How to do your market research as a startup
Before you get to head up a successful business, you need to do your market research. It might be a drag, but a good base of research will provide the insights you need to succeed. Set time aside to do this properly as part of your startup journey and don’t cut corners. It’s great if you have an amazing idea or the perfect product, but it is essential to rigorously check whether there is definitely a market for it.
WHY IS MARKET RESEARCH SO IMPORTANT?
Market research is helpful on so many levels, as it helps you find flaws in your business plan that need correcting and gives weight to your investor pitch. It can also save you thousands in the long run as you will have more information to back activities, such as marketing.
Ultimately you want to be able to pinpoint your customer base and know exactly why your product or service will change their life for the better. The more you know about this crucial point, the better equipped you will be to make a profit out of it.
Now let's get into how you begin conducting your market research:
SET YOUR GOALS
Before you begin, you should write out a formulaic list of what you want to achieve with your market research. What information are you seeking and how do you think it will help with your long-term goals? Write down your expectations so that you can compare and contrast them with the results at the end.
DECIDE ON YOUR DATA COLLECTION METHOD(S)
Decide how you will go about collecting research data before you begin, whether through primary, secondary, or a mixture of both.
Primary research will include any information gained directly from consumers or potential customers. Secondary research is anything you can learn from existing resources such as reports, studies, statistics, etc. Both are equally valuable and form important parts of the process, so a combination of both methods is usually preferable.
This can be a great way to understand what your target audience really wants from your business. Explore their needs and expectations thoroughly in order to discover whether you will be meeting them head-on or missing key components. Look at what they are gaining from your potential competitors and where they think something is amiss. Primary research might include interviews, surveys, or focus groups – anything that involves direct responses from a selected group. Ensure the questions that you are asking are ones that delve deeply to draw out thoughtful and considered responses. As a word of caution – don’t make the mistake of only asking the people you know or a group that is unrepresentative of your target market.
Primary research is often the best way to gather qualitative data – the more detailed kind that is tricky to analyse. This is vital for assessing attitudes and behaviours that can then be used to judge purchase intentions of your product/service. Quality does come at a cost though - extensive interviews or focus groups will take longer, so be sure to allow plenty of time to discuss ideas and address emerging topics.
Quantitative data is more easily gleaned from secondary research (where others have done the legwork), as producing your own quantitive data may be more costly and time-consuming given the larger sample of your target population needed to gain tangible results. Statistical data is for seeing exactly where your time and resources will be best placed. You should also be able to identify key trends and therefore have a good idea of how to predict where your business is likely to sit in the future.
Secondary research is arguably simpler to collect than primary as it is readily available from a variety of locations and sources, from the library to the internet, in books, or government statistics. There is such a large amount of accessible information on the internet, so you have no excuse for skimping on secondary research. Use this method to get clued up on your competitors by discovering what they are doing right and what could be improved. The more information you can gather, the better equipped you will be. Secondary research is fast and effective in getting a solid overview of your target business space, however, be wary of focusing solely on this type of investigation as it can quickly become outdated – nothing beats real-time responses from potential customers.
DO IT CONSISTENTLY
Don’t forget that market research is not only useful at the very beginning of your startup journey - it is essential throughout the lifespan of your business. Once you have a few key techniques down, market research can be a valuable tool to use to inform new marketing campaigns, new products, new promotions, and new services. Gauging the appetite of your audience as you scale is key to knowing how far you should push your product and judging when the demand is not yet there.
If you really hate doing market research (like, really hate it), then remember you can always hire a third party to do it for you. Outsourced market research is still going to have a positive effect on your startup, but there is a lot to be said for the DIY method.
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*Editor's note: This blog was originally published in 2016 and has since been updated.