Market research is one of those essential tasks many entrepreneurs often see as the big green one-eyed monster in the closet. It can be scary if you have never done it before. However, just like that monster, once you tame it, it can become your best friend. Here are three facts to know before you get started.
Who you are going after
As a company your mission is to answer needs. Who’s needs will I be fulfilling is the most important question you will ever answer. Any answer to the other what, where, how and why questions are all tributary to this first one.
You generally have a good idea as to who you want to sell to. It’s important not to make your definition too inclusive. Otherwise you’ll be chasing so many rabbits with your limited marketing budget, you risk not catching any. There will always be time to increase your market scope after. Start-ups who do well usually get a larger market share, of a smaller market, rather than a tiny share of many markets segments.
A good way to reduce your market scope is to ask the following 3 questions.
- Who would be interested in my product or service enough to listen to me talk about it?
This is your potential market
- Who are you pretty sure would buy your product or service if you asked them really nicely?
This is your target market
- Who would thank me for selling them my stuff and would buy it again and again?
This is the low lying fruit that, as a start-up, you can afford to go after
Now that you know who you are going after, try and find out all you can about them. First you use what is already there. Look for general market stats, articles or other information on companies who are going after the same market or talking to people who have worked with this market and understand it.
That is however not enough. It will give you an idea of how many there are of them and where to find them but it won’t tell you what relationship they will have with your product of service. This is called your market/product fit. Any company who wishes to stay in the market must know their market/product fit. To know this you need to
Go out on the streets
Find people that are representative of your target market and go talk to them and observe them.
How do I go about talking to them you ask.Well it’s a whole science called market research. If you’re a start-up and on a shoestring budget these few tips might help. Just remember you are doing what you can with what you have, not conducting real market research. There will come a point in your company’s development where you will need to have specialists help you out. For now here are a few pointers.
- Go hang out where they hang out
- Become one of them
- Put an ad up on Kidjiji or other high traffic site.
- Create an event or environment that will attract them
It’s an ongoing process
A large chunk of what you learnt about your target market last year won’t apply this year. Not to mention your market or product focus may have also shifted somewhat. Because this is an ongoing process for companies and because current and future markets are often so competitive that you can’t afford to lag in answering your customer’s needs adequately, you need to build a process inside your company that will continuously update you on what your target market wants.
Therefore you should always approach your market research as though you’ll need to start it over again next month. Build tools that will be re-used. Train resources that will get better over time at doing this. Organize and keep the data you collect in a methodical way.
I’m also going to give you a bonus here.
Be prepared to be proven wrong
You start talking to who you thought was your target market and realise they really aren’t that interested in your product/service. They don’t react at all in the way you anticipated they would. They keep asking you questions you don’t have answers to. These are all signals that you either don’t have the right market and/or product/service. Be prepared to listen to this information you are getting and act on it. If you’re not sure of what you are hearing ask others around you what they think it means. We are sometimes so blinded by our way of seeing things we don’t see the obvious. Being told you don’t have the right product or market at the beginning is NOT a failure. It’s a huge win. You could have been wasting time and resources on this path.
Just remember any company needs a good product/market fit to survive in the long term. You will spend most of your time seeking this holy grail. Make sure you have the best possible tools for your journey