Do I really need to spend hours and hours of research? Yup! you do! One of the biggest and most expensive mistakes entrepreneurs can make is doing little or no homework.
How to conduct market research for a new business? This blog provides you guidance and free templates to perform market research, to understand your audience, competition, and business opportunities.
Conducting market research is a critical step in developing any new venture or product. It helps make data-driven decisions and support assumptions with analysis. What does market research entails, why is it key for entrepreneurs, and how to get it done with limited resources?
What is Market Research?
Market research is the process of gathering data about the market you plan on operating in, the industry you are part of, your target market and potential customers, and competitors currently in operations.
To conduct market research for a new business, start by defining purpose. The purpose of the research is to firm up or negate your assumptions and ultimately will help you determine if there is an appetite for your product, how to be competitive and how to find your niche.
How to Conduct Market Research for New Business
First, define your scope, objectives and timelines for the market research. Answer few questions, for example:
What is the market and industry I need to focus on? what are the current versus expected trends?
How can I learn about my competitors, and their pain point?
What specific data points and information do I need to find my niche?
What else do I need to make informed business decisions?
How can I access free already existing research reports and material?
For example, if your goal is to understand consumer demand for a new application, your research objectives may be to assess interest levels, ideal features, and potential pricing models. That may include insights into demographics / preferences for various customer segments, information about competitors and their strategies and overall analysis of this particular market, trends and challenges.
Your Target Market
One of the top reasons of startup failure relates to product market fit, i.e. not having identified the appropriate market that will need your product or service, or if your product will be needed at all.
Hence the need for an integral customer research, to narrowly define the target segments you want to reach with your business. Define your ideal customer profile or Buyer Persona and research basic demographic, geographic, psychographic, and behavioral data related to the Persona.
The more precisely you can define your target, the better your business will resonate with your expected customers’ needs and interests.
For example, let's assume you are building an app to help busy students tackle their homework, while working. Your target market research would then focus on the university student population within your selected geography, holding a part time job, and who values efficiency and convenience.
Use Already Existing Free Data
Search for relevant free macro-economic and industry reports, academic studies, news articles, and other existing softwares and tools. Analyze competitors through product reviews, market share data, and brand messaging.
Try publications, the likes of the World Bank, Standard & Poors, IMF Publications for high level market and industry insights, views and data points from the top.
Try Answer the Public and Google Trends if you want to get a sense of the level of interest in a particular product or service — as well as how that interest fluctuates. All you need to do is enter a search query.
Another great way to conduct market research is to ask potential customers open-ended questions that you can learn from. You can do this for free with SurveyMonkey.
Also, you can try the Pew Research Center, a nonprofit dedicated to informing the public about attitudes and trends.
Analyze and Interpret the Results
Once your research is gathered, analyze data points and identify patterns, trends and actionable insights. Compile findings in a way that contrasts and compares relevant data points.
Be sure to benchmark competitors – Assess how your business can improve upon already existing competitor solutions.
Solid analysis unlocks entrepreneur potential; transforms simple data points into powerfully insightful market intelligence.
Refine Your Business Assumptions
With your research findings in hand, refine and validate your assumptions and be sure to identify how you will provide superior value to your customers vis a vis current market place.
Synthesize your findings to inform your business strategy.
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