So you have come up with a fantastic idea for your product or service. Believing in your idea and having the drive to make it happen is super important. However, you should take an important step before you proceed further on your startup idea – market research for your startup.
According to a study by the Statistic Brain Research Institute, approximately 50% of startups fail within the first 5 years. Understanding why startups fail is actually a huge opportunity to learn and avoid those same pitfalls. Hence, we will now look at the reason why startups fail and how to do market research for a startup in India
Why do Startups Fail?
Even though there are many causes of startup failure, including inadequate funding, poor management and marketing technologies, the major reason for the failure of startups is lack of adequate market research. Sometimes a product or service may be launched on an idea where there is no market need, or the pricing of the product could be off due to the wrong understanding of the target market.
To overcome all these issues, a thorough understanding of the market, the ideal customers and the competitors need to be done through a combination of market research methods.
In the next section, we will clearly understand what market research is for startups and how market research helps businesses.
What is Market Research?
Market research is a crucial step that will assist you in better planning of your business. It all comes down to obtaining information about your customers’ opinions, purchasing patterns, and physical location. Furthermore, market research also assists you in staying on top of industry trends and what your rivals are up to.
When you perform market research, you will have answers to the following questions.
a) What is the size and revenue of the industry in which you will launch your business or startup?
b) What are the current products and services offered in your industry?
c) Who are your potential customers and what are their pain points?
d) Who are your competitors and target customers?
e) What are the prices that potential customers are willing to pay?
g) What are the market conditions and demographics for your offering?
Armed with these data collected, you will be able to make informed decisions and launch a successful business off the ground.
TIP:
Remember – Market Research has the potential to make or break your startup business. Because only with proper market analysis you will be able to better understand your customers and market conditions
Now we will understand the different types of market research methods for your business strategy.
What are the Different Types of Market Research Methods?
To gather comprehensive information, startups should use a variety of research methods, including both primary and secondary research.
Primary Research
Getting information directly from the customers or target market is primary research. Through this method, you can get in touch with potential customers through a variety of ways like survey platforms, interviews, focus groups, feedback and more.
Secondary Research
Secondary market research essentially means data collected by other industry experts or associations. Sources you can use to collect data for secondary research include census, business journals, company websites, published online information and research reports. We then make use of this data to gain deeper insights into the market.
Each method above provides different types of data, which can be used to validate findings and gain a deeper understanding of the business’s market.
8 Steps to Conducting a Market Research for a Startup
Determine the Goal of Your Market Research
There are different goals or purposes of doing market research. First, identify the goal of your market research – which could be internal or external.
Internal goals could be improvements in cash flow and lead generation for an existing business whereas external goals could be getting funding or approvals for starting a new business.
Depending on whether your goal is internal or external, the market research will usually proceed to include the following steps.
- Learning about your competition
- Understanding your existing customers
- Identifying new potential customers
- Improving your products or services
- Understanding different pricing strategies in the market
- Refining your brand positioning and marketing
Understand Your Target Market or Industry
One of the main reasons to conduct market research is understanding the market or industry in which you are going to launch your product or service. Using secondary research, you can get a good understanding of your market size, revenue , growth percentage and other factors.
This understanding of the industry helps you gain a better idea of how much you could scale your business, investments required to beat your competitors as well as to identify any gaps or opportunities to refine your product offerings in the market.
Analyse Competitors and Their Product or Service
The next steps to understand your target market is to do competitor analysis for your business or startup. First identify the competitors in your space that offer similar products or services and do a detailed study of their online and offline strategies. Understanding their target market and how they market their products or services can also give you good insights about their business strategy and help you tailor a unique strategy for your business.
Related: 8 Proven Ways to How Benchmarking helps a Business
Understand your Target Audience Better
The next step is to create an ideal persona of your customer which includes the demographics, interests and pain points of your target audience. A good understanding of your target audience helps you structure your pricing strategies, marketing and sales and brand values accurately.
An ideal customer persona must include the following information
Name:
Age:
Demographics:
Interests:
Pain Points:
Qualifications:
Goals:
Needs:
Identify the Unique Selling Proposition of Your Idea
Your USP (Unique Selling Proposition) is the unique thing that you can offer that your competitors can’t. It’s your “Competitive Edge.” It’s the reason why customers buy from you, and your business succeeds.
For a small business or startup, the USP is the main thing that helps it succeed. Once you understand from the previous steps, what your competitors provide, and what your target audience needs, you can automatically find the gaps in your industry and tweak your product to create an USP.
The key is to take what you’ve learned and use it to create an USP that sets you apart. It could be a unique feature, an unbeatable price, exceptional customer service, or a combination of things. The point is, it should be something that makes you the obvious choice for your target customers.
Create a Business Plan for Your New Business
Although not always necessary, creating a business plan based on your market research is key to a successful startup. The idea is to have a solid roadmap to guide you as you turn your dream into a reality.
An ideal business plan should contain the following information:
- Executive Summary
- Company Description
- Market Analysis
- Products or Services Offered
- Competitor Analysis
- SWOT Analysis
- Marketing and Sales Strategy
A detailed business plan will guide your operations as you get started and give clarity on the goals that your business wants to achieve.
Prepare a SWOT Analysis Chart
SWOT stands for strengths, weaknesses, opportunities and threats and SWOT analysis is used to evaluate a company’s competitive position and to develop strategies for planning the business. Every SWOT analysis chart will contain these 4 categories.
Strengths – Strengths describe what an organisation excels at and what separates it from the competition.
Weaknesses – Areas where the business needs to improve
Opportunities– External factors that could give the business a competitive advantage
Threats – External factors that could harm the organisation.
Armed with a SWOT analysis, the business can easily identify opportunities that can enhance it and make complex problems more manageable.
Identify Marketing Channels for Your Small Business
The last but not the least step is identifying marketing channels for your startup. Once you have acquired all the necessary information by thorough market research, narrowing down on the sales and marketing channels is a no-brainer.
It is all about getting the right message in front of the right people at the right time.
So, how do you choose the best channels? Well, it all goes back to what you’ve learned about your ideal customers. Where do they hang out online? What kind of content do they consume? What influences their buying decisions? Answering these questions will give you a good idea of where to focus your marketing efforts.
For example, if your target audience is all about social media, then platforms like Facebook, Instagram, and TikTok might be your best bet. You could create engaging posts, run targeted ads, and even partner with influencers to get your brand in front of the right people.
On the other hand, if your ideal customers are more likely to respond to email marketing, then building a solid email list and crafting compelling newsletters could be the way to go. You could offer valuable content, exclusive deals, and personalised recommendations to keep them engaged and coming back for more.
The key is to choose marketing channels that align with your target audience’s preferences and behaviours. By showing up where they already are and providing value, you’ll be able to build trust, generate buzz, and ultimately drive sales.
Also Read: Brand Development Strategies in Marketing
Have You Done Market Research For Your Startup?
It is advisable to do market research first before spending a considerable amount of time and money in your business.
The first major advantage of conducting market research is improving your risk management strategy. Doing research helps you understand patterns of consumer behaviour so you can calculate the likelihood of your products and services succeeding with your target market.
Understanding how your key customers are likely to engage with new products and services also allows you to make effective decisions about future investments.
Because there is very little time for mistakes in highly dynamic industries, businesses must respond quickly and creatively.
Many business owners have approached us with their ideas and asked for our assistance in turning their business ideas to reality.
Do you have a business idea or a passion which you would like to turn into reality?
Attend this upcoming webinar to know more.
