Market analysis when you’re going to launch a startup. What types of market research are there, and what is the market research process? Here’s our comprehensive guide to marketing research and competitor analysis.
Coming up with an idea for a startup is always a fantastic feeling! You’re probably so excited, that you want to develop and launch it straight away!
However, it’s essential to carry out a market analysis first.
Nine out of ten startups eventually fail, so it’s important to gather as much information as possible to help your business idea succeed. The research will give you the information you need to ensure you’re targeting the right people and that you have the edge over your competitors.
Many entrepreneurs think that market research is a hassle; that it takes too much time, that it’s too expensive, and that it doesn’t prove anything. However, we’re here to tell you that the marketing research process is much more straightforward than you might think!
Here is our comprehensive guide to market research and how you can use it to boost your business.
Table of contents
- What is market research for the pre-startup stage?
- How can market research help your startup?
- Primary market research for the pre-startup stage
- Secondary market research for the pre-startup stage
- Should I use primary market research or secondary market research?
- Easy ways to carry out market research for the pre-startup stage
- Can I carry out the marketing research process myself or should I work with a partner?
- Top tips for carrying out the right market research for the pre-startup stage
- In summary: the marketing research process can help drive your business forward
- Frequently Asked Questions (FAQ)
What is market research for the pre-startup stage?
Market research is when you gather information to help answer questions about your startup. The main goal is to work on it before you started on development.
There are many ways you can get your data, and we’ll look at the different types of market research later on in this article.
How can market research help your startup?
When you have an idea for a startup, you will likely have a lot of questions; everything from where you should sell it to who your target audience needs to be.
Market research helps you answer these questions and gives you the certainty you need to move forward with your idea. This can increase your chances of success and means you’re less likely to make mistakes.
Here are some of the things the market research process can help you with.
- Branding your product or service: what name, logo, and brand colors should you use?
- Your audience: who should you target your product or service at?
- Your product features: what should you include in your MVP?
- Your price point: what price should you sell at?
- Your marketing strategy: how should you market your product or service?
Marketing research can also help you if you’re looking for financing. An investor, bank, or grant provider will want to see evidence that your startup will be successful, and market research can give them the reassurance they need.
Primary market research for the pre-startup stage
Primary market research is when you carry out the research yourself or get someone to do it on your behalf. Essentially primary market research is all about getting the information you need direct from the source.
There are two types of primary market research: qualitative and quantitative. Let’s take a look at the differences between them.
Qualitative data is descriptive and concerns behavior and language.
For example, if you ask a market research participant to talk you through their typical working day, or what they like most about your product.
Qualitative data can be collected through open-ended survey questions and interviews.
Quantitative data is statistical and concerns numbers.
For example, if you ask a market research participant how old they are, or to rate your product on a scale of one to ten.
Quantitative data can be collected through close-ended survey questions, observations, and experiments.
Secondary market research for the pre-startup stage
Secondary market research (sometimes called ‘desk research’) is when you use information that has already been gathered by someone else.
Valuable sources of secondary marketing research include census data, government surveys, market research reports, and trade journals. You can access this information both online and offline, for example, through your local library.
Should I use primary market research or secondary market research?
The answer depends on a variety of factors, including the information you need, your timescales, and your budget.
Primary research will always provide you with high-quality information and ensure that the research is customized to your specific needs. However, it can be expensive and take time to obtain.
Secondary research costs less to gather and is often easier to acquire. However, the data may not necessarily be tailored to your requirements.
Easy ways to carry out market research for the pre-startup stage
When people think of the research, they think of intensive focus groups and long phone calls with prospective customers.
However, the reality is that you can carry out high-quality market research easily. Here are some ways you can get involved in the market research process.
Carry out an online survey
The great thing about an online survey is that you can get a large number of responses in a short amount of time and tailor the questions to your specific needs. You can ask qualitative or quantitative questions or a combination of both.
Determine the questions you want to ask – try and keep your form as short as possible to keep people’s interest. Then you can build the survey in the system of your choice; we like Typeform and Google Forms.
Top tip: If you ask demographic-related questions like age or location, you can break down your responses further using these categories!
Yamaha used a survey to understand whether it should use sliders or knobs on its latest keyboard. By sending a short questionnaire to existing customers, it got the feedback it needed in a couple of hours.
Carry out in-depth one-on-one interviews
An in-depth interview is a longer discussion you have with someone about your product or service. This could be a potential customer, an industry expert, a business in a similar niche, or a prospective supplier.
In the past, these interviews had to be carried out face-to-face, but now you can do them over video conferencing software like Zoom or Teams. This means you can connect with anyone wherever they are in the world.
In-depth interviews are great for marketing research as you can use them to gather valuable feedback and opinions. Plus, the person you are interviewing may provide you with insight you might not have thought of.
One-on-one interviews are better than focus groups for startups. This is because people feel more comfortable talking to one other person, and you don’t run the risk of one dominant person taking over a focus group.
Carry out an observation
Observation is when you watch someone try and carry out a task. For example, if you have a prototype of a mobile app or marketplace, you can watch a prospective customer use it and see how long specific actions take. You can even follow it up with a survey or quick interview to find out their thoughts.
