We are in the midst of a startup revolution. Every other day, there is a new company launching, but very few taste success. So why do startups fail? Between the creation of an idea and its implementation, there is a crucial step which most entrepreneurs miss out – checking the viability of their product or service. This requires effective market research. Before you conduct that, here are a few questions you need to answer for yourself.
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Market research is done for a variety of purposes – to study the target market, to study the impact of promotional plans on your sales and to analyse customer behaviour and much more. You need to understand why you are even conducting this research – a confused objective can lead to wrong results and execution.
Once you have answered your first question, you need to define the people who need to be part of your research. Understand the buyer of your product/service. This will be your target audience. The target audience you select for your research should be an accurate representation of your target market. Otherwise, the entire market research exercise will be of no use.
There are two types of research data commonly used for market research – primary and secondary data. Primary data is data directly collected from the target audience. Data already gathered by others is the secondary data. This data can be accessed from government agencies, trade organisations, and mainly, from the Internet. Primary data collection is done using through surveys, questionnaires and focus groups. You will need to hire market research experts to help with this. Data required for qualitative as well as quantitative purposes will also need to be gathered. Overreliance on secondary data and selecting an inaccurate target audience are common mistakes which happen during market research.
Market research does not end with data collection. Relevant data has to be selected and analysed to obtain meaningful information regarding the behaviour of your target audience. The data you have collected will also have to be tested for consistency. The data gathered regarding your product, your potential customers and your competitors are then presented in an organised manner to decision makers.
There are several tools you can use, select the right ones and you will be good to go.
The results obtained from market research are not always positive. Sometimes, market research will tell you about the gaps between your product or service and the expectations of your potential customers. Hence, it is important that you adjust your product or service according to consumer requirements. For a startup, it is better to hire an outside agency to do market research to prevent any bias in the results.
Some startups skip market research due to non-availability of funds. If this is the case with your startup, don’t skip your market research. Instead, adopt a cost-effective method to conduct market research. Hiring management students from premium colleges as interns is one way to go about this.
Conducting an effective market research is essential to position yourself effectively in your market. This crucial step can help you transition your business idea into a thriving enterprise.