Market research for startups

What is market research and why is it so important?

Broadly speaking, market research is a process whereby a range of information is collected in order to ascertain if there is a demand for your product or service.

Performed correctly and thoroughly – no stone should be left unturned when developing your niche – market research will provide you with a clear understanding of your client base; you’ll discover who your direct competitors are; you will learn what motivates people to buy and the price they will pay for your offering.

Sounds straightforward, right? Well, there are few things to take into account.  This short guide will clarify a few things and put you on the right track.

Primary research

Primary research is the process of gathering new or original data of your own accord.  This method is particularly useful when you require feedback on your product offering or specific information about your potential customers.

Focus groups

At 11:FiftyNine, we recently completed a strategic marketing plan for our friends over at Letterbox Lab, a subscription box startup, and had the pleasure of sitting in on a focus group they held for prospective customers.

Focus groups allow business owners to gather data on the viability of a new business venture, product or service.

This can be achieved by asking participants a series of informal questions or simply by observing how people interact with a new product.

They are a fantastic form of market research for start-ups as they provide business owners with the opportunity to witness people’s reactions in real-time.

Cheap and easy to organise (tip: invite people to a focus group via email or through a Facebook group), focus groups that are engaging and fun offer business owners the opportunity to build a rapport and establish early relationships with potential customers.

Questionnaires and surveys

In a vein similar to focus groups, questionnaires and surveys are highly effective instruments for collecting data from people.

Questionnaires and surveys are useful as they are easy to distribute (especially online), low in cost and allow you to target a large sample of the population.

Services such as Survey Monkey are free to use and allow you to distribute questionnaires quickly and easily.

Survey Monkey automatically manages and tabulates questionnaire responses and has a built in reporting feature which is easy to decipher.

Secondary research

This is information that is already at your disposal.  It’s useful for determining market conditions and most importantly information on your competition.

As a digital marketing agency that specialises in the creation of marketing plans and strategic recommendations, we rely heavily on industry standard market research databases such as Keynote and Mintel for all the latest trends and industry developments.

However, the reports generated by such market research databases are costly – a single report can cost anything in the region of £200-£500.

As a startup, it’s likely that your marketing budget will be small (or non-existent), so you’ll likely need to rely on free means in order to gather the data you require.

The internet is the obvious avenue here: articles, newspaper sites, websites and journals specific to your industry etc. Just be sure your sources of information are credible, i.e. avoid The Sun or The Daily Mail!

PESTLE analysis

A PESTLE analysis is a useful framework for evaluating the macro environment, or in other words, the conditions that govern society as a whole.

A PESTLE analysis will allow you to identify the elements of the macro environment that may affect your business.  The word PESTLE is an acronym which stands for:

Political

Economic

Societal

Technological

Legal

Environmental

Conducting research on all these different elements will help you determine if the current market conditions will work in your business’ favour.

Competitor Analysis

“Know thy enemy” – Sun Tzu

A thorough competitor analysis will allow you to determine the strengths and weaknesses of your competitors.

Such knowledge may provide you with a strategic advantage and help you acquire a larger share of the market.

We recommend you benchmark yourself against the following variables:

• Main product offering
• The various keywords your competitors are trying to rank for in Google
• Website performance (free services such as SimilarWeb can assist with this)
• Mobile optimisation (are your competitor’s websites optimised for mobile searches? If not, this may provide you with a competitive edge…)
• Social media statistics
• Pros/cons of their overall brand and product offering
• Competitive advantage/USP (unique selling point – this is what sets your competitors apart or helps them stand out)

As an aspiring entrepreneur, you’ll no doubt be aware of the multitude of new skills you need to acquire in order to launch a new business venture.

Unfortunately, the learning curve is steep, daunting at times and seemingly endless.

Prior knowledge of the marketplace, your competition and potential client base is essential and could mean the difference between business success and business failure.

The above should provide you with a firm starting point for your research endeavours, however, if it all seems a bit too much, worry not: help is at hand.  There are a wide range of marketing agencies that specialise in helping small businesses navigate the marketing minefield.