I got many requests to write on “How to Conduct a Market research and a survey for a Startup”. However, I am not going to dwell on the basics of Market research, but will be writing some of the essential activities that need to be done to be able to conduct successful research and help you to take an intelligent decision for your business.
No Matter how good your idea is, it should be sellable, it should have the potential to solve the problem of the people, it should have a market. Before you put money on your idea, it is essential to conduct market research to find out whether there will be enough demand for the products or services you plan to provide once you commence your business.
The more research you do, the more you will be in a better position to make the right future business decisions. So before you convert your idea into a business, answer the following questions-
- What problem are you solving?
- Who will buy your product and services?
- Is there a good market for your business idea?
- How much demand will there be for your product and services?
- Who will you be competing against and how is there market positioning, strength and weakness.
- Are there any potential business partners you could collaborate with?
The research you do to find out the answer of the above questions will tell a lot about the potential of your business idea.
Now here, the questions arise how you will find out the answer to the above questions?
This is the point where you’re actual research work starts and where most of us face the challenge.
So in this article, I am going to take the initial part of the market research you need to do to find out the answers to the above questions.
Here are the suggestions which will make your research work much easier.
Question 1 – What Problem are you solving?
How to find out? –
Your product might be solving multiple problems, and it is very much important to identify all of them and bring it on the table.
Use the following table format to list your problem statements and solutions.
Question 2. Who will buy your products and services?
Solving this problem includes in-depth Customer analysis and segmentation. This is one of the most critical sections of your research. Here, you will need to define who your target market(s) will be. The Target Market is the groupings of consumers or businesses most likely to purchase your product or service. The first group you plan to target is your Primary Target Market; the second is your Secondary Target Market.
Do this analysis for each set of problems you have analysed and solving.
Use this simple format for customer analysis –
Question 3. Is there is a good market for your business idea? and Question 4. How much demand will there be for your product and services?
Suggestion. For answering the above questions, you need to understand the concept of –
- Total Available Market
- Serviceable Available Market, and
- Serviceable obtainable market
Total Available Market (TAM) – Revenue a company would realize if it had 100 per cent share of a market it could serve while creating shareholder value.
You can calculate TAM easily by finding out the industry market value globally, and these figures can be easily found in the reports generated by big companies like Deloitte, KPMG or you can take the subscription of some data providing websites like https://www.crunchbase.com/. Though I would suggest, you go with the freely available data rather than going with the paid ones in the initial stage.
Serviceable Available Marke (SAM) – It is the portion of the market that you can acquire. For example, your product may only be available in one language, so your SAM would be the subset of the TAM that speaks the language that your product is developed for.
Service Obtainable Market (SOM) – is the subset of your SAM that you will realistically get to use your product. This is effectively your target market that you will initially try to sell to which is all depends on how much you can invest, how much money you can put in marketing and other stuff to attract the audience.
Question 5. Who will you be competing against and how is their market positioning, strength and weakness.
The purpose of the Competitive Analysis section is to thoroughly analyze the competition that will exist for your business. Part of developing a successful business involves being aware of possible competitors and their products. Competitors are any business which can sell a product/service that accomplishes a similar type of result as yours; therefore, the features and benefits of a competitor’s product can also appeal to your target market. There is ALWAYS competition!
- Who are your direct competitors (exactly what you offer)? Who are your indirect competitors (offer substitutes)?
- How long have they been in business?
- How is their business: Steady? Increasing? Decreasing?
- What have you learned from their operations? From their advertising?
- What are their strengths and weaknesses? Ensure you are being unbiased.
- Are there any opportunities and threats that your competition may present?
- How does their product or service differ from yours? What is your competitive advantage?
- List the direct competitors in your local market. These are firms who offer exactly what you offer. List the current number and the number in existence for the past three-year period.
- List the indirect competitors in your local market. These are firms who offer substitute products.
- Analyze any competitors who have gone out of business in the past and if possible, why.
- Explain how your firm will compete with these competitors to prove how you can survive in their markets.
- Examine risks that could occur when you enter the market. For example, what if your key competitor cuts their price when you open your business?
It may be easiest to compare your competition using the following chart in your marketing plan. It can simplify the data if you separate the direct and indirect competitors in your chart. You may need to research your competition by looking at their website, if one is available, by visiting their operations or speaking to customers.
Once you have completed your chart, observe and evaluate your findings.
- Who is the market leader?
- How can your business be different or better than the competition?
- What area(s) of the market are currently not being served or served poorly?
- Is there room for you in the market?
Question 6. Are there any potential business partners you could collaborate?
with? Suggestion- Healthy collaboration with some experienced/ established business is always good for the startups; it provides an add on advantage to startups to gain trust from the audience and generate more and more user base.
For collaboration, I would suggest to be more social as you can, go to events and seminars, meet business peoples, join business networking groups like TIE and BNI join professional social media channels (I think #LinkedIn is the best) and be very proactive always with your pitch and presentation.
At last, I would like to share some tips which may be helpful to you.
- Your market research will form a significant part of your business and marketing plans, so keep a record of your research to refer back to when you are reviewing or developing your plans in the future.
- Make time to do your research properly. It is one of the most important things you will ever need to do and getting the right information now will help avoid problems later.
- Don’t just carry out research before you start up and assume that is all the research you will ever need to do. Carry out research as an ongoing part of your regular business activity to ensure that you remain aware of what is happening in your sector and can retain a competitive edge.
- Be realistic with your research findings and be sensible with your assumptions and market predictions.