How to do market research
Your business idea is clearly inspired. But it helps to check you’re not the only one who thinks so. Find out how to do market research to validate and refine your idea.
Types of market research for new businesses
As a startup, you need to figure out who’s going to buy from you (customer research), and who you have to beat to get that sale (competitor analysis).
Why do customer research
By understanding your customer, you can:
Why do competitor analysis
By understanding your competitors, you can:
How to do market research
It’s a good idea to figure out your customers first. That is the most important relationship for your business.
- Create a customer profile.
Describe the person or business that will buy from you. For consumers, think of things like their age, location and interests. For business customers, think of things like their industry, size and location.
Stuck? Start by checking out who buys from known competitors.
- Hit the internet
Search for information on the group you’ve just described. There may be existing studies into those types of people or businesses which you can use as a starting point.
- Start asking questions
Find real-life people who fit your customer description and ask them questions like: what do they need from a business like yours? where do they get that product or service now? what’s good about that current solution? and what could be better?
Market research methods
So how do you get information about people and their preferences? There are a few proven market research methods to try.
- Search the internet (desk research)
Search for public studies into your customer group. And follow what those people say on social media and community groups.
- Have one-to-one conversations
Ask open-ended questions and let respondents do the talking.
- Host workshops or focus groups
Ask questions to a whole group of customers at once. You’ll get deeper answers because people will spark off each other.
- Run surveys
Ask tons of people the exact same questions to generate really solid insights and statistics.
- Start a community
If your customers are enthusiasts, bring them on your startup journey. Share updates, ask questions, and invite them to be beta testers.
Give something to get something
Free catering or swag will get people to your focus group. A random prize draw will encourage people to fill out your survey. A little sweetener goes a long way when doing market research.
How to do competitor analysis
Customers can tell you a lot about your competitors. So you’ll use many of the same market research methods to find out who you’re up against.
- Identify your competitors
Some competitors will be obvious from the get go. But you will find more by asking customers who they buy from now. Spare a thought for indirect competitors, which sell different things but go after the same dollar (they might sell cupcakes versus your doughnuts).
- Compare them to each other
Competing businesses often go after different parts of the market. One will be the premium option, while another will compete on price. Or perhaps they will target different age groups or locations. Map how they relate to each other.
- Find where you fit
Where on the map will you go? Measure your strengths and weaknesses against your competitors and figure out where you can give them a run for their money.
That’s how to do market research
You don’t need a big budget or a stats degree to go do some market research. Asking a few key questions of a few target customers and doing some competitor analysis can give you the smarts to build a winning business.