Moving from ‘thinking’ to ‘knowing’
If you’re an entrepreneur or just someone with a great idea and wants to find out whether anyone else thinks it’s a good idea then you’ll need to do some market research.
Doing market research is important because not only does it help entrepreneurs and startups make better decisions based on real data and insight (and not the gut!), it also acts as a catalyst to develop the ideas further and provide inspiration. By doing the right research (the right way) early on in your planning and strategy phase, you will be saving yourself a lot of time, money and potentially pain later down the line. It will also enable your business to prioritise your efforts and strategic initiatives according to the impact they might have on business growth.
It’s likely that your idea will have some competition already, and that you have a target audience in mind for the product or service that you have in mind. At this stage, the most pressing questions you’ll need answering are ‘Does the target audience value the idea enough to pay for my product or service or switch from one of the competitors?’ and ‘How big is the market I want to tap into?’
The first question above requires what is know as consumer insight and will help you understand:
- Your target customers’ lifestyles
- What other products, services and brands they use and consume
- How loyal people are to other products and services
- The emotional needs and wants consumers, and their lifestyles (habits, rituals, shopping behaviours, exercise regimes, social behaviours etc.). This is often call the Market Needs Analysis
- Drivers of purchasing decisions
- The latent needs of your target audience
- Similarities and differences of the above across markets and regions (if required)
- Opportunities to service and support consumers with new solutions (products and services).
The second of the questions above is what is referred to as market sizing and will help you understand:
- the makeup of your target market, including the addressable market size
- the extent to which you can grow your sales
The diagram below shows how market sizing enables you to understand known and addressable markets, to those that might be less likely to engage with your brand, product or service in the short to medium term (but who will/could be your customers in future).
Not only will both of the above put you in a much stronger position to grow your business or develop your idea much quicker, it will increase the potential of investors backing you, knowing that you’ve done the groundwork and have validated your idea and sized the opportunity.
Ultimately, you may discover the your intended audience don’t feel the same way as you about your idea, or that they don’t value it as highly in the context of their everyday lives which are often way more complex than you’d imagined. In this instance, the market research will surface new ideas and eureka moments that will push your thinking forward and give you confidence that you are doing the right thing.
You can speak to one of our research consultants to find out how to get started and learn from our experiences with other startups including Vouchforme, Waggel and Gymshark, or you can download our research briefing template at any time.