Market Research has long been recognised as an important tool in facilitating the development of new products. This will be particularly important if you are trying to attract investors. But how exactly can it help? And what kind of research would be of most use for your business?
First things first
The most important point to make here is that there is no one-size-fits-all answer to such questions. It all depends on your situation.
At the early stages of a new business venture, you may have several unanswered questions about the product you need to create and the market you plan to sell to. Some things may be quite clear, others a complete mystery. Perhaps you already have some data on your market or perhaps your past business experience means you already understand certain things very well.
So, the first thing to do is to create a list of the things you need to know that you do not know already. That should give you a clearer idea of the kind of market research you might need.
To help in this process, let’s look at some of the key questions many people have when starting out on a new business venture and, in each case, consider how market research can help.
Product Development: What should the final product look like?
Some people might start with a blank sheet of paper and some very rough ideas. Others may start with a much more specific vision of their product that just needs some further refining.
If you are literally starting with a blank sheet of paper and some very rough ideas, then you might want to consider what Steve Jobs once said about product design “You’ve got to start with the customer experience and work back toward the technology, not the other way around.”
A good place to start is to look at the market as it is today – what do people like / dislike about the products that are already available? Are there any emerging trends you need to be aware of? And, if you were to ask a potential customer what they’d like to see in future – what would they say?
Market Research can be of immense value at this early stage, helping you turn rough ideas into a more tangible reality. At this point any market research you undertake is likely to be highly exploratory. You might not even have any tangible concepts to test as yet; in which case the very purpose of the research will be to help create some tangible concepts based on what you learn about your market.
However, it might be that you already have a well-defined concept and the challenges you face are more about refining the details. In this case, you can opt for more direct forms of market research where you test and perhaps compare different concepts that are fairly well developed.
Market research will help you to start any development decision-making process from the viewpoint of the customer experience and refine your ideas from there. We would use a different approach depending on whether you need develop a detailed design from a blank sheet of paper or choose the best idea from a shortlist of concepts, or just to refine and tweak the final product. It’s all about horses for courses.
Understanding the market: How big is it? Who are the competitors? How do people buy?
Investors and other stakeholders often like to see evidence to support any new idea. Is the market big enough could be a key question that needs answering – but not always. If we are talking about a market that is well established and where everyone accepts it is indeed a big market, you are much less likely to need to find the data to convince people.
But if you are dealing with a new area, or a niche area, the exact size and potential of your market may be an unknown quantity. Then you may need to think about getting hold of some market research to demonstrate that there is a good business case for what you are planning.
If you are aiming to be a new entrant in an established market then the last thing you want to do is to begin by making some avoidable schoolboy errors. An established market will have established competitors – each of whom will have their own strengths and weaknesses. Customers in such a market will be used to buying products in a particular way; they may have strong expectations in terms of the channels they are willing to use, how they buy and what information they expect suppliers to share with them etc. Understanding the current market dynamics is likely to be a key area to look at, if you find yourself in unfamiliar territory.
Marketing: Who should I be marketing and selling my product to and how?
You might have a great product but who are you going to sell to? At some point you will probably need to sit down with a marketing agency and brief them on what you want. One of the first thing they will want to know is a detailed description of your target audience – what kind of people do you want to reach?
The more you know about your target audience in advance the more targeted (and hence more successful) your marketing can be.
If you use market research to profile your target market you will get a clear idea of who you need to aim for, why and how.
Knowing who you need to reach in terms of simple demographics is all well and good. But often it helps to be a lot more specific than that. Knowing more about your audience in terms of their interests, their media preferences, product format preferences and other aspects of their lives can all help ensure your marketing is better targeted.
You can also use market research to help understand how you might position your offering with such an audience. What messages are they likely to respond best to and which are unlikely to resonate? Understanding their likes, dislikes and interests will all help to determine that. If you have specific promotional concepts in mind, you can test these directly. This all helps to refine what you’re doing to ensure it hits the right notes.
Pricing: How much can I (should I) charge customers?
Pricing can sometimes be a key area you need to think about – especially if you are dealing with a price sensitive market. You might be able to get a good feel for this just by researching what competitors are charging but sometimes it is not necessarily possible (or desirable) to do this.
Market Research can help in such cases by reaching out to potential customers and testing what pricing strategy is likely to deliver the optimum results. Pricing research can provide your financial people with the information they need to model various pricing options and to understand how different pricing levels might impact on demand.
Market Research can help with any new venture/product concept
By taking time to think about the questions you need answering and why you need them answered, you can obtain a clear view of what kind of market research you might need.
Hopefully, some of the questions we’ve raised here will help to spark some ideas in that thought process.
But once you have your list of questions, you can then think about getting some answers. Some of these you might be able to find answers to yourself but some you might need help with. At that point you are ready to seek the help of a market research agency.
A market research agency can provide you with advice and guidance as to what form of research might be most appropriate. Speaking with an agency will help to clarify your thinking and provide you with some tangible options to consider.
If you would like to find out more about the kind of services our agency can offer, or if you have particular questions you’d like help with, please contact us for more information.