When thinking of your business idea, the biggest challenge is figuring out if your business idea is going to fly – are you able to fulfill a need in the market or solve a problem?
You want to validate your business idea so that you save yourself spending a lot of time, effort and money on an idea that does not have traction in the market.
Good research gives you the benefit of:
- Clarity – knowing exactly who the customer is
- Truth – customers sharing what they want/need without subjective bias
- Opportunity – knowing where the gaps / trends or needs are for your customers
- Improvement – providing ways to improve your business and it’s offerings
Today, thanks to social media platforms, it’s fairly easy to uncover the pain points that potential customers could be experiencing. Using search terms for your business idea you can search for competitors, you can see what marketing strategies they are using and how they are serving their customers. You can also see what their customers are asking for. You can do in depth searches on Facebook, Facebook Groups and Reddit to name a few.
Start with Primary Research
Primary market research is research done directly with your potential customers to validate a potential business idea or to expand your current product/service offering. What your potential / existing customers want / need, directly impacts all aspects of your company and its products/services and can determine whether it will be a success or failure. There are many tools, however a survey is a reliable, consistent and popular method to collect the data you need.
Primary research is done through interviews, surveys, focus groups etc. You can do this research yourself or hire a company to do it for you. If you complete the research yourself, you keep the costs down and have the added benefit of getting to know the market for your business.
A drawback of primary research is that it can be time consuming and expensive, particularly if you are hiring a marketing firm to conduct the research. The benefits are that you can target specific groups (such as your customers or the geographic market for your business) and tailor the study/survey to answer specific questions relating to your potential client and the market. If you only find 2 people out of 50 that are interested, it may not be a viable idea. Ask people who would be your client, not friends and family and your network who know you and will support you but may never need your service or product.
It involves searching existing information that has already been collected, such as demographic data, company records, surveys, research studies and industry statistics, and using it in your own business or marketing plan. It is normally less time consuming than primary research, and can be less expensive. Sources of secondary research materials include libraries, universities, industry associations and government departments and google searches.
Knowing your competitors is crucial to developing effective business strategies such as market positioning, pricing, discounting and special offers. It also helps you identify potential competitors, analyze their strengths and weaknesses and how your own products and services are or can offer to your potential customer.
Competitive analysis can reveal trends and help you improve your value to your customers. It also helps you to improve your marketing or learn how other businesses do theirs or see if there are any under served opportunities for your business. Understanding your place in the market and who your competitors are helps you to create leverage for your future plans for your business.
What Do You Need to Know?
When conducting research there are some questions you may want to answer, and primary or secondary research will help you find the answers. Some of the questions to consider:
- Who is My Customer?
Knowing who your customer is will help you choose a location, establish pricing, and plan a selling strategy. Ask yourself: Who will buy my product? What are my customer’s habits and preferences?
- Is There a Demand for My Product/Service?
Make sure that your product or service is meeting the needs of your customers. Or uncover other needs that your product/service may solve.
- Who is My Competition?
Determine who your major competitors are, know their strengths and weaknesses and your opportunities and threats (SWOT) and see how your business compares.
- Where Are My Customers Located?
Knowing where your potential customers are located will help you choose a location and what kind of marketing strategy to use. It can also help you learn about changes in your industry and how those changes could impact sales.
- What Will I Charge?
The goal for your business is to maximize your profits while remaining competitive. Pricing can play a large part in the success of your business, so you will want to consider what your competitors are charging for similar products and services and if you can maintain your prices over time.
- How Should I Promote My Product/Service?
Ensure that you are using the most effective methods to promote your business. When deciding on a promotional strategy, consider what your competitors are doing and what kind of media would best suit your customer (for example, online media for the millennial market).
- Surveys are likely the easiest way to get started, create no more than 10-12 questions
- Keep the questions concise and to the point – one question per sentence and avoid leading questions and influencing the response
- Tell them who you are and how you plan to use the information
Market Research and Statistics Resources
Find information on research and statistics resources available online. Discover how to obtain data and analysis through various channels. You can also access catalogs and materials from various Canadian government libraries.