Many great ideas and innovative businesses have failed because the entrepreneurs simply relied on their gut, and then they wonder where it all went wrong.
“Research is formalized curiosity. It is poking and prying with a purpose. ”
- Zora Neale Hurston, American author
Scene 1: A Couple of Years Ago
You or your visionary team have a great idea for a new product!! It ‘feels’ like the answer to everyone’s problems. It will definitely be a big hit! So you get your creative heads, product designers, technical staff and experts all into a tizzy. The product must be ready in next 6 months. After hours and hours of hard work, there it is – to take the consumers by storm. You launch it with big fanfare.
Scene 2: Cut to the Present
The ‘great’ and promising product was ‘great’ only on the drawing board. Your negative inventory is piling up and there are just not enough takers.
What Went Wrong?
The consumers just didn’t connect with the product or the price point was wrong or the brand personality did not appeal or the communication was not clear or the distribution was poor or the value-proposition was not meaningful….There are a number of things that can have a very different response in the market than you had imagined it to.
But it’s too late now….Too much water has already run under the bridge and enough time, effort and money already been wasted. You had been banking on this one great idea and suddenly you see your vision falling apart.
Wish You Had Known This Before!
Many great ideas and innovative businesses have failed because the entrepreneurs simply relied on their gut, and then they wonder where it all went wrong.
The answer is simple: They just didn’t bother to validate their assumptions beforehand.
Who Needs Market Research?
Any and every organization, whether an existing business that is looking at launching a new product or a start-up that is banking on that one great idea needs to do a thorough analysis of what the market needs, at what price-point and how that can be effectively positioned and marketed i.e., every company introducing anything new in the market needs to validate all the aspects of the business on which ‘someone’ [either you or a team] has made some assumptions on what the outcome will be.
For E.g. – if you think the product will have 3 per cent conversion at Rs 100 per piece from those who view the advertisement and 15 per cent conversion at Rs 50 per piece, then that’s an assumption which needs to be tested.
Market research is an important tool that can equip the organisation with data/information that can help them determine the right strategy and reduce the risks. It can help them make informed and well-calculated decisions.
It can help you gain valuable insight into what the consumers want – type of product, pricing, value proposition, communication clarity, brand personality, etc.
Why Should You Do Market Research?
More specifically, good market research allows you to:
· Have a handle on the customer needs
· Be equipped with market trends
· Plan how to position your product/service
· Be on the lookout for warning signals, so you can take corrective measures before it is too late etc.
If you are looking for investors to fund your business, market research based plans have a better chance of being considered seriously than plans that are based on pure gut feel and no market research. Market research does not have to be formal research through an agency. Just talking to a reasonable number of customers is also a fair market research.
For E.g. – if you are selling ERP solutions for travel agents, then talk to at least 100 of them in the segment you want to tap. If you are selling an enterprise solution to very large enterprises, then talking to 4-5 might be enough as access to more will be difficult. However, if you are doing a mobile app, then testing it with may be a 1000 or more people might be possible, and therefore expected.
How Should You Do It?
Market research is nothing but an information gathering exercise. In a raw form, it could mean conducting feedback/informal chats to connect with your customers or potential customers. You could conduct interviews, quizzes, surveys, questionnaires and the like.
In more formal and professional ways, you could hire experts who conduct detailed research, follow media reports and use marketing information systems to capture and analyze key data.
Research could be qualitative as well as quantitative. The more accurate the data, the better position you are in to understand what the market needs.
When Should You Do It?
As suggested earlier, market research should definitely be done prior to launching a new venture or product or before changing some aspect of the business – e.g. changing a feature or a service or the pricing.
In fact, it should be an ongoing process built into your organisation’s ethos and work culture, such that there is a constant flow of information about how you are placed in the competitive market. Since technology has made the world shrink and the communication open, market trends, needs and scenarios are changing very fast.
Time and effort invested in adequate market research will help take proactive steps rather than reactive ‘stay afloat’ decisions, and remain at the top of the game.
Long Term Success-Oriented Approach to Business
With market research, your business will focus on your customers. It will help you to prioritize and select growth oriented practical and achievable opportunities, help identify the target market for your future endeavors and regularly monitor your positioning, helping you to create and recreate your brand image in your campaigns as per the changing requirements.
The writer of this article is Prajakt Raut, Founder, The Hub for Startups. He is an entrepreneur and entrepreneurship evangelist.
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