You have a great idea for a new product or service. Of course, you are completely convinced of its usefulness and necessity, but is the market that too? In other words, how do others view your ideas, and is there a market for your ideas? To find out, it is important to do market research.
What is market research?
Market research is the process that involves gathering information about your target market and audience to know the feasibility of a new product or service, the influence of an existing product, and to know the perception consumers have about your brand.
It is an essential element of business strategy and an important factor in maintaining competition.
With market research, you map the market for your new product or service. You look at who your customers are, where their needs lie and where they are located. In addition, it is important to map out which competitors are present in the market and what they do exactly. Knowing that will also help you determine how to differentiate yourself from them.
It’s therefore not an argument that market research is necessary for the success of your new and existing products or services. To help you conduct the research the best way, here are seven steps to follow.
How to conduct market research in 7 steps
Conducting market research may seem daunting at first, but that shouldn’t be the case as long as you have a focus. Here is the step-by-step process to follow in conducting one.
1. Clarify your research motive
Before conducting market research, you have to clarify your research motive. Ask yourself questions ranging from what is the key information you would want your research to uncover to what you want to understand about your market and customers.
By clarifying your research motive, you’ll be more focused during the research, thereby making it effective.
For instance, you might want to know the significance of your existing product or service in society before iterating it, your research process would then be finding out the importance of the product to know whether you should iterate it or not.
2. Identification of your target market
After clarifying your research motive to stay on track, the next step is identifying your target market. This is important because before you know the purchasing decision of consumers in your niche, you must first identify who they are.
In this situation, you may have many target markets. You just need to put each target market into consideration when optimising or planning your content or campaigns.
Also, each of your target markets must share common characteristics. These characteristics might be demographic such as age group, income level, gender, locations, marital status, or psychographic characteristics i.e people with similar interest in things, or your target market might be a particular type of employee at a company.
3. Engaging with your potential customers
Once you’ve identified your target market, the next step to take is to engage with your potential customers. The common method used by most companies is pulling surveys or carrying out a study.
Though surveys or studies may come in handy here, they aren’t a substitute for physically engaging with potential customers.
Engaging with customers in their home and work environments will give you more insight into their lifestyle, and also increase your understanding of how they make their purchase decisions better than any survey or study can tell you.
Also, physical engagement is an effective step to getting ahead of competitors as lots of people skip this step due to fear of getting shunned by strangers.
4. Knowing your market capacity
After identifying your target market and substantiating the identification by engaging with them, the next thing is to know your market capacity. You need to research to figure out your target market capacity, and if it’s big enough to sustain your business.
The research can be carried out by using the factors mentioned in the first step. You’ll then figure out the number of people that meet the demographic or psychographic attribute.
And if from the research you find out there aren’t enough customers to sustain your business or overcome competition, then you should change the product or service you offer.
For instance, if you find out your target market only has about a thousand potential customers, the solution is to either sell to them frequently or sell to them at a fairly high price to have a sustainable and profitable business.
5. Identification of your competitors
This is another step in conducting effective market research. To be successful in business, you need to identify your competitors, their market saturation, what makes them distinct, and their advantages, strengths, and weaknesses in the market.
To have a definite understanding of them, make a list of all your primary competitors, then research them. In the research, you should find out what they have that you lack and why customers would want to choose them in place of you.
After that, rank your list of competitors by starting from the most threatening to the least, then decide on a timeline to research the most threatening ones.
6. Analyse your data
After collecting all the information you need and verifying it to know its accuracy, the next thing is to analyse it in a way that will make it useful for your business.
Organise your research into sections that will make sense to you and will also be presentable to potential investors.
7. Put your findings into action
This is the final step in the process of conducting market research. Once you have analysed your findings, it’s time to put them into action.
For the internal aspect of your business, look for where you can use your findings to improve your business.
And for external purposes, put your research or findings into a readable and digestible document that will be easy for lenders or potential investors to assimilate.
Keep all the information you get from your previous research for the next one, and make sure you set a reminder to conduct market research every year to stay ahead of competitors.
With well-carried out and well-designed market research, you can make better business decisions and hone your products or services to meet customers’ needs and preferences.