will help them in the long run. This whole process serves the purpose of market research fittingly well.
If you own a fairly new startup, you must be well prepared to cover all the basics, including your content, marketing operations, distribution sales, service, and customer support teams must be on the same page before making any strategic decision about launching your startup.
The best way to start your marketing research and analysis is to write it down. You can use the document to understand the key provisions that you need to ensure smooth flow of operations within your startup. And if there is some deviation, you can always check the document to set your path straight.
Industry Overview (industry trends and barriers)
What you want to start with is doing what's called primary market research. Primary research refers to market audit that you do yourself. For example, by looking at your competitors, looking at Google trends, studying your strengths and weaknesses, building buyer personas, etc. Once you're done with it, you can start conducting secondary research. Secondary research means looking at studies, surveys, polls, audits and reports done by other people or companies. What you want is the perfect mix between quantitative research and qualitative research. Then, the goal is to combine your primary research and secondary market research findings into one comprehensive document.
To develop a successful startup research plan, understanding the existing industry dynamics of their niche is one of the most important pre-requisites for new startup owners. This is where trend jacking comes into play. As a startup owner, you must keep a bird’s eye view on the latest marketing trends within your niche industry. Simply put, all the relevant information about your industry and business needs must be on your fingertips.
Reading startup research reports, conducting relevant market research surveys, participation in industry-specific seminars, webinars and conferences and workshops can go a long way in shaping your understanding about new and upcoming trends within your niche industry. You can also use online tools to your advantage and gather all important information about new business and marketing trends.
Conducting secondary research is your best bet if you want to discover what your competitors are doing and what's trending in your industry. How to get your hands on such studies and reports? You can look into research companies and trade institutions like Forrester, Statista or Gartner, business development departments in your local chambers of commerce or you may also look at less renowned organizations by browsing the web.
Leveraging technological tools and having the right market research methods to conduct market analysis will bring startups a lot of insights and fortunes and help them make progress by leaps and bounds in this ever-changing and challenging landscape. There are many tools, applications, and plugins available. You can use them to your advantage.
Market Segmentation
Market segmentation is breaking a market into distinct subsets. As mentioned in the preceding paragraph, it is very important for startup owners to have knowledge about their buyer personas, the business environment you're in and potential customers to make the most of your market research efforts. Do remember that not everyone will buy from you.
This is why it is a prerequisite to work out your market segmentation strategy. Before chalking out the segmentation plan, you being the startup owner must know about your target market.
Developing buyer personas will help you carry out startup marketing analysis quite easily. For creating the buyer personas, you need to gather information about their demographics, habits, interests, locations, etc.
This particular set of information will provide you with the rough idea about what your target market and target audience look like.
Remember, a buyer persona is a semi-fictional representation of your potential customer. In order to develop a buyer persona, you can carry out interviews, phone calls, focus groups, and use other online tools to gather the information required. Once you are done with developing buyer personas, it’s time to create a feasible market segmentation strategy to target them with email marketing, drip marketing, and social media marketing tools etc.
Having a smooth and robust target marketing strategy will help you in fine-tuning your market analysis approach while making informed decisions about your startup’s operations and sustainable growth.
Market Need
Why should anybody use your product? This is a simple question. Think for a moment. You have got a fabulous product.
But there is no customer to buy it. Because there is no need for it. The market is already saturated, so why the customers will buy the product that is already available in large numbers, and with reasonable costs. Therefore, for new startup owners, it is very necessary to conduct a comprehensive market analysis (Or also called marketing audit) so as to understand where the product will fit in if there is no need for it.
In this case, you can only succeed if you add some value to the users’ experience with your product. The value addition aspect will give you the required competitive edge over your competitors. This particular aspect of your market analysis plan must contain comprehensive details about your target market, including the five Ps of marketing, i.e. People, Place, Position, Promotion, and Price.
Smart marketers tend to create the need of their product by using time-tested tactics, in combination with value addition to their product(s). The pinpoint focus on delivering value-added product or service to your customers will make you stand out in an already competitive market. Do remember that necessity is the mother of invention. If the necessity arises, the demand of the product will automatically rise. That’s where you can play your game to gain the much-needed advantage.
