Just as you wouldn’t walk around outside with a blindfold around your eyes, you wouldn’t start a business without conducting market research beforehand. If you’re thinking of starting up a business, market research can enable you to know whether or not your business idea is feasible. It provides the right footing for a startup, is practically essential as the foundation of a business plan and is often a prerequisite for many business loans. Overall, a business plan is incomplete without market research.
The business landscape, customer preferences, and market scopes are extremely fluid in this era, constantly evolving. Good news is there are many resources today that will allow you to do your own market research without spending the vast amount of money to hire firms to conduct it for you.
But first of all, “What Is Market Research?” Market research is the assessment of various internal and external factors that has a correlation in impacting your business. These factors below answer the question of “What Am I Researching?”
1. Product & Services – Focus on the function of your product/service, how will it be developed or manufactured, and what will be the placement and distribution method?
2. Competitors – Check your competitors’ profile and observe their techniques. What are their advantages and disadvantages? Which area can you compete or improve in?
3. Target Market – Identify your ideal customers. Look for demographics, geographic location, and behavioral characteristics. It is impossible to be a business that is of everyone’s preference, thus create a niche for yourself and define your business narrower to your target market.
4. Industry (Current & Future Trends) – Carefully observe and familiarize yourself with market trends. Are there any technological opportunities or challenges for your business?
5. Operations and Management – It’s important to layout a management structure as well as understand and forecast the revenue and expenses that will be incurred to keep your business operational. (Ex. Wages, Inventory/Supplies, Marketing)
Once you have established the objectives of the market research, you must then develop a strategy to gather these information. There are 2 different types of research: Primary Research and Secondary Research.
Secondary research has to come before primary research. It is the first step of validating the feasibility of moving forward with the business idea. Secondary research refers to the research on available literatures.
1. Utilize the internet – Government statistics and records are a good source of information on the market.
2. Research your competitors – Read the company reports of potential competitors to identify possible market strategies.
3. Visit the library – Find trade specific publications which might be important in planning the business.
Primary research is basically the information you need but does not exist. It mainly refers to the 4Ps of your business: product, price, placement and promotion.
1. Product – How will your potential customers respond to your company name, logo, and business?
2. Price – How much are your potential customers willing to pay for your products or services?
3. Placement – Where is the most strategic location for your business and how do you distribute? Also, ask how important the option of home delivery is for your business?
4. Promotion – This refers to the market segmentation. Promoting your business to targeted audience through certain portals. How important will purchasing online be for your customers?
These can be done in a few simple methods, namely through phone interviews, face-to-face interviews or online surveys. Using family members or close friend circles for primary research is convenient, but they may not be the most representative survey subject.
It is important to be open-minded and adaptable when conducting market analysis as some of the feedback you hear may not be exactly what you were expecting and hoping for. You may feel attached to your business idea and wish to change nothing about it, but after conducting a survey maybe you find that customers are looking for a slightly different service or additional features. Do not scrap your idea, but do consider adjustments to accommodate your customers’ demands.