Market research for startups
Do you have an exciting idea for a start up business? Have you started your market research? Read our top tips for market research for start ups here…
Market research is the process of gathering and analysing information about a market, customers, and competitors. It’s an essential tool for startups, as it can help to identify opportunities, assess risks, and make informed decisions about their business.
Why is market research important for startups?
There are many reasons why market research is important for startups. Here are a few of the most important:
- To identify a viable market: Market research can help startups to identify a market that is large enough, profitable, and growing. This is essential for startups, as it helps to ensure that their business has a chance of success. For example, knowing the size of a target market can help a company to forecast and plan – essential processes for good governance and financial management. A detailed examination of a market can also help identify new product ideas, or product diversification routes that may not have been included in the initial business plan but may be more profitable in the long term.
- To understand the needs of customers: A startup company must gain an understanding of their target customers’ needs. This information can be used to develop products and services that meet those needs, which is essential for gaining and retaining customers. It also helps create more effective marketing strategies and communication plans because it allows the company to respond directly to concerns and questions customers might have.
- To assess the competition: Through market research, startups can assess their competition; identifying the strengths and weaknesses of competitors, which can help startups to develop competitive strategies. This can include looking in detail at competitor pricing, approaches to market, and product or service quality. A thorough analysis of the competitor landscape can help start-ups construct a more robust business plan, and allow a clear view of their position in the market.
- To make informed decisions: Market research can also help startups to make informed decisions about their business. Background information gathered from market research can help underpin most business-critical decisions, providing reassurance to early investors and stakeholders that decision making is grounded in real evidence.
How to conduct market research
There are a variety of ways to conduct market research. The best approach for a particular startup will depend on the specific needs of the business. Some common methods of market research include:
- Surveys: Surveys are a popular way to gather information from a large number of people. They can be crowd-sourced / conducted online, in person, or over the phone. Allowing surveys to be completed anonymously can drum up more interest and promote honest answers but it is important to ensure that your questions are structured carefully and professionally, avoiding leading questions that will skew your data outcomes.
An organic crowd-sourced piece of research has value, but a more considered piece of research would use a sample group, relevant to the target demographic of the start-up product / service in question. Think carefully about the age, gender, lifestyle factors, preferences, and geographic spread of your target market and construct your sample group accordingly – this will deliver more valid data which will be more useful to the business in the long run.
- Focus groups: Focus groups are a qualitative research method that involve gathering a small group of people together to discuss a particular topic, product, or service. They can be a helpful way to obtain in-depth feedback from customers. As before though, using a relevant sample group can help get closer to your chosen target market. Focus Groups work best when they are relaxed and informal, and discussion is professionally facilitated to tease out the thoughts and feelings relating to your product and service. Remember, there is a difference between the relaxed considered response you may get from a focus group and the more immediate response you may get from an online or telephone survey. The strongest research methodologies use both forms of research together – for a more balanced view.
- Interviews: Interviews are another qualitative research method that involve talking to people one-on-one. This can be a good way to get detailed information from an individual customer type that may help answer questions relating to product development. However, caution needs to be applied with the interview route as a small sample size / use of just a few interviews can skew or bias the results. A larger interview set will deliver more balanced data outcomes.
- Secondary research: Secondary research involves collecting information that has already been published. This can be a good way to get a quick overview of a market, but always check the authority or publisher of the original research to check the quality of data and the sample sizes used.
- Omnibus research: Omnibus research is a quantitative method of research where the sample is shared by other companies / organisations. Using this method, data is collected on a wide range of topics or products in the same interview from a similar chosen demographic. Start-ups will need to prepare a pack of proprietary content for the researcher who will professionally conduct the research. Omnibus research can be a very cost-effective way of accessing large sample sizes. Omnibus research is often conducted on nationally important topics, frequently, where regularly updated data is required.
The importance of feedback
Once market research is conducted, it’s important to listen to the received feedback, analyse all of the received data carefully and conduct more regular feedback-generating surveys for on-going analysis. This can be used to improve the business and make it more successful. If the feedback is negative, it’s important to take it seriously and make constructive changes to the business as necessary.
Market research is an essential tool for startups. By conducting market research, startups can identify opportunities, assess risks, and make informed decisions about their business. This can help startups to increase their chances of success.
Here are some additional tips for startups conducting market research:
- Start by defining your target market. Who are you trying to reach with your product or service?
- Set clear goals for your research. What do you hope to learn from the research?
- Choose the right research methods. The best methods will vary depending on your goals and budget.
- Collect and analyse your data carefully. Make sure to draw accurate conclusions from the data.
- Use the results of your research to make decisions about your business. The research should help you to improve your product, marketing, and pricing strategies.
Market research can be a daunting task, but it is essential for startups. By following these tips, startups can conduct market research that will help them to achieve their business goals.
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