Do you have a unique, life-altering idea that can revolutionize the world as we know it? That’s great; you have your startup idea. You are probably envisioning huge strides and great profits through this business venture. However, statistically, only 40% of all startups manage to become profitable.
It’s also important to note that you’re probably not the only one in a particular field; there are many more startups and small businesses in the same race. 19% of startups face competition as the greatest challenge.
9 out of 10 startups fail, while 20% of startups fall apart after a year. Moreover, 30% of startups shut down within 3 years, and 70% of startups dissolve within 10 years. These are some grim but honest statistics to consider when starting a business.
So, how exactly do you ensure your vision turns into a successful reality? How do you join the leagues of AirBnB, LinkedIn, Khan Academy, Pinterest, Slack and other successful startups?
The short answer is market research. You can research the market so that you can find companies that operate in your niche. You can get valuable insights by understanding how these businesses made it to the top and what marketing strategies they used. It’s also helpful to research your target audience, their preferences, demographics, and characteristics.
Studying and analyzing the case studies of already successful business ideas can help you gain valuable insights in a short time. While trial and error is a good way to learn, studying others’ experiences is a smarter way to learn.
So, how to conduct a market research for a startup? Where to begin and what all to include? This article provides a complete guide on doing market research for a startup.
What is Market Research?
Market research is the process of gathering information about the happenings in the marketplace. This knowledge will also help you to ensure sustainable growth for your startup in a competitive marketplace. It involves investigating and analyzing market dynamics in order to get better understanding of your competitors, potential customers, and market conditions.
Market research also includes looking for trends, learning about other companies within the same niche, investigating the prices and marketing strategies of others along with getting information about your prospects.
It also includes choosing the demographic that you can sell your products and services to. Researching about the region where your consumer base lies helps you get to know your potential customers better. With proper research, you can decide the best route for the development of your business.
Whether you’re looking to grow your startup or scale your small business, market research can help you make better business decisions in the right direction. You’ll be able to take necessary decisions and determine which procedures need to be followed moving forward. Having a focused action plan and streamlining activities based on your research can also help you hack growth.
Steps of Market Research
1. What is the Purpose of your Market Research?
As a part of market research, you invest in gathering qualitative and quantitative data for assessing the market and tools to analyze and interpret the data. Before doing that, you need to figure out why market research is necessary for you. Most commonly, startups invest in market research to build a roadmap to stay on top of the competitive marketplace.
Deciding the purpose of your market research requires you to ask yourself some questions. Which market should you enter for your product or idea? Will your product/service be in demand considering the cut-throat competition?
Once you have the answers to these questions, you can focus on the unique features of your product to see if it will be viable in unoccupied niches. You can also draw parallels between your market and another to see if another product can become popular in your area of distribution.
Market research may be internal, external or both. Internal market research goals include revenue generation and engaging in better business activities. External market research focuses on micro-environment i.e. economic development trends within which your startup exists. You can then use the data gathered to pitch your startup to investors.
Market research for attracting investors
In order to attract investors, you need to create a business plan and presentation through thorough research. The data in the presentation should be recent, informative, and accurate. Market analysis and research are vital for startups in their early stages. Incomplete or narrow information about the business environment and lack of competitive advantage will drive away investors.
Market analysis for searching for an idea
Having an idea is not a big deal. What’s important is having a workable idea. According to experts, a workable idea is one that is based on a need-assessment of potential customers.
For this, you can select an industry you’re interested in working in and then go into details about that industry. Study the problems and requirements of customers the industry caters to. The ultimate goal is to understand their problems and provide solutions.
Market research for testing ideas
Market research is also advisable if you already have a product and you’re ready to start your business. This is done to understand and study the competition and the unique features of your product. You should also pay attention to the nature of your potential clients and why they should buy your products and services.
Studying the current market trends and regulatory conditions such as applicable laws, restrictions, etc. will help you develop a better perspective for achieving your goals.
2. Know the Types of Market Research
The different types of market research based on different business goals include:
Primary and secondary market research
They are also known as field and desk research. Primary research includes information you collect yourself or pay someone to do it for you. The information encompasses current sales volume, metrics, and customers. It also accounts for current business operations and existing competition.
Secondary research focuses on analysing already existing data gathered by third parties. This includes reports and studies by other companies, government organizations, or others in the industry.
Offline vs. Online research
While both methodologies have their advantages, it’s best to use a mix of both. This helps unveil different kinds of information about the target market. Offline research involves accessing primary sources and getting in-depth results. Online research helps you get inexpensive and quick results.
