Eric Brandenburg, UK manager of market research company Marketest, looks at how unbiased research will uncover the merits of a new product to a market.
Every entrepreneur runs their business idea by their nearest and dearest, gauging their reaction and obtaining what they deem to be useful information.
Although primarily, it can produce ideas and objections that may not have been explored yet, it is vital to remember who these reviews are coming from – they will be biased! An entrepreneur’s enthusiasm and passion for their business idea, along with their personal connection to those they are asking will mean the data is far from relevant or useful.
Looking at a larger market
In order to take any business idea to the next stage it is essential to prove, using reliable information, that the idea is wanted or needed by the target market. Using biased participants to conduct primary research will not aid the launching of your product or service.
Further to this, any business plan that is solely based upon figures resulting from biased primary research will almost certainly prevent a business from being successful. Despite this, many entrepreneurs only undertake a minimal amount of market research.
When undertaking any business project, whether it be developing a business idea or producing a new service, it is essential that an entrepreneur is realistic: will it be a success? The key to market research is gaining perspective and being informed, enabling decision-making to be undertaken to its best ability. As every entrepreneur will know, starting up a business is taking a step into the unknown. So, it’s essential to arm your business with as much information and data on your target market as possible.
“It is essential that an entrepreneur is realistic: will it be a success?”
It may be hard to put into practice but being objective with any business idea is one of the best chances to making it a success – the same goes for conducting market research.
How do I do market research for my start-up?
First, decide what kind of market research will get you the information that you need. Primary and secondary sources are available to you – more on that in a minute. Assess your budget and whether your preferred method(s) of research fits.
Then comes the market research itself. You can ask an expert to do it for you or you can go down the DIY route if you’re trying to keep your budget low. Whichever you go for, make sure you’re very clear in the questions you’re going to ask and who you’re going to ask.
Once you’ve collected it, think about how you’re going to manage and process the data. Doing this effectively will keep your research results timely so that they’re still relevant when your product or service hits the market. Then you can do the fun stuff like analysing the results and concocting marketing campaigns around the research.
Primary versus secondary market research
It is important to gain responses from an unbiased target market. Not only will they be honest with their opinions, but they will also highlight flaws that a biased audience may not uncover.
Conducting primary market research is an opportunity that an entrepreneur should not miss out on – it is a chance to get into a customer’s head and get to grips with their purchasing decisions. When thinking about primary market research, you’re including:
- One-to-one interviews
- Product trials
- Focus groups
Don’t forget that there are more modern ways to gather quick-fire information like Twitter and Instagram polls or trialling adverts on Facebook.
By conducting primary research using unbiased panellists, entrepreneurs can gain the latest information about the consumer’s wants and needs, allowing them to adapt their product or service accordingly and gain a competitive advantage.
Objective market research has many benefits for start-ups and entrepreneurs. The key ones are unbiased views, reliable data, valid results and factual figures.
Start-ups have a series of barriers to overcome when seeking credit. Primary research can help remove some of these.
Once primary market research has been conducted and an idea has been modified and finalised into a business plan, an entrepreneur’s chance of securing funding will increase dramatically.
By showing an investor your primary market research findings that underpin a business plan and highlighting the potential for success, it will present as a lower risk to them.
Unbiased information obtained from primary market research can allow an entrepreneur to build a product and service which will meet client’s needs.
When a product or service can satisfy a need or a want in the target market, the business plan pitch becomes far more valid and reliable which is one factor that will attract investors time and time again.
Secondary market research will give some background into your market and the success of previous products or services as well as your target market’s previous purchasing habits. Think:
- Surveys done by other companies
- Other professional or commercial research
By conducting such research, it can give entrepreneurs an outline of where to take further research, revealing holes in current data and areas for deeper investigation.
Although it is important to know previous customer buying habits, it is also essential to know the current and near-future habits. Markets and trends move fast these days, with products and services going in and out of fashion quickly, becoming the latest trend within a matter of days and consequently becoming old news just as fast. Though primary research should be your primary objective, secondary research can give you a broader view of your target customer base or industry.
