Importance of Market Research for Startups and Business Idea

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So, you’ve got an idea?

Excellent. I believe that great ideas can come from anywhere, and can go anywhere. Of course, so many factors can impact whether or not ideas turn out to be a success. Somewhere along the way you’ll find yourself wondering things like, “Will people care enough to buy it?” and “How can I be sure that I’ll do it right?”.

The good news is, there’s lots you can do to reduce the risk of failure and build up the confidence it takes to move forward with turning a promising idea into a reality.

A crucial step is validating your idea. Idea validation is all about exploring whether or not your idea is likely to be a business success. It’s about getting the green light to go ahead before you invest too much.

The key to a great idea is to make sure you’re solving a real problem. That’s where market research comes in. Market research is essential to your understanding of why the problem you’re looking to solve exists in the first place, and who it affects. Figuring this out early is an important factor for success, and it can save you a lot of time and money down the line.

Let’s take a look at how to go about this.

Some useful expressions

Product lifecycle – This is the process every new product or service goes through. Starting with its introduction into the market, then growth as it gains traction, followed by maturity as it reaches its peak, and finally decline as it’s replaced by something better.

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Value proposition – This is a statement that paints a very clear picture of what your product or service has to offer to potential customers.

Defining your market

Market research is the process of defining a target set of customers (a market) for your product or service, and gathering important information about them to validate the need or opportunity for your product to exist. Not be confused with user research, which is all about getting insights into the needs and behaviours of the people who are actually likely to use it.

For example: What age group does your product suit best? Is it gender-specific? Does it serve lots of people some of the time, or a more specific group more frequently? For your users, what’s the most important aspect of the problem your product is solving?

It’s essential to look at your potential competitors too. What are they doing well, what are they doing poorly, and what can you do differently to add more value?

Validation is about value creation

I know it might sound a bit like marketing fuzz, but trust me on this one. It isn’t enough for people just to say if they would use your product or not. Validation is about how they see themselves really using it, and the value they perceive it to bring.

I always ask: “How will this product or service add value to people’s lives?”. Take some time to think about this for your own product. You may find it useful to jot your thoughts down, so you can refer to them and build on your answer at a later stage.

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Gathering great insights

Well-designed products and services are based on a deep understanding of the problem they solve. That’s why research plays a key part in the way think about products; validating solutions by investigating and uncovering as much information as one can.

finding out below is important:

  • Who your audience is
  • Why the problem you’re solving for them exists
  • How your product will solve their problem
  • Who your competitors are

Defining your value proposition

Your market research will also put you in a great position to create your value proposition. This tells your audience:

  • How your product or service will solve or improve a problem
  • What benefits and value they’ll get from it
  • Depending on the nature of your product or service, it might also tell them why they should buy from you instead of a competitor

A value proposition is an important part of making a great first impression. You’ll use it when you’re introducing people (potential customers, investors, or partners) to your product, as a way of summing up what it’s about. So it’s really worthwhile putting in the time to make it easy to grasp, as well as compelling.

Are you targeting people or businesses?

When you approach defining a value proposition, think about who you’re targeting:

If your product is consumer-focused (business to consumer or B2C), the value proposition often highlights an improvement on one of the below factors:

  • Price e.g. better value for money or a lower price
  • Selection e.g. variety or range of choice
  • Quality e.g. well made, long lasting, proven better results, sophistication
  • Convenience e.g. making life simpler, easier, faster
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If your product is business–focused (business to business or B2B), the value proposition will likely centre around:

  • Increasing revenue
  • Reducing costs

Any good product needs to have at least one of these dimensions in order to compete. A lot of fantastic products are built on more than one of them.

For example, you may get an online grocery store that boasts a fantastic selection (great range of products), through a really convenient service (fast, flexible delivery).

Or you could have a software innovation that promises to streamline and consolidate systems, reducing your operational running costs (increasing profit by lowering expenditure).

Research inspires more meaningful solutions

Research plays a critical role at each stage in a product’s lifecycle: before it’s conceived, while it’s being developed, and after it’s launched. Although our approach changes and adapts as we move through the product lifecycle, market research is a key starting point.

Prashant Dedhia

 

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