3. Get an Industry Overview
To ensure the success of your startup, it’s important to understand the existing industry dynamics of your niche. This is why you should stay on top of the current marketing trends within your industry and have all the relevant information on your fingertips.
Studying startup research reports, conducting surveys, participating in relevant industry seminars and webinars, and workshops can help you understand new and upcoming trends. You can also leverage online tools to conduct market analysis for gaining insights into the ever-changing and challenging marketing landscape.
4. Market Segmentation for your Ideal Customer Profile (ICP)
Not everyone is going to buy your products and services. As a startup owner, it is essential for you to have an idea about buyer personas and potential customers. For this reason, market segmentation strategy is a prerequisite for startups so that they can spend resources and revenues on a profitable target market.
In order to develop your ideal customer profile and get loyal customers, you need to have a clear idea about your target audience. By gathering information about them, including demographics, habits, interests, location, etc., you can create buyer personas. Once you have your potential customers, you can target them with email marketing, drip marketing, social media marketing, and other tools.
5. Pick your Market Research Methods and Tools
There are many market research methods you can use either alone or in combination. These include:
- Focus groups
- Social media
Some tools that can be used for effective online market analysis include:
- Google Keyword Planner
- Ahrefs, SEMrush, Ubersuggest
- Facebook Audience Insights
- Surveys and polls on social media
A startup market research company offers market research services to small businesses and startups. Some of these leading companies include Insight by Design, U&I Collaboration, Ascendant Consulting Firm, Starlight Analytics, etc.
Platforms like EZlauncher help startups promote visibility and brand exposure. In a highly competitive market, small startups find it difficult to get noticed. EZlauncher promotes their brand and makes it easy for visitors to browse the market.
Whether you’re a product maker, marketing agency, or a visitor looking for new names on the market, EZlauncher can help you out.
Comprehensive market research will enable you to understand your competitors and outline their strengths and weaknesses. Setting benchmarks is a great way to stay on top of competition. Startup owners can set their own goals by benchmarking their competitors and their key performance indicators (KPIs).
Competitors include direct and indirect opponents. Direct opponents are those that are in the same price segment of products/services, and have similar target audiences and promotion and distribution pipelines. Indirect opponents are those that have a similar target audience but different products, pricing, promotion, and distribution channels.
7. Ask the Right Questions
Some fundamental questions need to be answered as a part of well-planned market research.
- What is my potential market size?
- Who are my competitors and what’s their market share?
- Are there unoccupied niches I can fill?
- What are the unique, advantageous features of my business?
- What’s my estimated market share?
Lean Startup Market Research
The lean approach to startups is beneficial as it allows quicker time to market, reduced development costs, innovative products, improved customer relationships, and much more.
The core idea behind lean startups is not spending too much time developing a perfect product that might not succeed in the marketplace. Rather, startups should quickly develop minimum viable products (MVP), introduce them to the market, and measure customer response for future course of action. Therefore, lean organizations follow a continuous cycle of build-measure-learn.
Market research is prevalent in all three stages of the lead product development cycle.
Before building an MVP, businesses need a vision and strategy to determine the scope of the product. They need to ensure that the new product has a long-term viability and a competitive advantage in the market. Market research options in the build stage include:
- Market sizing
- Customer needs analysis
- Competitor analysis
- White space identification
- Rapid concept testing
Using market research, startups or businesses can gain actionable insights through the right metrics and unbiased results. Methods for measuring metrics in marketplace include:
- A/B (or multivariate) tests
- Funnel analysis
- Brand tracking
- Customer engagement/satisfaction studies
Learning how to create an ongoing, successful business is the most important element of the lean approach. Here are some techniques to ensure learning during the development cycle of your product :
- Customer interviews
- Root cause analysis
Knowledge is Power
Market research for startup companies is essential to ensure the growth and success of the venture. You need to invest time and resources into proper market research to collect valuable data that can be further used for your startup business. It’s also important to gather the data only from trustworthy and reliable sources. There will be bumps on the road to scaling a startup, but you’ll be able to overcome those with the help of knowledge through smart market research.
Having the right research methods and tools can also help immensely with getting your startup noticed. If you’re a startup looking to get brand exposure, submit your startup on EZlauncher. Because we do not ask for a monthly fee like other do. We are also offering business plans for startups and has a feature to help them create their pitch and impress