A Start-up's Guide to Market Research
How Start-ups can Leverage Market Research to Make Smarter Decisions
When making business decisions, market research can be a valuable tool for companies to use. This is especially true for start-ups, where the first year or even first few months of operating is a critical time to launch your product or service. Market research may seem costly and time-consuming at first; however, an investment in market research helps to ensure the long-term profitability and success of your business down the road. Below are 4 ways in which market research can help start-ups in decision making.
Providing Insight on your Business Idea
Perhaps the business is not fully formed but is only an idea of a product or service that you wish to bring to market. Market research can help to confirm if there is a true need for the business idea and if the concept is understood by potential customers. It is important in this circumstance to ask consumers or ascertain information regarding both the unmet need and the business idea. This way, you will be able to determine how more or less important this unmet need is and if your idea truly adds value.
Defining the Market
Once it is known that there is an unmet need in the market and the business idea satisfies that need, market research can then help to define the market. For start-ups, finding the right customers that would be interested in purchasing the product or service, i.e., the target market, is an area of research that would be particularly beneficial. Obtaining rationale from potential customers regarding their motivation to purchase the product or service can also add credibility to your business idea, which can be useful when securing investments and growing your business.
Differentiate Yourself from the Competition
When entering the market, your product or service may have an extra cost associated with it: a switching cost. Consumers may be already accustomed to other offerings, even if they are not fulfilling the need as much as your product or service does, and therefore find it more difficult to switch from the competitors’ offering to yours. Using comparative research to then be able to clearly communicate to customers why your product or service is different from the rest can help potential customers make the switch to your business away from the competition.
Maximizing your Marketing Strategy
Marketing expenses for a start-up can be costly and with so many different ways to market (i.e., digital, print, email, etc.) it can be hard to navigate which strategy is right for your business and at what price point. Market research can help to identify which channels would reach your potential customers and what type of messaging would be most effective.
Market research can be leveraged to help achieve the goals above also in a way that is affordable for start-ups. Many research reports are available and accessible online either for free or for a discounted price. Joining an association in your industry or attending events where research is presented are also ways that you can obtain market research without breaking the budget. Chances are that someone else has already wanted to answer the same question as you have and has done research in order to do so. When researching specifically about the product or service, analyzing any aggregated customer data can also be informative when cost-effective. Working with an agency to gain specific insights that pertain directly to your product or service, while staying in the scope of the budget is also attainable for many businesses.
Ryan Pontone, Market Research and Analytics Associate