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Why market research is vital for a Start-up

Author: ResearchFox

According to numbers from GEM (Global Entrepreneurship Monitor) of international businesses, worldwide approximately 300 million persons trying to start about 150 million businesses. Among these 150 million businesses one third will be launched, say 50 million new firms per year. I would say by the time you finish reading this sentence almost two to three new businesses are getting launched.

What is the failure rate of start-ups?

Its bit difficult to give any number for failure rate of new businesses because the definition varies with people and place. Forbes says 90% of start-ups fail while Bloomberg says it’s 80% and GEM says it’s 50%. So we can say failure rate varies between 50% -90% which is very high.

Reasons behind failures?

Here are some of the most common reasons why new businesses fail:

·         Not investigating the market

·         Business plan problems

·         Product/service is pushed towards the wrong target market

·         Market size is overestimated

·         Positioning the product based on wrong attributes

·         Failing to understand the target market segment

 

What can be the solution to reduce or nullify the failure rate for any start up?

To reduce or nullify failure rate for a start-up an entrepreneur should develop an effective strategy to pitch his product/service into the market. For building effective strategy he should have access to complete information about market size, market segmentation, demand & supply scenario, insight of targeted customer, competitors and other factors. Market research is the only one angelic solution to get all market related information and analysis.

What is market research is and how it is going to save start-ups from failing?

According to American Marketing Association (AMA), Market research is "The systematic gathering, recording, and analysing of data about problems relating to the marketing of goods and services."

In simple terms market research is all about collecting, analysing and interpreting data to build information and knowledge that can be used to predict future events, actions or behaviours.

The dominant part of start-ups will create a business plan to outline vital strategic information before launching a product or service. The level of market research that is conducted to form a business plan is relatively low.

 

Obtaining statistics and conducting market research will provide you with a far better understanding of your market, your customers and their desires, moreover as providing you with a far better insight into your competitors. This bigger understanding of your market can help you better focus your marketing efforts, make informed decisions about your business and make the most of available opportunities.

It is very important to conduct both primary and secondary market research on business plan to fully understand the practicality of the project as well as key target market information. Secondary market research will give a background look into your market, the success of previous products or services as well as your target market’s previous purchasing habits. By conducting primary research entrepreneurs can gain the updated information about the consumer wants and needs, which allows them to adapt their product or service accordingly and gain a competitive advantage.

Market research has many benefits for start-ups. The key ones are unbiased views, reliable data, valid results, and factual figures.

If product or service is already experiencing serious challenges and revenue is presumably declining, Market research might appear to be too expensive of an option for fixing business. But, in reality, market research might just be the one thing that can help business to turn things around.

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