Starting a startup is no small task. It takes a lot of hard work, dedication, and, most importantly, market research. You'll struggle to succeed in the business world without knowing your target demographic.
With market research being an essential aspect to be able to validate a business idea and establishing a clear strategy, it is necessary to understand how to carry out such research. There are many ways to do market research, and I'll go over a few essential methods in this article.
Let's get right into it.
Why Market Research Is Important In A Startup
Here are the top reasons why market research is vital in a startup:
Assists In Identifying Your Target Market
Do you want to know exactly who you should target with your product or service? Conducting market research will help you identify your target market. This is important because if you don't know who your target market is, you'll have a hard time marketing to them effectively.
Gives Insights Into What Your Customers Want
Another reason why market research is essential in a startup is that it gives insights into what your customers want. This information is valuable as it can help you better tailor your offering to meet your target market's needs. From there, you can develop marketing messages more likely to resonate with your target audience.
Helps You Understand Your Competition
While most people only touch the surface regarding their understanding of their competition, market research can provide a more in-depth look into who these organizations are and what they're doing to be successful. This information is essential as it can help you position your startup to set it apart from the rest.
Can Help You Make Better Marketing Decisions
With the insights gained from market research, you'll be able to develop marketing strategies that are more likely to be effective. Not only will this save you money, but it will also improve the chances of your startup's success.
What Sort Of Market Research Do You Need For A Startup?
There are a few foundational questions you need to answer during your market research:
You can use various market research methods such as surveys, interviews, focus groups, and secondary research to get started. Once you have gathered all the data you need, it's time to analyze it and draw conclusions. This will help you make informed decisions about your startup.Apart from asking yourself the above questions, various types of research can also help you analyze a target market to support your startup business. Here are some of the most common market research methods:
Primary research is a type of market research that you collect yourself. This can be done through surveys, interviews, or focus groups. It's important to note that primary research is usually more expensive and time-consuming than secondary research.
Secondary research is market research that you gather from existing data sources such as government reports, industry association studies, or published articles. This type of research is usually less expensive and quicker to conduct than primary research.
Qualitative research is a type of market research that focuses on understanding your target market's opinions, attitudes, and behaviors.
Quantitative research is a type of market research that focuses on measuring the size of a target market. Combined with qualitative, this can provide a balanced approach to your research.
Once you've conducted your market research, it's crucial to analyze the data and draw conclusions. This will help you make informed decisions about your startup business.
You could also go into much more detail and break down various segments of your market to really understand what makes them tick. Here are a few examples to consider.
This is all about understanding the characteristics of your target market. This includes age, gender, income, education, and location. These are important as they can help you better target your marketing efforts.
From lifestyle to values, attitude, and interests, psychographic research looks into the psychological factors influencing your target market's buying decisions.
This is more important in some markets where people tend to make buying decisions based on pure emotion rather than logic. For example, people in the luxury goods market often buy products to show off their wealth and status.
Customer Needs Analysis
This is all about understanding the needs and wants of your target market. This includes understanding their unmet needs and what motivates them to make a purchase.
By understanding customer needs, you can develop products or services that address those needs and improve your chances of success in the market.
Market Trends Research
Keeping up with industry trends is essential for any business, but it's especially crucial for startups. This is because you want to be able to identify opportunities early on and get ahead of the competition.
Additionally, by understanding market trends, you can develop strategies to anticipate changes in the market and adjust your business accordingly.
How To Conduct Market Research For A Startup
Let's now get into each stage you must consider when conducting market research. As a practical example, let's consider a startup launching a new type of health drink.
1. Know Your Objective
The first step is to know your objective. What do you want to learn from market research? In our example, the company wants to understand if there is a need for their product in the market and what kind of reception it will get. Specific objectives can be:
2. Form Hypotheses
The second step is to form hypotheses based on your objectives. A hypothesis is a statement that you will test to see if it is true or not. In our example, some hypotheses could be:
3. Select The Type Of Research Needed To Test The Hypotheses
The third step is selecting the research type needed to test your hypotheses. There are many different types of market research, but in our case, here are some examples to consider.
4. Identify Target Demographics And Recruit Subjects To Do The Research
The fourth step is to identify the target demographics for your research and recruit subjects. In our example, the target demographic might be adults aged 18-49 interested in healthy living.You can use online platforms like Amazon Mechanical Turk or Craigslist to recruit researchers. You can also use offline methods like flyers or word-of-mouth. Going to places where your target demographic hangs out (like gyms, health food stores, etc.) can also be a great way to recruit such people.
5. Conduct The Research
The fifth step is to conduct the research. This involves administering surveys, interviews, focus groups, or observations. It is essential to ensure that the data you collect is reliable and valid.
