How to Do Market Research for a Business Idea – Have you ever wondered how to do research for a business idea? Would you like to understand what other businesses are doing so you can know if your idea is already out there? If so, you need to do market research. This article will take 5 minutes of your time to read and it will give you actionable information that helps you do marketing research for your business idea. Here’s the video I mentioned in this post:
Marketing research is the use of surveys, polls, interviews, and other systems for gathering consumer data, which you can then use to figure out what advertising messages appeal to the most people. In this article, we’ll cover how to do market research for a business idea by giving you a step-by-step process you can follow when conducting your own marketing research.
Table of Contents
How to do market research
1. Read about the market.
There are market reports for most industries. Even if your idea seems unique, such as a new type of toy, you can find information about different aspects of the toy market, including pricing and what toys are selling well. Reading these reports and those in trade journals can show you current and predicted trends, which gives you a better idea of how your product or service might perform.
2. Perform customer research.
You’ll want to know a lot about the type of people who may be your future customers. This includes information about who they are, such as their age, education level, location and occupation. You’ll need to review their current buying habits and whether they’re willing to pay more for quality or they’re adhering to a budget and using coupons while focusing on cost.
Much of this demographic information is available on the U.S. Small Business Administration’s website. You can use this data to determine which groups are more likely to purchase from you than others — and if there are other groups you want to target and sell to.
You’ll also need to analyze information to determine why your target group would buy your product instead of something from another company. Start by finding out who the customers are for similar products or services, based on market reports.
3. Interview potential customers.
Once you find these potential customers, you’ll want to ask about their needs and what they want in a product or service. You can do this with an online poll or survey on social media. Sending out a survey link to online groups where these potential customers spend time is a good option.
For example, if your target customers are mothers of young children, put the link on a social media platform where these women share tips, or ask a few specific women to share the link with others who meet that description.
Reaching out to potential customers is essential for understanding if or how your product will be relevant in market. Some key answers you can gain from this include:
- What products or services already exist?
- How much are customers willing to pay?
- How can products or services be better?
4. Understand the competition.
Learn about other companies in the same or a similar industry. By comparing companies that have similar products, you can better understand the business landscape and learn how they’ve succeeded. This can also help you determine your chances of success. Company size doesn’t necessarily matter here. You can research established firms of a similar size or start-ups, be they private or publicly traded.
Speaking with potential customers can also clarify what they currently like about the competition and areas where they feel their needs aren’t being met. Reading online reviews, talking with customers in person or online, and conducting surveys are all useful ways to obtain this information.
5. Testing the business idea
The last step is testing your business idea. You could offer a business service to a few customers to get their opinion and see how it works in real life. If you’re making a product, create a prototype and let others use it to get their feedback on whether it’s useful, if it fits a need and how much they would pay for it. You can modify your business idea based on what you learn.
Launching a small business can be challenging, even with a great idea. Find more tips on how to successfully start your business, and consider how you plan to protect your company from potential damages. With small business insurance, you can have the peace of mind that you’re covered if the unexpected happens.
Why is market research so valuable?
Without research, it’s impossible to understand your users. Sure, you might have a general idea of who they are and what they need, but you have to dig deep if you want to win their loyalty.
Here’s why research matters…
- Obsessing over your users is the only way to win. If you don’t care deeply about , you’ll lose potential customers to someone who does.
“Whoever gets closer to the customer wins.”
Bernadette JiwaFounder, The Right Company
- Analytics gives you the ’what,’ but research gives the ‘why.’
Big data, user analytics, and dashboards can tell you what people do at scale, but only research can tell you what they’re thinking and why they do what they do. For example, analytics can tell you that customers leave when they reach your pricing page, but only research can explain why.
- Research beats assumptions, trends, and so-called best practices. Have you ever watched your colleagues rally behind a terrible decision? Bad ideas are often the result of guesswork, emotional reasoning, death by best practices, and defaulting to the Highest Paid Person’s Opinion (HiPPO). By listening to your users and, focusing on their customer experience you’re less likely to get pulled in the wrong direction.
- Research keeps you from planning in a vacuum. Your team might be amazing, but you and your colleagues simply can’t experience your product the way your customers do. Customers might use your product in a way that surprises you, and features that seem obvious to you might confuse them. Over-planning and refusing to test your assumptions is a waste of time, money, and effort because you will likely need to make changes once your untested plan gets put into practice.
Best low-investment business ideas you can start on the side
Partner with a dropshipper
Buy stock, store it, pick it, pack it, ship it. Managing inventory can be a big commitment when you’re running a business.
Dropshipping is a fulfillment model where a third party supplier stores and ships inventory to customers on your behalf. You just need to make the sales and pass orders on to your supplier; you don’t need to handle the products yourself.
Launch your own book
A book is just another type of product when you think about it. And as such, you can create one to serve a particular demand in the market.
Cookbooks, picture books, comic books, poetry books, photo books, coffee table books, and novels—if you’ve got the knowledge or the creativity, there are a variety of original books you can bring to the market.
Sell print-on-demand posters, greeting cards, and prints
If you’re artistically inclined or know your way around a camera, you can dropship using a print-on-demand business model to let others physically own a piece of your work. Just be sure you have the rights to the content you want to print, unless you’re using public domain assets that you can freely monetize.
Sell a service
With services-based businesses, “time” is your inventory and your biggest investment. You’ve only got a limited supply of hours in your day. However, that makes it easier to get up and running if you’ve got skills that are in demand.
Sell handcrafted and homemade goods
If you’re a maker—whether you DIY soap, candles, sauces, or pottery—you’re in a unique position to find an online business idea since product development and procurement are literally in your hands.
Antiques store owner
Do you ever walk into a local store and find products that look exceptionally good, probably from an earlier time than yours that could be refurbished or used as antique pieces? Well, if you have an eye for such pieces and you can get a good buying price for them, it’s time to start an antique store of your own!
Online coffee/ tea store
If you’re a tea or coffee connoisseur, this business idea might just be your calling. But to be able to do this, you need to align yourself tea leaves and coffee producers. It’s a bit of hard work but can turn into a brand of its own once you’re able to tap into the taste buds of the consumers.
Conclusion
Market research is the first step to ensure the validity of your business idea, and now you can take it one step further with market research software downloads. Many free market research software downloads exist, but not all of them are as effective as others. Knowing how to find high-quality market research software for downloads can help anyone who’s planning on starting a company.