Don’t be put off by the words ‘market research’ – it doesn’t have to be technical, expensive or time-consuming, says Hannah Moule.
In a nutshell, market research is about getting as much honest feedback about your idea, product or service as possible prior to you taking the serious steps of investing in a business.
The earlier in the stage of your business idea you start undertaking research, the better. You can develop and evolve your idea responding to the feedback as opposed to you spending a lot of time developing what you think is a good idea.
Carrying out market research is a very valuable exercise. Even when the feedback is positive, you might learn something that enables you to make your idea even better or help you sell it. It will help you streamline your product to meet what the market needs or wants.
Broadly speaking there are two main types of research: primary, speaking directly to your target market, and secondary, researching existing data.
For an absolute start-up business it’s always sensible to start with secondary research, then when you can’t go any further with desk-based research you should undertake your own primary research.
Researching existing data (secondary research)
What should you be searching for
• Other similar businesses
• Competitors (direct/indirect/substitutional)
• Researching the industry and the general market
• How other people are selling their product or service
o What is their pricing?
o Where are they located?
o What sort of marketing and sales are they undertaking?
How to look for the information
The great news is that in the 21st century you don’t have to move to research your business idea. You can get 99% of what you are likely to find on the internet:
• Google it
• Look for relevant trade organisations – they often have their own research although sometimes you have to join to access it
• Look for competitor businesses
• Research industry statistics
• Buy existing research.
Top tip: Check the dates of the survey data as some sectors are moving so fast that even data a year or two old could be out of date and misleading.
What else should you be thinking about while researching?
• Market trends
• Latest technologies
• Industry advancements
• Competitors’ strengths/weaknesses
• Emergence of new competitors
• How to develop a USP (unique selling point).
Gather your own data (primary research)
Having carried out lots of desk-based research you will hopefully have slightly narrowed down your business idea. Now you are in a position to start gathering your own information.
Establish who your target market is
Seek feedback from potential customers as they are the most important people to gather information from in this process. It’s great to start with friends and family but often they will not be as objective as you need.
Qualitative or quantitative research?
Qualitative is people’s views, opinions, perceptions. Quantitative is factual, numeric data. Qualitative research should explore a few issues in depth – don’t try and cover too much and end up with shallow answers of limited value. It is also harder to analyse qualitative information but it’s hugely valuable particularly in shaping, developing and improving your idea.
Research needs to be useful and reliable but for most start-up businesses getting professional research is cost prohibitive. There are lots of inexpensive ways of getting information however, but you need to:
• Plan it well in advance so you can make the most of the effort
• Identify a few – maybe six or so – key issues or questions; try not to cover too much
• Ensure you are being professional but personable.
Methods of primary market research
1. Face-to-face – this is the best method when you want to tease out issues. This can be individual conversations, one-on-one interviews or with small groups.
2. Telephone conversation – especially if your target customer is another business it can be hard to arrange face-to-face meetings as people are busy. Often a pre-arranged telephone conversation can be easier and less time-consuming. Do try and pre-arrange it though, as you will get a much warmer reception than cold calling.
3. Existing groups/networks – think about whether there are any existing groups of your target market that already come together for other reasons. Perhaps if you are thinking of offering wellness retreats you could try a local yoga group?
4. Use online groups/forums – join chat rooms and forums and ask your questions.
5. Use surveys – there are some excellent, free or very cheap options for online surveys such as Survey Monkey. You can also do postal questionnaires. To encourage people to respond you can send pre-paid postcards with tick boxes, encouraging them to reply.
6. You can try ‘in street’ surveys but check with the local council whether you need a permit.
Make all surveys very brief and to the point or else you won’t get many responses. You can tempt people into responding by offering a sweetener such as entering into a prize draw or a free pen for all participants etc. What would make you fill it out? As before, appeal to people’s nature – they generally want to help small businesses succeed.
Tips on designing a survey
• Avoid leading questions that people can answer without much thought. Don’t make it easy for them to give the answer you ‘want.’ For example, engage people by asking them what they would value most from a glamping holiday rather than just would they go glamping. This will give you more useful answers
• Avoid yes and no questions
• For face-to-face or personal surveys, work off a script or question sheet so you make sure you are gathering the same data for all participants, and it’s comparable
• Keep it relatively short and simple
• Avoid asking personal or sensitive information.
What to do with the feedback
If you start with positive feedback that’s great and it will give you the confidence to take the idea further.
If there is negative feedback, listen to it. Ask more people – sometimes one person might not get your idea but if multiple people come up with the same feedback then you need to adjust it.
When have I done enough?
When you confidently know:
• You can price your product/service competitively
• You can compete with your customers or provide a sufficient point of difference in the market
• Your product or service has a need or a demand
• That the model you have chosen can work.
Now you have worked out whether there is a demand and you have got closer to your price point, the next steps are to carry out your budgets and feasibility. Can you set things up for X price and can you make money out of it? Good luck!
About the Author
Hannah Moule is the founder of rural business consultancy Moule & Co and knowledge hub The Business Barn. Hannah specialises in rural business and farm diversification, providing a one-stop-shop for feasibility and business strategy, preparation of budgets and cashflows, gaining planning permission and helping set up a business structure. www.mouleandco.co.uk / www.thebusinessbarn.co.uk