Market Research is about making informed decisions and about market, customers, niches insights. Market Research primary goals are:
Close the gaps in your knowledge about the market, customers, and their needs.
Measure the size of the market for your product & services and identify a niche.
Identify the products that customers are interested.
Check the pricing they are prepared to pay.
All these information points are important to all business sizes. They are particularly important for startups. The more information you have the better. Your gut and your energy are great. They will get you far. But adding a bit of a rational component to them, supporting your business idea with hard facts will further improve your chances.
Startups are more dependent on the information about the market because:
You have a new product or service that nobody heard about.
You might be entering the category that is already crowded and over-saturated. In this case you need to find a point of differentiation. You need to understand if your business will survive the competition.
You have little cash and need the first few customers quickly: Market Research can help identify who is your primary target, who they are, where to find them.
Knowing your target customer, it is easier to know where to advertise to reach many of them. This improves your marketing dollars efficiency, in other words ROI.
You need to prove to lenders your idea of a product or service will sell. Checking the interest for your product or service with Marketing Research and coming to your lenders with hard facts will improve your chances of getting a loan.
You have a product but might be unsure how best to position it. What will your customers value the most about it? What will interest them most? Market Research can help finetune your product’s key benefit and the main statement for your product in your ads. This will make sure the message in your ads resonates the most with consumers.
Market Research can help correctly price your product, increasing the gross margin. Knowing the number of people who are likely to buy your product at different prices will help you find the price elasticity for it and find that perfect price that will bring you the most profit.
You may have a few product concepts but are not sure which one will generate the most interest. Again, putting these concepts in front of your potential customers can help pick a winner.
You may have a complex product that is hard to use. Try explaining it to the customers and see if they understand its mechanics.
These and many more questions can be answered in Market Research to help startup survive its first few months and start generating positive cash flow. More importantly, it can save you from losing your money by jumping into a territory that does not have any customers. In the end, Market Research can cost you a fraction of what you may lose from a failing startup. There are many Market Research options out there that cost next to nothing.
Some of them you have probably used not realizing they are Market Research:
Reading blogs, consumer reviews, checking for similar products and services online.
Industry reviews, data trends.
Personal interviews: did you talk to your friends and family about your idea. Well, these are personal interviews. If you interviewed random people about your product even better. Make sure our interviews are as representative of the market as possible.
Focus groups: ask a few potential customers for half hour of their time. Get them in a group and ask their opinion about your product.
Draft a quick questionnaire, post it on https://surveys.google.com or www.surveymonkey.com. Get at least 50 respondents and analyze the data. Depending on the length of your questionnaire, your country, and the target of your survey (who you want to interview) the price ranges from just from around $2 to $10. So, the cost of your Market Research may be as low as $100 and as high as $1,000.
If you don’t know much about Market Research and don’t know where to start, consider hiring an expert. Somebody who knows how to transform your business challenges into survey questions how to best form questions, how to post them on sample panels, extract the data and analyze it.