How to Perform Market Research

By 26/02/2020April 30th, 2020Blog
startup market research

Firstly, there are no guarantees in the world of startups. In fact, most startups fail – that’s no secret. It can be difficult to predict whether a new venture will be successful or not. However, founders who have a solid strategy, along with experts in their corner do stack the odds of success in their favour.

Although the startup failure rates are high, proper research and preparation will significantly reduce failure rates. Proper research prevents founders from chasing an idea that never had a chance of getting off the ground – and instead pivot to research their next idea that has potential. This could be repeated until a stronger success indicator is found.

Scratching an Itch

A lot of startups make the mistake of designing something that they think is cool or provides a little extra convenience for the end-user. The key for most successful startups is they focused on or solving a problem – scratching an itch people have. For example, Task Rabbit solves consumers’ problem of completing their household tasks, by connecting them with local handymen and women.

The bigger and itchier the itch, the more you will get paid to scratch it.

“The best startups generally come from somebody needing to scratch an itch.”

Michael Arrington, TechCrunch founder and co-editor

 

Finding an Itch to Scratch?

You will also need to be sure that you are targeting the right market. You will need to identify your ideal client and understand what makes them tick. You also need to discover deepest reasons for wanting their problem solved.

Once you’ve found the market that you wish to target, you need to know if they’re itch is itchy enough to make them put their hand in their wallet, pull out their credit card and pay for your solution. Pretty simple right? Incredibly, many people overlook this.

Think of it like this: You are providing a value through solving a problem. In exchange for your solution, the customer is providing value to you in the form of money. I know it may sound obvious. But it is important to understand the meaning of value – which is the foundation of your startup.

How To Market Research, Fast

Do You Need Market Research? Some of the world’s most successful entrepreneurs have dismissed market research. There are 3 glowing examples of ‘anti-market researchers’ that spring to mind.

They are:

Steve Jobs, who said: “People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.”

Hendry Ford, who said: “If I’d asked people what they wanted, they would have said a faster horse.”

Walter Isaacson – former chairman and CEO of CNN, who said: “Did Alexander Graham Bell do any market research before he invented the telephone?”

market research

Now, before you say “A-ha, there you go – if Jobs doesn’t believe in market research, then neither do I”, you first need to consider your product or service. If you’re developing something as revolutionary as the first automobile or smart phone – and you are every bit as much of a visionary as the guys above, then may not need market research – fair enough. Otherwise – do market research.

Testing Your Assumptions

When starting their companies, many entrepreneurs make all kinds of assumptions. There are two type of assumptions that entrepreneurs can make. Those that you need to make and those that you shouldn’t make.

Assumptions that you shouldn’t make are those, that if researched, can be established as facts. For example, you shouldn’t assume your market size – it can be researched.

On the other hand, the assumptions you must make are those which research cannot establish as facts. For example, the price that people will pay for your product. This is an unknown, therefore price is an assumption that you must make.

You must have a system for testing the necessary assumptions. Companies can test their product pricing by performing split tests. This involves showing half of potential buyers one price and the other half another price. The outcome of the test will establish the best price point as fact.

They key is to identify when you are making assumptions. Then establish whether those assumptions need to be made. If you must make assumptions, test them to establish facts, before moving forwards.

Before you start a company, or at least before you start creating your product, you need to write down the assumptions that you have made. Conducting your market research to establish as many facts as possible. This will help to stack the odds in your favour and avoid wasting time and money.

Where to Research

We are extremely fortunate in this day and age, when it comes to conducting research. All the necessary resources we require are easily accessed online. For great market research, visit the sites below. They have an incredible amount of data that makes it easy for anyone to perform at least preliminary market research.

  • marketresearch.com
  • gartner.com
  • forrester.com
  • acnielsen.com
  • frost.com
  • Australian Bureau of Statistics

When you’re researching these sites, you are predominantly searching for demographics. For example, I was consulting to a company that provided services that assisted people plan for retirement. We researched Australian Bureau of Statistics to establish the number of retirees who are still in the workforce and how many owned their own homes. This validated our assumptions. We could then move to the next step of researching the market’s needs.

To find what trends are happening within a market you can use resources such as; Industry or Trade Journals, Industry Associations, Google Search and Google Trends.

