To conduct market research is to find out whether or not there is an opportunity for you to take your idea and turn it into a successful business. This research is a way for you to gather information and insights on potential customers and develop an understanding of your digital and local competitive landscape. Gather all of the information learned from your research to identify a competitive advantage for your business.
The difference between Market Research and Competitive Analysis
“Market research helps you find customers for your business. Competitive analysis helps you make your business unique. Combine them to find a competitive advantage for your small business” – Small Business Administration
How to leverage your market research to find customers in your niche
Researching your market or the field you are about to enter is the act of blending consumer behavior and economic trends not just validate but also polish your business idea.
It is paramount to have an understanding of who your consumer base is from the beginning (reverse engineering this is possible as well, but why spend your time and effort on an idea that is not all the way thought out? Start smart. Start strong.). This approach of validation-through-market-research lets you reduce risk even while your business is still just a thought in your mind.
How do you validate your idea? I’m glad you asked. A great place to start is to gather demographic information on your target audience to better understand what the opportunities and limitations are for attracting these individuals. Some key factors could include population data on interests, wealth, age, family, or anything else that is relevant for your business.
You will probably start to notice key differentiating factors. If not, that is ok too. Take these varying identifiers and create buyer personas for your business. These personas will slightly grow over time and can be leveraged in future marketing efforts.
After you’ve curated all of your data, you’ll want to answer these questions to get a good understanding of your market.
Questions to Validate Your Business Idea
Demand: Is there a desire for your product or service?
Market Size: How many people would be interested in what you’re offering?
Economic Indicators: What are the average income ranges and employment rates?
Location: Where do your customers live? How far can your business reach?
Market Saturation: How many similar options are already available to your consumers?
Pricing: What do these potential customers pay for these alternatives?
While refining your idea, you will want to keep in mind what the latest small business trends and tools are so you are up to date with the times and not doing extra work if it is not necessary. It is also vital to develop a sense of how the current market shares split for those who could potentially impact your profits in your specific industry.
Market research can be accomplished through your efforts by going directly to the consumer or this research can be done through existing studies and sources. Each of these research styles has some pros and cons and also can be applicable at different stages of your business in the future.
Existing sources can be a way to save your incredibly valuable time and energy that could potentially be better spent on other tasks to excel your business forward. However, the time it takes to find such sources can rack up quickly. Once you finally do find something similar, it could be just that, similar to your inquiry and not necessarily specific enough to your audience as you would like.
Reliable sources that provide customer and market information at no cost.
Reaching out directly to individuals in your target audience can give you a much better depth of understanding how who they are and how much of a problem it is that you are solving for them. However, this approach has its drawbacks, just like the former. This style of market research can take a substantial amount of your time and not to mention the sheer cost that could be associated with these efforts for them to have accurate and effective data. If this route is affordable, you will gain the ability to find solutions specific to your business and future customers. A few examples for this field research would be to find out which logo do they feel best matches the related services or to find where they would go to find the solution you are providing.
Different methods to accomplish direct market research
Surveys: This is great for feedback from your respondents
Questionnaires: These can be helpful for further refinement of data from surveys
Focus Groups: These are ideal for feedback under guidance from a moderator
In-Depth Interviews: A much more time-consuming route that allows for the collection of detailed information that goes beyond initial and surface-level answers
How to utilizes a competitive analysis to gain market share in your niche
“A competitive analysis is a strategy where you find who your competitors are and research their products, sales, and marketing strategies. By doing this, you can create solid business strategies that improve upon your competitor’s.” – Hubspot
Simply put, you evaluate your competitors to understand their strengths and weaknesses in comparison to yours. It is logical to think the better understanding you have of your competitors, the higher the likelihood of you carving out some of their market share for your business.
Though the process of identifying your competitors’ strengths and weaknesses can be simply stated, the execution can be exceptionally difficult as well as confusing and time-consuming. Most of the data can be tedious to gather. If you are able to dig something up, it can sometimes leave you having more questions than answers.
Important steps to make your competitive analysis useful
- Pick the right competitors to analyze
- Know which aspects of your competitors business are worth analyzing
- Know where to look for the data
- Understand how you can use the insights to improve your own business
A competitive analysis is fundamental for making sure your business will have success against its competition. This analysis should not be a second thought towards your business strategy, but rather, this research should form the basis of your business strategy. This process will give your business a far greater chance to survive by better aligning with your target audience’s needs and expectations. Taking the wrong road is easy to do and has happened to most. Start strong with the proper planning and start smart with the proper research conducted and follow the map your research has painted.