How to Do Market Research for a Startup Business

Are you thinking of starting a business in a crowded niche? Do you have the necessary cash flow to sustain your startup until you gain a foothold? 

Your first step should be to conduct thorough market research. Every business model always has a flaw. Just ask the creators of Netflix how they were able to create an innovative business model that ran Blockbuster Inc. out of business. 

So, where do you begin when doing market research for a startup business? In this article, we explore the definition of market research and the different types of research methods startups can use before launching their business. 

What is market research?

It’s the practice of acquiring information about competitors, customers and any other existing factor that will influence your business. 

Doing this research helps businesses create viable products and services that fulfill a customer’s needs. It looks into market dynamics, assessing existing offerings and reducing the risk of delivering products that no one wants to use.

Market research will help you predict when you’ll be able to scale your business, whether you’ll need to onboard new employees, what social media platforms to focus on, and more.

Steps to conducting market research for a startup business

Market research is a time-consuming task. As a startup owner, you’ll already know that time is a scarce commodity. However, if you don’t take time out in the beginning to ‘do your homework’, you’ll pay the price further down the road. Lack of planning can ultimately scupper your enterprise. 

You can succeed in market research without wasting too much valuable time - follow these steps:

Step 1: Determine the goal of your market research

Always set goals before you prepare yourself to put in the effort required. Answer these questions before you start:

• How will you conduct your research? Online analysis? Surveys?
• What issues do you hope to resolve through your research? 
• How will you use the information you acquire? 

Once these questions have answers, market research becomes more direct and credible.

Step 2: Conduct thorough research of your target market

After you figure out your reasons for conducting market research, the next step is to understand your target market.

To get the necessary knowledge about your target market, here’s what you can do: 

• Consult industry experts
• Читайте соответствующие рыночные отчеты
• Analyze market trends 

Step 3: Use the right tools and software

Data collection is one thing, but reliable data analysis is quite another. 

The precision achieved in the latter phase is critical to the success of your market research. Data processing is a time-consuming task that demands constant attention.

There are plenty of affordable tools and software to choose from. You can invest in market exploration tools, data analytics tools, and reporting tools to aid in this step of your study. 

Once you find the right tool, all you have to do is make an informed decision. By providing specific, trusted solutions to your different needs, you improve your chances of success. 

Different types of market research

Market research is one of the few practical ways startup businesses can gain an edge on established competitors. It helps you understand what works for them and capitalize on their shortcomings. 

Knowing the various methods of market research is essential if you want to get your startup on the right foot. 

The two most frequent types of market research that startups can conduct are the following:

1. Primary research

This is the most common research method startups use. It is carried out either by the company or by contracting experts. Moreover, it entails approaching the data source directly to gather essential information. 

Primary market research is best suited for startups that want to know the following:

• What is the customers’ average rate for spending on a certain commodity?
• Do they have a particular service or product they wish was available?
• What are their views in terms of service development?

Apart from these questions, you can also identify direct competitors; the latest trends among other small businesses to gather accurate consumer insights.

Most startup owners gain insights for their new business through the following:

• Survey data collection
• Online communities related to their target market
• One-on-one interviews of potential customers

2. Secondary research

This form of research involves quantitative analysis of different data. It looks at trend reports, sales data, and market statistics. Using this data can help you create a buyer persona that will represent what your ideal customer looks like. Are they athletes who just entered college? Or are they parents who just welcomed their first child? Having this information will give you a solid foundation on how to build your brand for future marketing campaigns. 

Opting for secondary research also has its fair share of pros and cons.

Pros

• Cost-effective
• Provides required data
• Covers more fields and allows large-scale research, resulting in more thorough research

Cons

• Difficulty obtaining specific information
• Custom fields or research on a specific domain are not available

Different methods to conduct market research

You can further improve your market research approach based on how you collect data. Here are some of the methods you should consider: 

1. Survey

This method is a way of acquiring data by asking the target audience a series of questions. Surveys are the most versatile and widely used method when conducting market research for a startup business because they can help your business collect valuable information that can help streamline your business operations. 

2. Interview

This type of market research is more personal; it allows for more in-depth investigation and lengthy dialogue between you and your customers.

3. Focus group

A focus group is a group of people who meet in a room to discuss a specific topic. It involves an organizer who keeps track of the conversations using a checklist of questions to generate useful insights. 

4. Social listening 

There’s a vast amount of information available on social media. Social listening can be a very useful strategy when doing market research for a startup business. The information you acquire will help you analyze genuine conversations relevant to your business. 

Conclusion 

In every step of market research for a startup business, you can always simplify different processes to make it easier to comprehend. 

However, because every company has different needs, any market research guide can only be a starting point.

Learning how to conduct market research for a startup is just the beginning of how you can create a solid business plan that will impress investors and propel your company to success.