Estimated reading time: 8 mins
If you’re thinking of launching a business, or perhaps a new product within your existing business, market research is one of the wisest investments you can make.
At its core, market research is about proving your hypothesis, in the sense that you think you have come up with a great idea that will meet market needs and sell really well – yet, these are all assumptions, and the process of market research validates these assumptions or reshapes your assumptions to be more aligned with what the market really wants.
You can approach this so many ways, and each method will probably give you a different answer! There are some tried and tested methods you can use, but it starts with understanding the many options: What are surveys? How do you perform focus groups? What is Conjoint Analysis? How do you get your head around competitive analysis?
Now, many an entrepreneur will be so attached to their idea that they don’t want to receive “real” feedback, instead, they want to only listen to the positive feedback that proves their idea will be a success – yet, this is where fragile egos can really harm entrepreneurs, as it’s only through receiving unbiased and balanced feedback that they can shape their products to the needs of the real world.
After all, whilst it might feel nice, emotionally, to create a product on the basis of their assumptions, thinking it will fly off the shelves like hotcakes – it can be a very upsetting reality, if their idea doesn’t turn out to be a success, and in hindsight they could have avoided all this loss in terms of energy, effort and financial investment.
In this article, we’re therefore going to take a quick look at how to undertake market research prior to launching a new business or product, and then how to successfully use that insight to market a new business, product or service.
STEP ONE: TREND SPOTTING
The first step in the market research process tends to be desk-based, in that it involves reading up on market trends, industry reports, and so on. There are resources such as bis lexisnexis or Mintel that can prove hugely valuable in this initial phase, though sometimes, the best way to spot trends is to attend a trade show and see what innovations are being touted, and also, what are the key topics of interest within the industry.
In this sense, you are gauging where the market is heading. In an ideal world, you want to do this prior to coming up with any concepts, as otherwise, you might feel tempted to distort and filter what you see so that it supports your idea. Therefore, going into this process with “fresh eyes” that allow you to see things holistically and neutrally tends to be a lot more helpful than when, in the back of your mind, you are attached to a concept that you are looking to prove.
In a nutshell, the market research should come first – prior to you having an idea, as your idea should be as a result of carrying out research rather than carrying out research in order to justify your idea.
STEP TWO: COMPARE
The next step is to look at the market, in terms of competitors. Let’s say that you are starting up a business selling nut milk, for instance – you perhaps went to a food and drink expo where there was a huge focus on dairy free alternatives, and vegan substitutes… so, you came up with the idea of selling milk made from nuts.
The next step would be to either get online, or go to a variety of supermarkets, to see what the competition were doing in this space. From this, you would gauge a rough idea of what the “going rate” for nut based milk was, how it was marketed, and even the ingredients required to make the milk.
This step of comparing what others are doing, is perhaps the most valuable in your development process, as it can provide you with so much information around so many aspects of the product – from how it’s made, to how it’s marketed, to how much it is sold for, and what type of retailers seem interested.
STEP THREE: SPOT THE GAP
The next step, having thoroughly researched the market in terms of competitor analysis is to spot the gap in the market. Have a think about where there’s a gap in the market, in terms of what needs are not currently being met… for instance, if all the nut milk on the shelves is plain and simple – you might see there’s a gap in the market for tasty milkshakes that are lactose free.
STEP FOUR: VALIDATE YOUR IDEA
You’ve now come up with an idea, that might have wings, but before you do anything further – you need to validate your assumptions that what you are thinking about is a “good idea” that people would buy. This is where consumer testing, focus groups, and the more conventional idea of what market research is comes into play.
In this sense, you can ask people to fill in questionnaires, do taste testing, perhaps produce a sample of the packaging you might use. The key point with this phase is to elicit valuable information from your target market and then use this feedback to shape your offering.
STEP FIVE: LISTEN
Of course, it’s not always nice to receive negative feedback, but it’s really important to listen to it – as there’s a lot of wealth in the negative information. If people are just positive, it might feel nice in terms of your ego, but it’s actually the negative comments that you want to be listening to the most – as these are what are going to help you shape your idea into a winning business or product proposition.
Therefore, ask open questions, create a safe environment that encourages the person to share negative feedback and actively listen to what they say.
STEP SIX: SHAPE YOUR OFFERING
From here, you now have some consumer insight that can help shape your product or business idea.
The challenge is it can be very easy to conduct market research and only hear what you want to hear or dismiss relevant feedback because it’s not aligned with what YOU want your product or service to be – yet if you go against the grain of market research and insist that you know better than your target audience, it is a recipe for very swift failure.
As previously mentioned, you want to be creating your product or business proposition in response to market research, rather than utilising the market research process as an opportunity to validate the fact you have come up with a great idea.
If you had an idea for flavoured nut milk, and nobody was into it, then you need to find a different angle – or perhaps a completely different idea. If the feedback was that people liked the health benefits of nut milk, but didn’t appreciate the taste, then you could consider small shots of concentrated, nutrient rich, nut milk to provide essential fatty acids in a convenient shot format.
The point is, your market research should be used to shape what it is you offer – and this is the entire point of the process. Some people feel that if their market research suggests their initial idea wasn’t very good, they have failed, yet this isn’t the case.
The market research is not there to validate your idea – it’s there to shape it and transform it into something amazing.
STEP SEVEN: REACH OUT TO YOUR MARKET
Now that you have an understanding of who your market are, what they want, and have come up with a solution that meets their needs… the final step is to reach out to your market and start selling.
It can be helpful to aim to target a specific slice of the market or focus on solving a specific challenge — this way, rather than being a generic jack of all trades you are positioning yourself or your product as a category leader; even if you have to create a new category in order to be seen as the leader.
This way, you are going to more relevant to a specific group of people that are facing a particular challenge or are looking for a particular solution. In this sense, it’s often said that it is more profitable to be a big fish in a small pond than a small fish in a large pond. The reason for this is that you are going to be more noticeable as a big fish in a small pond.
Let’s take an obscure example of soy sauce, for instance. You could go down the route of coming up with a range of chinese cooking sauces (which means you are competing with many other manufacturers that have much deeper pockets in terms of advertising budget) or, you could focus on one specific aspect, such as soy sauce, and create the most healthy or tasty soy sauce on the market.
This way, rather than spreading yourself out with “chinese cooking sauces” you can have more of a laser focus, in terms of being known as the new kid on the block within soy sauce, as an artisanal producer that is extremely high quality (and high profit margin).
Therefore, when it comes to marketing your product, focus on one particular group of people, one particular product category, or one particular problem — as this way you will gain recognition much faster, and at a much cheaper price, particularly when it comes to advertising online via facebook, amazon ads or PPC marketing.