- The purpose of market research
- What does market analysis include?
- How to successfully conduct market research for startups
Are you thinking about launching a startup? Before you dive in, take some time to think about the market you are going to enter. Strengthen or refute your hypothesis about potential customers with the help of qualitative market research. Here is everything you need to know about how it works.
The purpose of market research
Launching a startup without market analysis is like moving in the dark without a flashlight. It is impossible to predict where you will encounter an obstacle, and when you will see the light at the end of the tunnel. The purpose of market research is to illuminate your path, point out pitfalls, and remove obstacles in advance. A complete market analysis provides valuable insights that can make your startup competitive.
What does market analysis include?
A startup market analysis is a comprehensive overview of your target market that gives you the big picture and full potential.
Startups start with an idea, and market analysis begins with an analysis of the industry involved. This is a logical move from general knowledge to more specific details. At this stage, it is necessary to highlight and analyze current trends that dominate the industry, highlight the most influential companies, compare the current situation with the previous period and listen to expert assumptions about how the industry will develop and what trends will shape it in the future.
As soon as you have the market specifics of the industry, it’s possible to segment the market to analyze each part individually. This includes geographic segmentation as well as a breakdown by potential user groups. This research makes it possible to make assumptions about the needs of users that your startup can meet.
Perhaps this is all you need to know about the needs of the market at this stage, but keep in mind that 42% of startups fail because the market does not need their ideas and offerings. If at this stage, the value of a startup doesn’t coincide with market needs, then it doesn’t make sense to continue moving in this direction. Early failure, which saves development and launch costs, is another goal of comprehensive market analysis.
Your competitors can help you even if they don’t want to analyze their activities, highlight their strengths and weaknesses, and integrate those insights into what you already know about the market. This will let you create unique value and relevant offerings by finding a way to solve the problem of the user better, faster, more economically, and more effectively than others do.
How to successfully conduct market research for startups
There is only one way to do market research before starting a business. Hire a team that is familiar with the marketplace and is able to identify upcoming trends, and use the insights you gain to develop a dynamic business strategy.
Are there any secret market research tips?
You don’t need secret tips. There is clear logic you can employ using analytics. Below are the steps that can bring clarity to the market research process and help you get meaningful results.
Outline objectives and make them clear
Before starting market research, make a list of questions that you need to find answers to. These questions should be as precise as possible and not leave room for interpretation.
- Not the right approach: What are competitors doing? The question is too broad.
- The right approach: What are the five key strengths and weaknesses of each competitor?
The more specific the question, the more precise the answer will be.
Move from general to particular
The laws of logic ideally govern market research. Moving from general to specific details helps us draw a comprehensive picture and answer particular questions.
1. Have a clear vision of a problem you are going to solve
The problem that you want to solve and the solution that you propose, are key to finding and analyzing competitors’ strategies and developing the unique value you can add to the marketplace with your product.
2. Define your target customers
Once you have a portrait of your target customers, this will allow you to do more thorough segmentation and develop a unique value for each segment.
3. Look at industry trends
Current and previous trends in your industry can give you many useful insights on what to offer users and how to reach them in the best manner.
4. Evaluate the real market need
At this stage of the market analysis, it is possible to make assumptions about the needs of the market, taking into account a combination of factors. Real data on what the market needs at the moment can be obtained through comprehensive sociological research such as focus groups.
5. Analyze your competitors
As we noted, competitors can be useful. The gaps in their product offerings can inform what you need to develop and how to make the product better.
Find out what the main risks are
The most obvious way to identify risks is to use SWOT analysis, which stands for strengths, weaknesses, opportunities, and threats. Pay special attention to the last section - Threats. As for risk assessment in market research, you need to ask, “What happens if ...” type questions and look for the answers in market realities.
Try to make forecasts
Risk assessment is a prediction since a risky event may or may not occur. However, after the market is analyzed, it becomes possible to make more certain predictions about it. Use these predictions as support for your strategies, including backup ones.
Share research results with the team
After the market research is carried out, it is necessary to share the results with your team and brainstorm ideas on how to implement ideas generated.
Outsource this task to a reliable vendor
Market research should be objective. However, it’s sometimes difficult for a startup founder to maintain objectivity; the desire for everything to turn out in favor of their business can be too strong. That is why it is always a good call to entrust analysis and market research to an objective party and get results that reflect reality.
Market research and analysis reduce risks, increase awareness, and make it possible to find new, effective ways to solve users' problems. Although this is not a magic pill for all issues, it increases your chances of creating a really sought-after and useful product.
Get in touch with us at firstname.lastname@example.org to find out more about market research and discuss the idea of yours!