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5 Cost Effective Ways To
Do Market Research
For Your Business Plan
Gain Market Intelligence Without Spending A Fortune
IMAGINE: You are SO excited to finally get your business idea off the ground and start writing your Business Plan and while you look for all the information you need to better understand the market you want to enter in, you find various market research reports that would literally cost you a fortune and you are not even sure if they really help you gain the clarity you need for making decisions for your business. No wonder you are discouraged and feel lost!
THE GOOD NEWS: There is a cost-effective and better way to conduct market research that helps you collect all the information you need to confidently write the market research section of your Business Plan and steer your business towards success.
ONE: Identify what information you need
Conducting market research can be a very overwhelming, expensive and tedious process, especially if you forget its intended purpose in the first place.
Start with the end in mind. What you want to avoid is that your product and service is not well received by your ideal customer and your offering is ignored. Unfortunately, this often happens to entrepreneurs who are so passionate about their product that they forget it is meant to serve a market and audience.
The pragmatic way to approach market research is to get as close to your customers as possible when designing your product and offering and to create a solution your ideal customers actually want and are ready to pay for. This significantly reduces the risk that your business will flop due to lack of “product-market fit”.
Depending on your industry and the type of business you are (local, online, product or service-based etc) some variety of market research is more appropriate than another.
What you need is to get a clear understanding of the market and industry your company will operate in and to better understand your potential customers and their needs, so that you can be confident that your product and service will be well received by your target market.
Ultimately, your market research should help you refine your answers to these questions:
Make sure to identify and describe your target market i.e. your “ideal customer avatar”: what are the demographic (age, gender, income levels, education, profession, location) and psychographics (values, personality traits, interests & lifestyle, fears, challenges and pain points, favorite magazines, blogs, websites, books, Netflix shows, conferences, people they look up to) of your ideal customers?
Can you group your target market in separate segments based on certain common characteristics? This is called market segmentation and can greatly help you create different marketing campaigns to directly speak to each of these segments and customize your product and service and messaging to these specific groups.
You want to quantify the market size based on the number of potential target customers and the average amount of money they spend on similar products and services. Depending on your industry and geography these sources may differ, for example, if you are in the US these are some of the information sources you will want to consider:
Statista is a great source for gathering market information and includes datasets on 600+ industries as well as charts and infographics that make the information more easily digestible.
They offer a free and a single account, a great option for when you are just starting out to collect the market information you need in a cost-effective way.
This a great free resource for reliable market size data that helps you gain insight into demographic and geographic information for your target market. It has many online market research tools and free industry reports that are very useful as you start to gather market data.
Here you can find a variety of market research analysis tools, reports and resources to help gather and refine your target market data.
Survey the main industry publications and influencers as well as Google Trends and Google Keywords Market Planner to search for the most popular keywords used by your target demographic online to better understand the current stage of your industry and its outlook in the near future.
As part of your research try to answer these questions:
- Is your current target market expected to grow or shrink in the future?
- What are the overall societal, economic and technology trends you are observing in your industry?
- What are your target customers saying for example on social media or Quora?
- What are the customer reviews of your competitors saying?
Do you know how much your target customers are actually willing to pay for a similar product?
This is where surveying the market for similar products and researching the pricing strategies of your competitors is of great help for determining a set point for the customer’s willingness to pay that will help you determine your pricing strategy.
Typically the willingness to pay is influenced by the current state of the economy, how in-demand / in-season the type of product is, the annual disposable income etc.
Uncovering the shopping habits and routines your ideal customer uses is key to getting to know their behaviour on a more intimate level and putting your products where they are looking for to get inspired, educated and to shop.
As part of your market research process, try to answer these questions to uncover their buying habits and solidify your market intelligence:
- Are your ideal customers scrolling through Pinterest to get inspired for their next purchases?
- Are they using Instagram recommendations to save on their wish list what they want to buy next?
- Are they conducting online research to look for ethical and mission-driven brands they want to support?
- Are they mostly shopping online or are they using their local supermarkets and malls?
- Are they using their mobile phones or laptops/ desktops when shopping?
This seems obvious and pretty straightforward but there is more depth to it than you might think.
First, you want to identify your direct competitors, businesses that sell the same products as you are, and whose products are perceived by customers as very similar to what you offer.
Next, you want to identify your indirect competitors, these companies offer alternative products for example they offer a different version of the product you are offering and might not appeal to the same ideal customer avatar you are going for.
