Always Research your Idea First
Before you get excited about a business idea, you have to ask the market first. Making assumptions about what potential customers want is a dangerous game so it is important to drill down into the market and hear straight from the customers what their interests and needs are.
Apart from new start-ups, there are also many examples out there of businesses, which did not respond quickly to what was going on in their market. They did not listen to what their customers wanted and didn’t respond fast enough to competitor activity and to external market forces. They just continued producing what they wanted to produce because it was economically viable for them to do so. Not a good way to sustain a business for the long term.
This is where Market Research comes in. When you start out in business how can you convince a Bank that there is a market for what you want to do when you have no research evidence to support it? This logic also applies to companies, which are established and want to introduce a new product/service. The following is the jargon on Market Research, which I want to demystify for you because it is actually quite simple.
You need a Market Research Plan, which needs to define the market opportunities and research objectives. For example, the market opportunities centred on the demand for your product/service and your research objectives are to prove this demand exists and gather as much information as possible on your target market to support your findings. Next, you have to decide what market information you need and how you are going to get this information. You need to look at your competitors, previous buying trends and what is happening in the present with regard to customer preferences. You also need to be able to anticipate the future needs of your customers, which is the hardest part of the research, because it is always difficult to predict trends.
Next, you will need to gather Primary Data. This is new information, which could be obtained directly from the target market through Focus Groups (8-10 people), Personal Interviews, and Telephone or Postal surveys. Finally, you need to look at all the Secondary Data available (research reports, Internet, newspapers). This information is readily available and you can access it easily to help you understand your external market environment
Places to look for Secondary Data include the Central Statistics Office, Business and Trade Publications, Government Departments, State Agencies (Local Enterprise Boards), Local Authorities, Published Annual Reports from competitors, Internet User Groups & Special Interest Groups and Competitor Websites.
There are two types of information, which you need to gather. One is called Quantitative Data, which refers to how many customers you will have, how much money these customers are likely to spend and where they are currently spending their money. It is important to get a figure for the target market’s overall spending on your service/product. This will provide raw data for the Bank, which the Bank likes because they base their decision on potential market value. The second type of information is called Qualitative Data, which looks at attitudes and opinions and explains why individuals prefer one shop to another or one product over another
Regarding the Primary Data, Focus Groups are great. In addition, you can do a direct email questionnaire to the target on the free internet survey from www.surveymonkey.com. The more raw data from the target market, the better the research will be. You can also draw up a list of friends and family and their friends and family and carry out a telephone survey, which would also be part of the research findings.
You need to also set up an administrative process to capture all the primary and secondary data in a meaningful way. The more you capture, they more you will be able to see trends emerging, not just in terms of what the target market wants, but what they really need.
Undertaking this valuable research will help you to understand your target market of potential customers and you will be surprised by what you will learn from the market research. As stated previously, market research is not just something you do when you are starting a business; it needs to be an integral, ongoing part of a Business Development Strategy. You need to do this all the time before you spend time and money developing a new product or service. For more information on starting a new business, check out my marketing book The Cheese Mall that will help you hit the ground running in your first year with lots of helpful and practical tips.
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