Our previous post in the Startup Strategy Series revolved around why and how you can test your business idea before actually putting some real effort behind making it work. A lot of that article revolved around business market research explaining that the best way to test your business idea is to do a thorough business market research.
We even spoke about creating a business market research plan before actually conducting the research itself. Well, now we’re here to tell you all about business market research and its little intricacies. With the following knowledge, you’ll be able to formulate an efficient and efficacious business market research plan that will truly reveal to you the hidden potential of your business idea.
What Are The Various Types Of Business Market Research?
If you’re completely new to the area of entrepreneurship, then you most probably need to know that there are two types of business market research. They’re simply called primary and secondary business market research.
Primary business market research revolves around direct association with different types of customers such as purchasers, influencers, and end users who we learned about in the previous instalment of this series. This means using tools and instruments like direct interviews, first hand surveys and questionnaires, and even focus groups.
Secondary business market research involves studying data and information that independent third parties have gathered about your target audience. Secondary market research is more diffused in nature than primary market research which is quite focused.
This means that while primary research will reveal to you what your specifically targeted customers may or may not do, secondary research will reveal what people choose to do in general as opposed to a specific product. For example, if you’re selling a storage software programme, primary research will tell you what people think about your programme while secondary research will tell you what people think about storage software programmes in general.
Which Questions Should Your Business Market Research Answer?
Questions you pick will vary on the basis of the industry you’re planning to enter, products or services you’re looking to offer, and even how you plan to structure your business. However, there are a few basic questions that you’ll absolutely have to ask. The following is a small list.
- What is my target audience? Demographics and psychographics are at the heart of this question. You need to define your target audience and you need to use multiple variables, factors, and metrics to do so. The more defined your target audience will be, the better your marketing and sales strategy will be. Consider various things about your target audience such as gender, age, income, educational levels, lifestyle choices, and professions.
- What are their buying habits? Buying habits, technically, also falls within the category of psychographics. However, it is incredibly important which is why it needs to be addressed separately and in a focused manner. Buying habits of your target audience will constitute various aspects revolving around their purchases such as the quantity, favoured sources, critical features, added qualities, and pricing benchmarks.
- What compels them to buy? There is always a reason for an action. This is true in life but doubly true in business. If your target audience buys a particular product or service, then there will be something that compels them to buy it. Since all products and services solve a problem, the problem will be the reason. However, if there is more than one seller of that product, then there will be a reason why a particular brand outperforms others. Finding this out will give you an idea of what features and properties are important for your product or service.
- What are they not getting from their current purchases? The previous question helped you discover the benchmarks in the product segment you’re interested in. However, meeting those benchmarks isn’t enough for you to do well in the market because you won’t be able to capture your competitors’ customers. You need to find a feature, property, or quality that can be your USP. To do this, you need to find out what your target audience isn’t getting from the existing products in the market but is interested in. This will give you your USP.
How to Analyse Your Business Market Research Results?
There are two types of data you’ll be gathering with your business market research endeavours. The data can either be qualitative or quantitative. In many ways, qualitative correlates to subjective while quantitative correlates to objective.
Typically, primary research results in qualitative data but it can result in quantitative data as well. However, the quantitative data of primary business market research tactics are usually unreliable.
For quantitative data to be reliable, the sample size needs to be quite large but the nature of primary business market research efforts usually doesn’t result in this. Therefore, you should rely on primary business market research for qualitative data and on secondary business market research for quantitative data.
Quantitative data will usually comprise numbers and statistics while qualitative data will comprise opinions. This is one of the reasons why qualitative data is used to refine and fine-tune discoveries made by analysing quantitative data.
How to Focus Business Market Research on Competitors?
Unless your business idea is entirely new and completely revolutionary, you’re going to be competing against other businesses offering similar products. While you won’t have to worry about competitors if your business is fresh till a later date, you will have to compete tooth and nail if someone is already in the market before you.
This means analysing your competitors as a part of your business market research. Typically, you’ll have multiple competitors in the market ranging from fledgling to established companies. Even though the temptation may be strong, you shouldn’t go about analysing all of them. It would be wise to pick a competitor whose nature is similar to what you’re planning.
When it comes to choosing which competitor to analyse, you should consider four things. These are.
- Their size
- Their location
- Their age
- Their organisational structure
These factors are important because they’ll define how similar your competitors are to your business. This will help you develop realistic targets, objectives, and benchmarks as opposed to aiming for something that you can never achieve with your existing resources.
The best way for you to analyse your chosen competitors is to gather as much intelligence about their operations as you can. This means going through their websites, their social media pages, and specifically becoming their customers and trying out as many products and services as possible. This is the only way you can learn about the established trends in the industry.
Which Business Market Research Mistakes Should You Avoid?
Business market research will act as the launch pad for your business. How detailed your business market research is will, thus, define how well you know the industry or sector that you’re going to compete in. Poor business market research is one of the reasons why so many new businesses fail.
The most common mistake involving business market research is associated to scope. Every time an entrepreneur tries to cut corners with his business market research, his business ends up failing.
The most common business market research related mistake is to only rely on secondary research. Remember, the data gathered through secondary research will only give you diffused and generalised results. If you completely neglect primary research, then there’s no way for you learn what people think about your product or service.
Another business market research related mistake is to only rely on online sources. It’s true that the web is one of the best things to have happened to the business world. It’s true that it makes everyone’s lives easier. However, you can’t just rely on web based sources for your information. If you do, then be prepared for either incomplete information or grossly incorrect information.