If you’ve ever come across one of our business support posts before, you might be able to tell that at Entrepreneurs.ng, we value efficient market research.
Picture this: you’ve just finished reading a book or watching another season of your favourite TV show, and almost out of nowhere, you come up with a business idea, the business idea to end all business ideas. You are certain that your idea is unique, valuable, and lucrative enough to make you rich. So, what do you do first? Some would suggest going right into drawing up the business plan or immediately considering funding options. However, neither of these would be right.
First, you need to know that overwhelmingly, one of the main reasons start-ups fail is that they are unable to offer a service that the market actually wants. They are struck with a ‘novel’ and ‘original’ business idea, and they excitedly pour in time and resources into creating something that nobody wants. This is where market research comes in.
Market research allows you to validate your one-in-a-million business idea. It allows you to avoid a mountain of risk, anxiety, and second-guessing. It allows you to draw up a business plan that is actually worthy of your idea.
What Is Market Research?
Market research is the critical first step of your start-up process. It involves scoping out the competition, figuring out who they are, and understanding the size of the market as well as the nature of demand and supply for your product/service. It also involves careful analysis of consumer trends and preferences because, after all, the consumers are where the gold lies.
In market research, you want to find your market. You want to ask all the questions that need to be asked, understand just how unique your business idea is, if at all and shed light on the hidden opportunity your new business might hold. Market research makes all the difference.
The market research stage of starting a business is extremely important for success. In this article, we detail just how you can efficiently carry out market research on your own!
Steps To Perform Market Research
1. Know The Value Of Your Business Idea
The concept of value can be quite abstract. People define value in different ways depending on their geographical location, financial resources, upbringing, and culture. With changes in the environment, fluctuating pop culture trends; rises, and falls in the economy, value also changes with time.
As you can see, this can be quite a complicated task to grasp. However, as a budding entrepreneur, you can think of value or ‘market value’ as the problem-solving ability of a business. That is, consider that the purpose of a business is to consistently provide products and services that benefit consumers and other businesses too. Your business would fulfill this purpose by solving a problem that as of now, has no solution. Or one that has solutions that can be greatly improved. The more widespread or relevant the problem is, the greater the value of the solution (i.e. your business).
A concrete example of a problem-solver would be Amazon, the multi-billion-dollar company founded by Jeff Bezos. Amazon provided a time-saving solution in response to the problem of time-consuming shopping. Thanks to online shopping on Amazon most people don’t have to drive to multiple stores looking for exactly what they want. Instead, they just log in to their Amazon account and get all their wants and needs delivered to their doorstep.
To determine the value of your business idea, surveys are an incredibly useful way of probing the minds of people. Your feelings and intuition, while valid, will not be enough here. Objectivity is key.
Once you are satisfied with the value of your business idea, that the problem it is going to solve is relevant and that it will appeal to a wide pool of people, you are good to proceed!
2. Identify The Target Audience
Your customers are the bread and butter of your operation. In identifying your target audience, you figure out exactly who is seeking solutions to the problem your business is going to solve. Three different customers you need to consider are:
- The purchasers, who make the decisions and actually hand over the money.
- The influencers, individuals, or groups who have sway and influence over what people buy.
- The end-users: the people who actually use your product or service.
These three might all be the same person or completely different people. Whatever the case may be, you want to understand how your target customers think. That is: what their occupations are, how they relax, and what they are willing to spend money on.
After grasping this, you can then build everything – from website to brand name, to marketing campaigns – in a way that appeals to your customers directly. This will maximise your sales and minimise overall marketing risks.
Three areas to study as you define your target audience
- Jobs of Potential Customers: this could involve the daily tasks that your potential customers have to do at work or in their personal lives. If you think you have a great idea, and your intuition tells you that your product will appeal to university lecturers and school admins, for example, you want to look into what their jobs and daily lives actually entail. What problems do these school workers try to solve daily? What are their home lives like? This way, you understand the motivations of your target audience and exactly how you can improve their lives.
- Customer Benefits: Customer benefits are what your target audience gain from your product or service. Examples of benefits are saving time, saving money, or even simple pleasure. To get a grasp on trends and consumer preferences, understanding exactly what your customers gain from your product is crucial.
- Customer Peeves or Pains: These are basically the elements that inconvenience your audience and pushes them to seek new solutions.
Customer peeves or pains also could mean fears or annoyances that a customer might face before, during, and after purchasing your product, which might, in turn, cause them to abandon it. Understanding pains and peeves give insight. It tells you how to remove the hold-ups that might prevent customers from benefiting from your product.
How To Interact With Your Target Audience
Online surveys, social media meet-ups, and focus group sessions are extremely valuable when trying to understand who your customers really are. But how would you even find the people to interact with, in the first place? One option is to place online ads on Google and several social media platforms, offering a small compensation for responses to your surveys.
Another option is to buy expert market research data. Affordable market research data on consumer preferences and behaviours can be purchased at affordable prices from several market research companies. Just make sure that the data you are buying is ethically sourced and that it targets the geographical region you are most interested in.
Once your new company/product is functional, all the time you have taken to understand your customers will make them feel heard and valuable. This does wonder to increase customer loyalty.
Furthermore, use the information gathered during this stage to develop a customer profile. This is a detailed persona of a typical potential customer, and it addresses characteristics like sex, age, income, and level of education. Customer profiles are valuable when trying to come up with a communication or marketing strategy.
3. Check Out The Competition
There is a chance that once you start conducting market research on your business idea, you’ll find that someone else thought of it first. This is not necessarily a bad thing. Don’t give up on your idea!
Competition is just an important sign that your idea is relevant and valuable in the current market. Now, your job is just to figure out what you can do better than your competition. Additionally, you want to identify the different classes of competitors based on how often you will interact or compete with them.
To observe your competition, visit their websites and follow their social media pages. In essence, become a customer of the competition and learn what they do properly and where they fall short.
Furthermore, another important strategy is to talk to the competition’s other customers. We mentioned online surveys earlier, so in your surveys, you could include questions like: “Where do you go to purchase this service? How often do you go? Why?”
From scoping out the competition, you discover what you can do better. Maybe your solution is more cost-effective, faster, or more physically attractive. Also, you get to observe their communication strategy. You can then use this information to develop a sharper, better-tailored marketing strategy. In essence, you are learning from their mistakes, successes, and your own market research.
In summary, market research is just about learning about what’s going down in the market. That is, this sort of study allows you to understand what solutions people are actually looking for, what trends might influence their choices, and how your business can offer value and grow rapidly.
As we mentioned, while your intuition is a valuable thing, market research isn’t supposed to confirm what you already believe. Instead, the emphasis should be on objectivity. We emphasised the use of surveys in this write-up i.e. a way to directly interact with potential customers. However, be sure to employ as many research methods as possible to confirm that your understanding of the market value is correct.
With what you’ve read here, you are ready to conduct an efficient market research analysis!
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