How much does market research cost?
It varies and you can influence the final cost of the market research you do.
You can opt to have an external firm do your market research for you, but you’ve got to allow a longer time than if you were doing it yourself because they could be dealing with other clients or they may just do a more thorough job. It might be worth having a marketing agency look over your survey before you send it out to make sure that its wording is unbiased and meets the legal requirements that it has to.
According to ExpertMarket.co.uk, you’re looking at:
- Between £750 and £1,000 for a professional survey, depending on the number of participants
- Focus groups of between £500 and £700 for a 60-90-minute session
- Telephone interviews will cost around £35 each
- Face-to-face interviews are around £1,500 for a day on the field
If you do decide on an agency, have a gander over their previous work to see if they are suitable and, if they are, make sure you give them a brief with clear deadlines. Marketing Donut says that your sample size should be a minimum of ten per cent of your customer base.
As stated, you will save money doing it yourself but you could face hassle and expense over how you carry out, analyse and present your research.
The time it takes to carry out your market research will depend on your sample size and what kind of market research you’re doing. It’s good to have a copy of your results and your methodology once you’re done so that people who want to know how you did your research can find out.
How often should I be doing market research?
Just because there’s a market for your product, it doesn’t mean that you can stop there. People’s opinions and attitudes are changing all of the time. Your next market research opportunity could come along when you’re developing another new product or service, when you want to improve your existing offering or you want to see how customers are responding to your existing product or service.
This will likely dictate how often you do your market research. Remember that you can also build on existing templates to do further research at a lower cost if you wish.
Liza Dziuba, CMO and co-founder of Flawless App, explains how the company went about their own market research.
In the early stages, we invested around three months to learn about our potential users and market.
When we first had a start-up idea, we decided to talk to potential users. Based on our initial thoughts, we made an imaginary buyer persona, also known as an ideal customer profile.
It reflected our understanding of customers’ needs, the exact problem we would be solving and the decision-making process. We started talking to various developers, designers, and product managers from the technology industry.
“When we first had a start-up idea, we decided to talk to potential users”
First of all, we made a list of questions for our target audience and sent as a simple survey using Google Forms and Typeform.
Whenever we had a chance, we attended industry events and talked to people. We analysed public feedback of our competitors and asked questions at relevant online communities such as Slack groups, sub-reddits and industry forums. Those comprehensive research techniques helped us to understand our potential customers’ needs. At that point, we were able to outline the product plan with key features.
Understanding potential users is not enough for moving forward with the business idea – you must know your competition.
It’s critical to learn the competitor landscape and main industry players, their pricing and marketing tactics.
We learned about some of them from users we talked to. We carefully gathered and analysed all the information available online: websites, blogs, press releases, social media accounts, press interviews, marketing campaigns and website traffic. We also tested competitors’ products to understand their strengths and weaknesses.
Reading industry reports was an additional part of our market research. It revealed the market size, the overall number of users and amount of money they spend on competitors’ products.
The research helped us to define our unique selling point, and how we could differentiate from competitors.
Research is not as easy as it seems – it takes lots of time and effort to gather all bits of information and usually requires interviewing skills. Entrepreneurs usually fall into trap of their own biases by ignoring customer needs and market analysis.
Market research beneficial, says consultant
Asking customers what they want from a business can be ‘very beneficial’ for entrepreneurs who would like to improve their firm’s performance.
Simon Lidington, chief exchanger of independent consultants’ association the Insight Exchange, said that effective market research can be ‘indispensable’ to companies.
He explained: ‘If you want to know how to improve the saleability of your product or service, or how to improve customer satisfaction or experience, the best people to ask are consumers and customers’.
Lidlington, who was also vice-president of consulting association the Market Research Society (MRS), said that small businesses can learn from larger firms, many of whom have a devoted research department.
Ideas from customers can also lead to innovation and insight, he added.