6. Gather Insights And Determine Action Items
The sixth step is to gather insights from your collected data and determine action items that need to be taken.
In our new healthy drink example, we might gather insights like:
7. Implement Action Items
The seventh and final step is to implement the action items determined from the research. In our example, some action items might be:
How Many Surveys Is Enough For A Market Research Startup?
A typical question market research startups face is, "how many surveys is enough?" The answer to this question depends on several factors, including the size and scope of your target market, the type of product or service you offer, and your research goals.
Generally, the more surveys you conduct, the more reliable your results will be. However, there is such a thing as too much data, and it can be challenging to analyze and make sense of it all if you collect too much data. There is no magic number of surveys that you should aim for, but a good rule of thumb is to survey at least 100 people in your target market. This should give you a good idea of what people think about your product or service.
Also, depending on the industry, there are various groups to consider. For example, in the technology market, "technology decision-makers" and "economic buyers" are two distinct groups that should be surveyed separately. You might want to survey doctors and patients in the healthcare industry.
If you're starting out, it's also a good idea to keep your surveys short and sweet. No one wants to spend hours filling out a long survey, so ask only the most critical questions. Once you've collected some data, you can always come back and ask more detailed questions.
How Much To Budget For A Market Research Startup
Budget is a significant factor when deciding how to conduct market research for your startup. Market research can be pretty costly, depending on the size and scope of your project. However, there are ways to save money on market research without sacrificing quality or insights.
One way to cut costs is to use a mix of qualitative and quantitative methods. Qualitative methods, such as focus groups and interviews, can provide in-depth insights into customer needs and preferences. However, they are usually more expensive than quantitative methods.
Quantitative methods, such as surveys, can give you a large amount of data that can be used to make decisions about your product or service. However, surveys can be less reliable than qualitative methods because they depend on self-reported information.
Another way to save money on market research is to use free or low-cost resources. There are many online tools that you can use to collect data about your target market. You can also find a lot of information from government sources, such as the Census Bureau.
Finally, you can save money by doing some of the work yourself. If you have the time and skills, you can conduct your own focus groups or surveys. This will give you more control over the process and allow you to get insights that are tailored to your specific needs.
Features Of Great Market Research Tools
While there are tons of market research tools available, not all of them are created equal. When choosing a market research tool, there are a few key features to look out for. These include:
Ease of use
No one wants to use a tool that is difficult to learn or takes a long time to get results. The best market research tools are easy to use and allow you to get insights quickly. From dashboards that use drag-and-drop functionality to reporting that is available in real-time, the best market research tools make it easy to get the information you need.
Your business will change and grow over time, and your market research tool should be able to grow with you. The best market research tools are scalable and can be used by businesses of all sizes. From small businesses to enterprise companies, the best market research tools can be customized to fit your specific needs.
It's essential to choose a market research tool that is accurate and reliable. Look for a tool that uses valid methods for collecting data, such as surveys and interviews. It would help if you also looked for a tool tested and validated by experts. This will ensure that you are getting accurate information that you can trust.
The best market research tools go beyond data collection and provide insights you can use to make decisions. Look for a tool that offers sentiment analysis and market segmentation features. These features will help you understand your target market and make decisions about your product or service.
When you're using a market research tool, you should have access to customer support in case you need help. Ideally, look for a company that offers 24/7 support so you can get answers to your questions quickly. It would help if you also looked for a company with a knowledge base or FAQ section that you can reference when you need help.
Market Research For Your Startup - FAQ
Big Potato Games were in a bit of a situation when the data from social media and Google Analytics was not providing the team with the answers they were looking for regarding their products.
So the company took it back to basics, as they needed to know exactly who their target market was and what they wanted.
Exploring consumers' attitudes towards motivation in board games helped the team understand that people were not just looking for fun but also for a sense of achievement and competition.
They also uncovered that various types of customers exist (seven to be exact) – from social butterflies to solo players.
This specific market research helped Big Potato Games understand their target market better and what type of products would be the most successful moving forward.
With new-found knowledge of the size and importance of each customer segment, the company could make better decisions about product development, marketing strategies, and even sales.
The best way to do market research for your startup is to use a combination of surveys and interviews. This will give you more control over the process and allow you to get insights that are tailored to your specific needs.
When conducting surveys, be sure to use a tool that is easy to use and that offers features such as skip logic and branching. This will allow you to get the most accurate information possible.
You must do market research before launching your product or service as a startup. By understanding your target market and what solutions they seek, you can make better decisions about your business. By factoring in the above advice, you can set your startup up for success.
Last Updated on November 5, 2022 by Hanson Cheng