Like interviews, you don’t have to be in the room with the customer to do this. You can use screen-recording software to monitor their experience, and the benefit of this is that you can play back the footage anytime you like.
Carry out competitor analysis
While it’s important to look inwards when compiling your market research, it’s also important to look outwards. What are your competitors currently doing, and what gaps in the market are there?
Carrying out a thorough competitive analysis can also save you time. After all, if your competitors have already done the work and the research, you might as well take advantage!
The first step is understanding who your competitors are. Look at keywords people are using, read industry reports, and directly ask your customers who they are buying from.
You can then ask the following questions about your competitors:
- How established are they in your industry?
- Who is their target audience?
- How much revenue are they making, and what share of the market do they have?
- How much do their products and services cost?
- How are they marketing themselves?
- What do people like and dislike about them?
- What is their unique selling point?
Can I carry out the marketing research process myself or should I work with a partner?
While some startups carry out the marketing research process themselves, others work with companies that carry out the research for them.
The main advantages of working with a partner company are that they will save you time, ask questions you might not have thought of asking, and ensure there is no bias. However, the disadvantage is that working with a partner can be expensive and when you’re a pre-startup, every euro, dollar, or pound counts!
The answer to this question depends on your needs, timescales, and budgets. However, we believe that with a bit of prior planning, even the smallest startups can complete their own market research successfully…
Top tips for carrying out the right market research for the pre-startup stage
So, you’ve decided to carry out market research yourself? That’s great!
Here are some of our top tips to make sure your research provides value to your startup.
Ensure you eliminate bias
Sometimes when you have a vision for a startup, you want the research that you carry out to confirm what you already think,
This is known as ‘confirmation bias’. When this happens, you’re at risk of your startup failing as the information you gather isn’t telling you anything new.
It’s important to keep your own assumptions and hypotheses in check when carrying out your research. Keep an open mind, and don’t immediately dismiss feedback because it doesn’t fall in line with your own beliefs.
Similarly, if you’re carrying out secondary research, be mindful of any potential biases a source of information may have.
Be lean when it comes to your research
Any market research you do needs to be done quickly and efficiently. If not, you run the risk of wasting time and of your competitors launching before you do.
The methods we listed earlier in the article are great ways to quickly get the information you need to drive your business idea forward,
Start with a SWOT analysis
A SWOT analysis is an excellent way of identifying your strengths and weaknesses, as well as the benefits and risks of the marketplace you want to enter. It involves answering four questions about your startup:
- Strengths: What does our startup do better than everyone else?
- Weaknesses: What could we improve on?
- Opportunities: How does the current and future market benefit us?
- Threats: How does the current and future market put us at a disadvantage?
Even if you don’t carry out any other market analysis, we recommend doing a SWOT analysis as a minimum.
Keep the market research going!
It’s essential to keep carrying out market research through the lifecycle of your startup.
Your brand vision may change, new competitors may come into the market, and your industry sector may evolve over time.
By constantly keeping up with what’s going on, you can make changes accordingly and pivot your business if you need to.
In summary: the marketing research process can help drive your business forward
Market research can make the difference between your startup being successful and needing to go back to the drawing board.
However, you’d be surprised how many businesses don’t carry it out! According to Google, less than 40% of businesses use customer research to drive their decision-making.
So, take the time to carry out a thorough market analysis and increase the chances of your success.
Frequently Asked Questions (FAQ)
Market research in the pre-startup stage involves gathering information to answer crucial questions about your startup idea before diving into development. It helps in making informed decisions and reducing the risk of failure.
Market research provides valuable insights into aspects such as branding, target audience, product features, pricing, and marketing strategy. It enhances the chances of success and can be essential when seeking financing.
Primary market research is when you conduct the research yourself or hire someone to do it directly from the source. It includes both qualitative and quantitative research methods.
Qualitative research involves descriptive data about behavior and language, often collected through open-ended survey questions and interviews. Quantitative research deals with statistical data, such as age or ratings, collected through close-ended survey questions, observations, and experiments.
Secondary market research, also known as desk research, involves using existing data and information gathered by others, such as census data, government surveys, market research reports, and trade journals.
The choice between primary and secondary research depends on factors like your specific information needs, budget, and timescales. Primary research offers customized data but can be more expensive and time-consuming. Secondary research is cost-effective and quicker but may not be as tailored to your needs.
You can conduct market research through online surveys, in-depth one-on-one interviews (even over video conferencing), observations of user interactions, and competitive analysis of your industry.
Both options have advantages and disadvantages. Working with a partner can save time, offer fresh perspectives, and reduce bias, but it may come with a cost. Startups with limited budgets can successfully conduct their own market research with proper planning.
– Eliminate bias and avoid confirmation bias.
– Be lean and efficient in your research methods.
– Start with a SWOT analysis to identify strengths, weaknesses, opportunities, and threats.
– Continuously update your market research to adapt to changing conditions and industry trends.
Market research can significantly impact a startup’s success by providing valuable insights, reducing risks, and guiding strategic decisions. Surprisingly, many businesses neglect this vital step, with less than 40% using customer research, according to Google.