Got a business idea?
Let us look at best ways to do effective market research for writing a strong business plan
Writing your business plan starts with your business idea. As an entrepreneur, you need to conduct a feasibility check before you get into the action of writing a business plan and start working around it.
This article is a step-by-step guide on researching and documenting the market potential of any product or service, something that is crucial and often overlooked by entrepreneurs as a part of constructing a strong and workable business plan.
The main goal of market research is to analyze your target market and deliver actionable insights. It gives a deep understanding of your customer’s buying behavior.
Market research states the influence of demographic, cultural, social, financial, and ethnographic factors on their purchase decisions. It helps in understanding why a customer would choose to buy your product or service over others.
Let’s check out the infographic to understand how to do market research for your business idea.
The infographic states the crucial questions around which you need to do your market research. Let us look at each one of them in detail-
1. Who are your target customers?
Once you have your business idea ready you need to find out your ideal customer profiles who would need your product or service. It includes every single detail such as: where do they live? what do they do? What are their occupations? And so on.
This part of the research covers all the demographic, social, financial, and ethnographic factors to segment the target customers into different profiles and personas.
Clear segmentation helps in analyzing and assessing the needs of every segment differently. It enables you to have effective targeting strategies tailored for every segment of customers.
Market research helps in conducting primary and secondary research to gain insights into the target customer base. Primary research captures the response of the audience directly and secondary research analyses the information that is already available about the target customers like industry reports and blogs.
2. What do they buy currently?
This research pointer helps to understand the prevailing buying trends of the target customers. It takes into account the product or service-related factors that customers prefer to buy in your niche.
Using this research, you can discover insights related to the product preferences, most liked features, most preferred sales channels, seasonality trends, existing challenges, and areas to enhance your product or service offering.
The responses uncover the core product and the augmented products that customers are buying currently. It helps in identifying the market share of different product or service options stating the brand loyalty and high customer satisfaction scores.
3. Why do they buy that product/ service?
This is a difficult pointer to research about. The responses will depend on the product or service and its functionality.
Some people buy a bike to commute easily while others may buy it for their love for riding, you need to select which segment of customers would be your targeted buyers.
Customers are often influenced by different factors like social acceptance, seasonality, promotional discount, word of mouth, ad campaigns, and ease of availability to make their purchase decision. Market research will guide you to measure the impact of such factors to build the right go-to-market strategies.
The research will also aid in understanding the best price points of the product or service in your niche and other promotional offers that boost acceptance and penetration into the top markets of the world.
4. What will make them buy from you?
As a part of your market research, you need to tap into information sources to answer maximum questions to make your business plan more promising and increase the odds of success.
The available data can reveal a lot of insights about the market, sales figures, forecasts, and consumer buying patterns.
This research question will help you gain competitive intelligence as it helps you deep-dive, into your competitor products, service, strategies, and success factors
You need to find and build your competitive advantage over your competitors which will become your USP(Unique Selling Point) and differentiating factor of your product or service. These competitive advantages will be the reason that will make your target customers buy from you.
Conducting due diligence within the selected industry reveals an in-depth comparative study. For reliable results, you must consider:
- Companies of the same size.
- Companies serving the same geographical area and target customers
- Companies that are relatively new in the market as new companies will be free of any reputation bias.
Find the right market research partner
Once you have finalized the questions that you want to get answered through market research, the next task is to prioritize them based on what you want to research first.
Setting priorities keep you focussed on specific research goals. As you have specific goals there are maximum chances that the research will stay on track and give accurate insights.
Market research is costly but highly invaluable. It requires a lot of expertise, manpower, technology, and other resources to deliver results with accuracy and precision.
Large companies and startups have been spending a good percentage of their budget on researching things that can help them make informed decisions and mitigate risks.
Being at an early stage of starting your business, you can find a trusted market research services company to partner with for your research need at a very competitive price. A market research company holds the right expertise and experience to conduct the research effectively as compared to conducting it in-house.
Remember, the budget you spend on market research while creating your business plan and bringing your idea into reality is ultimately going to save you from losses and boost your business towards profitable decisions.