Market Research Basics for Start-Ups

Understanding The Benefit And Methodology For Market Research

Now that you've decided to launch a business, you definitely would want to raise your chances of success by applying proven business practices. One of the best things you can do to position your business on a firm platform is to understand the market you want to serve and, in particular, to know what it really wants. This requires defining the market, analysing its profile, identifying segments and finding out what their buying interests are. That way, you raise your chances of finding and serving a hungry market, which remains the best guarantee of business success. Market research is an important tool designed to help you understand the market you are planning to launch into. With a deeper understanding of the market, you are able to articulate strategies that will drive your business and help you achieve the results you desire.

Market research entails systematically gathering and analyzing information about the market and using the results to make informed decisions as to the thrust of your business. The benefit is that market challenges and risks are better understood, raising your chances of tackling them successfully. Opportunities are also identified and better exploited. Market research will help to:

• Understand the market, its size, structure, growth prospects, etc and help you to clearly define your target market.


• Determine why they buy, what they buy, when, how and where they buy from. You get to know who does the buying or determines what is bought.


• Capture the demographic profile and likely shifts in demography and consumer interest. This helps you judge what product is likely sell in the future.


• Define what influences the buying decisions of your target market.


• Get a feedback on how the customer perceives your company relative to competition.

For the start-up, your initial interest is to test the proposed business idea and measure its chance of success in the market. The bottom-line is to determine if the product or service you intend to launch will be of any appeal to that market. Does the market have any need that your product or service is designed to satisfy? If so, does the market find the solution you offer suitable and acceptable at its price? In effect, will they embrace and patronise the product or service?

Strictly speaking, this exercise is best undertaken for you by a professional market research firm which has the expertise to ensure valid and reliable results. However, given that the fund limitations of a small business may hinder your taking this option, a well-executed in-house effort can still produce satisfactory results for you. Before you do so, here are some basic steps to guide you:

Methodology
There are two broad methods of market research you can adopt:

1. Primary research
Refers to a research process specifically designed and implemented by you or at your behest, focusing primarily at the specific interest of your business or product. In effect, the information generated by this process is as designed and collected through a data collection process initiated by you to meet your specific requirement. Such data collection could be through surveys, telephoning, mailing, focus groups and similar processes. The interaction is with the primary sources of information - customers, residents of a particular neighbourhood, other target of the exercise, etc. The result will consequently be in the form of information that is in your private domain and not generally available to other users. Usually, this is an expensive process, though more likely to yield an unbiased, accurate result.

2. Secondary research
This approach pursues the same objective using already existing data, usually available from public or commercial sources. Such sources will include reports and publications generated by researchers, government agencies, educational institutions and companies that undertake market research as a business. To this extent, they are of a general nature and will generally not be specific your business project. However, they will usually provide relevant economic, industrial, product, population or other data that could be of great value in evaluating your market. By reviewing and analysing such already published reports, it is possible to extract data that helps you form a good opinion on the market. This is a much cheaper option, though more prone to possible bias.

If you can effectively undertake primary research, designed to capture the market information you need for your business project, that is a preferred option. The reason is that this process is controlled to get the specific results you are interested in. The timing is also current, unlike some available secondary data that may not be exactly up-to-date. The skill and cost requirement (using marketing research consultants could also prove unaffordable) is the major drawback. Going by this approach implies that you have the basic resources to do so meaningfully.

If you cannot implement primary research, secondary research should prove a more affordable and still viable option for a small start-up that is serious about evaluating its market opportunities. The following are some of the sources to obtain secondary research information from:

News Reports: Tracking and monitoring news reports can be of immense value, if you target the relevant media. In the print media, check current and back copies of newspapers, magazines and publications that focus on the subject of your interest. The electronic media also provide a rich source of information. Government policy directions, market entry by new operators, new product launches, new technology information, public opinion, reports on challenges and problems tormenting the populace, etc, are all valuable information that may have implications for your business plan. Much valuable news and data is also available online. Learn how to do an online search for any subject of interest and try to discover web sites that are have resources that are relevant to your need.

Research Reports: Identifying and reviewing relevant research reports and publications can provide much of the resources you need. Check the public and institutional libraries for materials relating to your area of interest.

Trade Reports and sectoral publications: Various trade groups (MAN, NACCIMA, etc) and government departments (the CBN, Customs, Commerce Ministry, etc) compile periodic reports which provide a lot of trade and economic statistics that you may find useful.

Demographic Data: Especially where regularly updated, the population data and profiles are quite valuable in analysing the market. The population agency, for instance, will provide information ron population profiles and distribution, which may be of great value to your business.

Other Sources of Data: Explore every other source that can provide information that serves the defined purpose.

Ultimately, your ability to extract what is relevant to your needs and analyse such information accurately, will determine how valuable this process proves to your business objective. What must be noted is that dabbling into a market because of some fantasy you have may turn out disastrous. It may not prove to be what you think. That is why it pays good dividend to find out from the market itself. If your business is built on positive indicators that you accurately profiled from the market, your success is almost guaranteed. It is also true that lots of projects which misread market expectation have failed over the years, notwithstanding that they looked good on paper. The missing point was the validation by the market which possibly wasn't sought.

Now that you know the basics, don't consider market research esoteric or extremely daunting. Even with limited resources, you can still design a plan evaluate the market you propose to serve. Even a simple questionnaire to your target market can provide some insight and this may not be impossible to execute. As shown, however, you can rely of existing data and reports to to extract the information that will still prove very valuable. Whichever option you can afford, the key thing is to take steps to research the market as a basis for validating your product or service offering and to formulate the right strategies for your successful entry.