It’s the most overlooked part of starting and running a business, however, it is so vital to the success of a company. Conducting market research is necessary for numerous reasons, but the overall purpose of it is to determine the one thing that young entrepreneurs and startups don’t want to question – whether there is a market for the products and services that they’re selling…
No young entrepreneur or startup likes conducting market research; it can be expensive, time consuming, complicated, and quite frankly, incompetent if it’s not conducted correctly. I remember when I first started my company back in the spring of 2012. Back then, I didn’t see the need for conducting market research – I was operating under the assumption that every type of consumer that I targeted would just love my product. I assumed there was a need in the market based off of an individual need I had, which is one of the worst assumptions a business owner can make. Always remember this; just because you have a particular need doesn’t mean everyone else has that same need. As I continued to run the company, I started realizing that it was becoming increasingly harder to tailor my product for the market, why? I had failed to conduct market research. I didn’t know the strengths and weaknesses of my product; I didn’t know how to effectively tell consumers that my product was available; I didn’t even know how much consumers were willing to pay for my product; it’s embarrassing how clueless I was.
If you read the introduction article “Capitalizing on Catastrophe: The Story of EntrepreLoser”, you already know that I dissolved my company after two years. One of my biggest regrets as an ex small business owner is not conducting adequate market research. I put so much hard work into starting and running a company, but I failed to do the proper due diligence, which is just irresponsible and unforgiveable. I hate to be candid, but excluding a few exceptions, conducting market research is the difference between a successful and unsuccessful company.
The Benefits of Market Research
Market Research enlightens a company on the infrastructure of a particular market. Every company has a target market, or a particular group of consumers it’s pursuing; companies need to know the characteristics and inner workings of the market in order to tailor a product or service that solves the problems associated with said market. For example, let’s say you (as a young entrepreneur) have just created the greatest product in the world. As great as the product may be, it needs a market to live in; it can’t survive on its own without one, and in order to survive, you need to learn as much about the market as possible in order to give your product the best chance of surviving. This means educating yourself on the type of consumers that create the market. You need to know what they like, what they dislike, how much money they make, how much money they have to spend – discretionary income, how much money their willing to spend for your product, their spending habits, where they live, what they look like, how many of them are there – demographics, how they think – psychographics, how they consume information, and other characteristics that define them. Once you know all of this, you can devise a plan (business plan) to penetrate the market, communicate your value proposition to them, and serve their needs.
Conducting Market Research
Conducting research on a particular market isn’t easy. In involves many steps. There are two different approaches that researchers must take in order to collect as much relevant, helpful information as possible. There’s the micro approach, which involves creating questionnaires and surveys for individual consumers, determining the best way to reach consumers, engaging with consumers, recording data, analyzing data, and drawing conclusions from the data. Then there’s the macro approach, which involves investigating the history of the overall market, the current state of the overall market, searching for market patterns and trends, and making sense of all the findings. All of that extensive labor and research can be quite overwhelming to young entrepreneurs and startups, but luckily, there are organizations, companies, agencies, and other institutions that produce tons of information that can help you find out anything you need to know about a particular market or industry. Instead of listing all those resources myself (which would make this article really long), I’m going to refer you to an article by Entrepreneur, the popular online business publication, that list the different resources businesses can use to conduct market research. It’s a very in-depth article, so put aside adequate time to read it in its entirety and check out all of the resources that it provides.
-Mike, creator of EntrepreLoser
Did you enjoy that article? Duh! (rhetorical question) Of course you did. Now I need a favor. Please share this article with your favorite social network. There are plenty of options to choose from – Facebook, Twitter, Google +, Reddit, Digg, and StumbleUpon – just click on one of the sharing buttons below and wallah, you’re finished. Thanks, I really appreciate it!