Another brilliant tool to research currently topics that are trending is BuzzSumo.com. You can perform a keyword search to uncover the most popular articles that have been liked and shared on social media. BuzzSumo is brilliant for finding trending topics in real-time.

What to Research

Knowing what to research is equally as important as where to research. You need to know what you are looking for. It is best to think of research in stages.

Market Size: The first step is to search for the market size. This is a broad search that establishes if there are enough potential customers to sell to.

Market Need: The next stage of your market research is researching market need. Here you need to uncover what problems your target market is experiencing and whether your product or service has the potential to solve those issues. You can also uncover if the problem is bad enough, that the target customer will pay for your solution.

Target Client: This step involves learning more about your customers. You can determine whether they are men or women, their age, relationship status, interests, employment.

Psychographics: These are attributes of your target clients such as what their beliefs, their opinions, their goals and their attitude.

Research and understand your potential customers’ issues and get to know who they are.

Market Research on Facebook

Using Facebook to perform market research is a great way to research demographics and interests of potential clients. With over 2.41 billion active users, there’s a fair chance your future customers will be using Facebook. With such a large userbase, Facebook stores masses of data that they make available to you through their advertising tools.

market research on facebook

Researching Demographics on Facebook

The Custom Audience Search feature is extremely useful to research demographics of your market. It is critical to know who is likely to be most interested in what your company offers. For example, if your startup idea is to provide software to lawyers, you can research your audience by entering “legal services” into the job titles section. You may then view the demographics such as age and what proportion of that audience is male and female. You can also see statistics about the audience’s relationship status and educational level. You can also find which Facebook Pages the demographic collectively likes the most and which type of devices they use.

When I began researching the audience for this book, I didn’t search by entering “job title” within the Custom Audience Search. Rather, I chose to search by “interests” using the obvious keyword: “Startup company”. I further refined the search to show only results from Australia – which revealed the size of Start-Up and Scale’s target market: 800,000 to 900,000 people within Australia were interested in Startups. With this knowledge, it confirmed my belief the target market was large enough for my book.

Knowing as much as possible about your audience is invaluable. This information can assist you to develop a product that can suit the demographic. Alternatively, if you already have a product, the information may lead you to can change your marketing message, pricing or even your entire product.

Take a look at Facebook Audience Insights here. Go ahead and experiment for yourself on the various demographics: https://www.facebook.com/ads/audience-insights

Once you are up and running you can also monitor those who interact with your Facebook Page by using Facebook Analytics by checking daily stats, customer journeys, lifetime value and a lot more.

You can access Facebook Analytics here: https://www.facebook.com/analytics

Research Deep Dive on Facebook

The Audience Insights demographic research above will reveal market size and background of potential customers and who they are. This was our preliminary step. The next step is to see what their pains are by doing a deeper dive to discover their frustrations, challenges and beliefs and other psychographics.

There are two ways you can do this. The easiest way is to search for groups within Facebook. And just ask them what their biggest problem that they are facing. I did this with Start-Up and Scale. I simply asked a number of Facebook startup groups the following question:

What legal or business issues do see entrepreneurs constantly struggle with in startup land? I am writing a book on Startups in Australia and could do with your help. What topics would you advise that I cover? Very interested to hear your input…

I received many answers from entrepreneurs. These answers guided me on the topics within this book. If you are considering using Facebook Groups, I recommend that you contribute to the group before you post questions or surveys. This will avoid you appearing as an outsider.

The second way is to advertise through the Facebook platform. You will have to pay to do this, but you can target demographics on a much larger scale, faster than using the group method that we discussed above. If you do want to advertise your survey or questionnaire, it can help to give away something of value so people in your demographic will be compelled to complete the survey or questionnaire. For example, you could give away a cheat sheet, ebook or report or similar thing of value. You can then word the ad like this:

“Hey guys, I am giving away my Facebook marketing cheat sheet. It has over 30 top-preforming ads that you can swipe for yourself! All you have to do is help me out by completing my 2 min survey.”

Ensure that you use a tone that is light and friendly. To improve results, use words that resonate with that demographic, so you are seen as a peer, not an outsider.

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