If you've ever worked with customers to define the product you're developing, you probably heard this phrase: "I need more/fewer of these features", or "the product should do this". It's hard to know whether that is true or not - because different customers might mean very different things when they said that. Market need is a defined set of requirements that are common to every customer. Now you know what market need is, how can it be measured
Here are 3 simple steps:
1. Listen carefully to your customers
When somebody tells you about the product he/she wants, pay attention to words they use. If there are several people in your room, focus on the first one.
Repeat their words back to them and ask "Did I understand correctly that...".
If you don't know what they're talking about, ask for an explanation (e.g.: "could you elaborate on this point please?").
2. Provide context for their answers
If somebody tells you about a certain feature they want to have in your product, don't just write it down without any explanation. Instead ask them questions like these:
"Why do you need it?"
"Could you give an example of how that feature would be useful?"
3. Ask questions and listen again
If you did the first two steps well and wrote down exactly what your customer said, go back to him/her and ask if they're happy with the result. If not, make changes until they are - don't be afraid of making mistakes, nobody will lose anything! Although this might sound like a waste of time (because you should already know everything), it actually takes less time than writing something down without context or asking several people about the same thing. After all, we're human beings and we can misunderstand each other very easily :-) So why take chances?
Competition
What is competitive analysis?
A competitive analysis is a document that breaks down the strengths and weaknesses of your competitors. It can be used to determine whether or not you have a chance at winning them over, and if so, what kind of product/service you need in order to beat them.
Basically, it boils down to this: If I want my company to win against our competitors, we have to have an advantage over them.
A healthy competition within the startup industry is a good sign. But the fact remains that if you are a new startup owner, you must understand that the field is full of unprecedented challenges and prepare for it in advance. There is a stiff competition going on within the industry. This is why, before entering the market, doing a complete market analysis is imperative for you.
A comprehensive market research will go a long way in helping you understand the market competition and the direct and indirect competitors' digital marketing strategies. One of the best ways to augment your startup is to set a benchmark. Benchmarking your competitors and their key performance indicators (KPIs) will help startup owners to set their own goals while keeping in view the big picture of the startup industry.
All you need to do is to keep a close eye on your competitors’ activities over the internet. How your competitors are using technology for their gains? What type of content they are producing? Which online tools they are using for their products’ promotion? What they are doing to give value to their customers? What tactics they are using to keep their customers coming back? These are some of the major questions that the startup owners need to address at the earliest. Remember, time once passed, can never be recalled.
Once you have set your sights on your competitors, implementing your marketing analysis framework will help you achieve your aims and strive for greater horizons of success and growth.
How You Can Successfully Conduct Market Research for Startups and Small Businesses
Market research is crucial to any entrepreneur's business plan. It helps determine the sales potential of your products or services, as well attracting customers and earning repeat business from them in this competitive world we live in today.
Carrying out market research for startups is of utmost importance, as it helps entrepreneurs make informed decisions when it comes to launching a startup. Irrespective of the industry, all the stakeholders involved within the startup must work out a strategy together, to ensure smooth functioning of the startup right after the launch, and as well as in the long run. It is a fact that doing a market analysis for startups takes a lot of effort and time. But, investing your energies in devising and implementing a solid, result-oriented market analysis framework that guides the overall functioning of the startup is extremely necessary for this digital age.
Understanding market segmentation and target audience are all the more important in the wake of relentless competition within the startup business landscape. Before making any final decision about launching your startup, you must be aware of the need of the product or service they aspire to offer. In order to stand tall, startups must strive to win competitive advantage against their competitors.
Keeping in focus the importance of doing a comprehensive marketing analysis for startups, we have come up with some pro-tips that will help startup owners to devise a strong strategy of their own. To succeed in the long run, the startup owners must have crystal clear understanding of the purpose of market research and the overall standing and performance of the industry the startup is working within.
Thank you!
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