How to do market research like a pro.
There is alot of ways on how to do market research like a pro but I have picked the best for start-ups like yours.
Market research is essential for any business. It helps you understand your customers and their needs. If you don’t do market research, you’re missing out on a lot of potential customers. In this article, we will show you how to do market research like a pro.
Step 1: Do Your Market Research Homework.
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One of the go-to tools for this is the Adwords Keyword Planner from Google, which will provide you with a set of usable keywords based on a phrase or term that describes your industry. Knowing the current, on-demand keywords in your niche is the first step to developing a targeted SEO strategy. It also allows you to check out the rates for competitive keywords so you can plan your advertising budget accordingly.
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Step 2: Research Your Competition
competitive analysis helps you learn from businesses competing for your potential customers. This is key to defining a competitive edge that creates sustainable revenue.
Your competitive analysis should identify your competition by product line or service and market segment. Assess the following characteristics of the competitive landscape:
- The Market share
- Competitions’s rengths and weaknesses
- Your window of opportunity to enter the market
- The importance of your target market to your competitors
- Any barriers that may hinder you as you enter the market
- Indirect or secondary competitors who may impact your success
Several industries might be competing to serve the same market you’re targeting. The Department of Justice provides a diagram of Porter’s Five Forces (another market research tool) as one way you can differentiate your competitive analysis by industry. Important factors to consider include level of competition, threat of new competitors or services, and the effect of suppliers and customers on price.
Step 3: Gather Information From Customers and Potential Customers
Conducting exploratory research can help you identify problems that need to be solved. It’s basically the same as researching for ideas in content marketing. First, you look for problems that your target market has. If there’s already an existing solution, see if you can improve it. Otherwise, look for another problem by way of primary research which means to obtain information straight from your potential customers.
An inexpensive way of doing market research this is to utilize Q&A websites like Quora. By understanding the questions that your target market have, you can determine whether there’s demand for the information, service, or product that you offer. You can also refer to social media websites so you can participate in existing conversations yourself.
Step 4: Analyze the Data You Gathered.
1. Determine the purpose of your study
There are many reasons why businesses might conduct market research. You may use them to assess business risks (e.g., threats), reduce issues, or create opportunities.
You can look at past problems to decrease future risks. And, analyze past successes to see what you need to continue to do in the future.
Before starting any market research, determine whether the analysis is for internal or external purposes. Internal purposes include things like improving cash flow or business operations. External purposes include trying convince lenders to give you a business loan.
Your analysis is a critical part of your small business plan. It shows lenders that you know your industry like the back of your hand and that your business has growth potential.
The kind of research you conduct varies depending on your analysis’ purpose. For example, say you conduct a study for internal purposes. Because it’s for internal purposes, you likely won’t need to collect as much data as you would with an external purpose.
Make sure you determine whether your study will be internal, external, or both before proceeding with your research.
2. Look at your industry’s outlook
In your analysis, outline the current state of your industry. Include where the industry is heading using metrics such as size, trends, and projected growth. Be sure to have relevant data to back up your claims.
This section will let investors or lenders see that you’ve done your homework on your business’s industry. And, it will show them whether or not your industry is worth their time and money.
3. Pinpoint target customers
The truth is, not every person will be your customer. But that’s OK! When you analyze the market, you must determine who your potential customers are. This part of the process is called a target market analysis.
You need to fully understand who your customers are and where they come from. Your research should paint a clear picture of your potential customers. Look at things like:
Marital or family status
Once you narrow down who your customers are, find out their needs, interests, personalities, and demographics.
Consider also creating customer personas based on your research. Many businesses have multiple customer personas. After you compile different customers’ characteristics, build different personas to represent your typical customers.
Pinpointing your target market can help you better cater to future customers and market more efficiently.
As your business grows, your potential customers may evolve or change. Revisit your target market from time to time to ensure they still fit your business.
4. Compare your competition
To further analyze the market, you need to understand your competition. And, you must know who your competitors are trying to target.
Take the time to research what other businesses are out there. Look at things like your competition’s offerings, location, targeted customers, and disadvantages in the market.
Make a list of all of your main competitors. Go through each one on the list and determine their strengths and weaknesses (SWOT analysis). What does their business have that you don’t? Why would a customer pick a competitor’s business over yours? Do they pose any threat to your business?
Once you outline your competitors’ strengths, weaknesses, opportunities, and threats, rank them from most to least threatening. Then, determine your startup’s advantages and marketing position.
5. Gather additional data
Information is your greatest ally when it comes to conducting a market analysis. The more information you gather and have, the better off your business will be.
The data you have should be unbiased, relevant, and factual. You should be able to back up your research and make decisions based on accurate information.
Use credible sources to gather additional data. You can take advantage of different resources, such as:
Local commerce websites
Trade journal articles
Competitors’ strengths and weaknesses
Target market surveys or questionnaires
Information from interviews or focus groups within your target market
After you analyze the market, it’s time to take a look at your findings. Lay out all of your research and organize it using different sections. Include sections for your purpose, target market, and competition.
Here are some other things you should include in your findings:
An overview of your industry’s size and growth rate
Your projected market share percentage
Your outlook for the industry
Discounts you plan on offering
Your business’s forecasted growth
Prices of your offerings
How much customers are willing to pay
Your cash flow projection
Your customer groups
Results of your other analyses
Based on your research, you will be able to forecast other things for your business, such as your cash flow cycle, gross margin, and customers’ buying habits.
7. Put your analysis into action
Conducting a market analysis might seem like a daunting task, but your business will thank you for it later.
Sure, you’ll spend a good chunk of time working on your marketing analysis. But, it’s well worth it. Don’t put all that extensive research to waste. Put your analysis into action.
For internal purposes, look at how you can use your findings to improve your business. Use your analysis to see if you can make any of your business processes more efficient.
If you conducted an analysis for external purposes, be prepared to speak with lenders about your research and conclusions.
Don’t just box up your analysis and pack it away for “later.” Revisit your market analysis every now and then for necessary tweaking.
Conclusion: By following the steps in this article, you will be able to do market research like a pro.