Then, you want to look at substitute/ alternatives to your current product offering, these are companies that have products that deliver a similar set of benefits but their product is different i.e. black tea vs. coffee.
As a starting point you want to clarify and refine the answers to the following questions:
- What services or products are they offering?
- How much do their products or services cost?
- How and where do they market their products or services?
- What are their strengths and weaknesses?
- What is their value proposition and mission?
- What promises do they make?
- What do their customer reviews say about the quality of their products and services?
Here’s how you can you collect all this information in a cost-effective way:
- Check out their main online presence: visit their website, about page, pricing, product and service description, mission statement, blog articles, free downloads etc.
- Check out their social media accounts and try to identify their social media strategy, content pillars, value creation and engagement style and brand voice
- Attend industry events and conferences whether online or in-person and collect their e-books, brochures, business cards and other marketing materials
- If they have a physical presence, engage with them as a customer and check out their customer service and quality of their offering
- If you have the opportunity speak with their customers and ask them about their experience while being upfront about your intention to conduct market research
- Send one of your trusted advisors or team members to be one of their customers and report on their experience
TWO: Get Savvy About Your Sources
Did you know that you could save thousands of dollars by getting savvy about the way you go about and conduct your market research?
Chances are if you don’t have the multiple six-figure budget for market research of a large corporation you won’t be pleased to shell out thousands of dollars to collect the market data you need to build a solid Business Plan.
Here is where having access to the library of a reputable university can save you, because you would be able to access licensed databases, industry reports and market information included in their annual subscription at a fraction of the cost.
Most universities offer subscription plans for researchers and outside parties so you can call them and see if such an option is available in your local area.
Some databases you will want to check out are Factiva, Forrester, Mintel Reports, Gartner, IBISWorld and Statista.
Depending on the university and the type of licences they have acquired, you might have to check if these are available to non-students or academia only on-site on the computer terminals in the university library or online.
THREE: Use field research
A great way to get to know your target customers better is to conduct field research, aka to collect original and highly specific information by interacting directly with your target market avatar through face-to-face interviews, online surveys and free consultations.
Whereas industry reports, databases and market intelligence will help you gain a birds-eye view of your industry, field research offers a more in-depth analysis of the actual behavior, hopes and dreams, fears and pain points of your ideal target customer.
A cost-effective way to conduct field research is to survey target customers online, to set-up free discovery calls to discuss their needs and to interact with target customers on social media in various groups and communities where your ideal customers hang out.
For example, you can use tools such as:
✓ SurveyMonkey – Freemium online survey tool that allows you to create awesome surveys that you can use for market research, product testing and more.
✓ SurveySparrow – A powerful experience management platform that integrates surveys and helps you create and share highly engaging mobile-first surveys that offer a chat-like experience.
✓ Typeform– A platform where you can build beautiful and conversational surveys, quizzes and forms
If you prefer the face-to-face personal approach to conduct your field research then joining various meetups for example on Meetup focused on topics your company helps solve would put you in direct contact with prospective customers you could survey as part of your research.
Last but not least, attending industry conferences and trade shows is a great way to network and get closer to your target customers while also checking your competition out.
FOUR: Hire a Business Plan consultant
A Business Plan consultant specialized in market research will be able to help you with all the necessary steps involved in conducting a thorough analysis, independently or as part of writing your Business Plan.
At StartupHQ, as part of our from Scratch-to-Hatch service we conduct a thorough market research for your business and industry and include its results as part of your Business Plan.
If you rather take on the challenge to perform your market analysis on your own, we also offer the possibility to review your work and answer your questions as part of our Biz-Hours-Call service.
Our experienced Business Plan consultants work with several companies every year so that they have access to specialized industry databases and market intelligence at scale. This know-how is integrated into their service offering and they can quote you competitive rates and make your market research process seamless and cost-effective.
We would be happy to answer your market research questions and more as part of your Free-Discovery-Call.
FIVE: Take Action
After all this extensive research you’ve collected all your relevant market information and now you feel confident you understand your ideal customer and are ready to execute your Business Plan.
You are right, the journey has just begun, after all market research without an action plan is completely worthless!
At StartupHQ we are all about getting all your hard-earned insights into an actionable Business Plan that gets you the clarity, funding and partnerships you need to succeed.
We help you systematically review, digest it and incorporate it into your Business Plan so that all this market intelligence is directly translated into how you plan and execute your products, services, communications, marketing, business development and finances.
Want to learn more about how we can help you conduct cost-effective market research as part of your actionable Business Plan? Book a Free Discovery Call to see how we can work together!
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