As an entrepreneur, we tend to get ideas about everything and anything, primarily about business start-ups. This is why it is essential to determine whether the idea we are getting will work out and become successful or not. This is where market research helps with business idea evaluation. It consists of researching the market conditions, analyzing the projected costs, and establishing the target market. Knowing how to use market research for business idea evaluation will help you to effectively plan and set realistic goals. In this post, we will talk about market research and how it helps with business idea evaluation.
What Is Market Research?
Market research involves the collection, analysis, and interpretation of data to gain deeper insights into specific industries and target audiences. For individuals embarking on a new business venture, market research serves as a means to address pivotal questions such as:
- Market Saturation: how many similar brands are already available to customers? Moreover, how many of these businesses are doing well, and what opportunities they are missing? And what different things can you do to fill the loopholes?
- Demand: is there a need for your service or products? If yes, what issues will your products or services resolve, and how can the product align with the requirements of customers?
- Economic Indicators: what are your potential customers’ average financial condition and employment rate? It is one of the first steps in market research as it allows businesses to create detailed customer personas.
- Market Size: how many people in the audience are interested in your products? This question will help you to establish an initial budget for your start-up. From here, you can predict the profitability and revenue of your new business.
- Pricing: what customers are paying to competitors? When you answer this question, you can learn the pricing aspect of your products to stay competitive while getting reasonable profit margins.
- Location: where do customers live, both online and offline, and how can your business reach out to them?
The results from the market research will allow you to customize the marketing efforts and build a better brand message to effectively engage with customers. It will also allow you to package and design your services and products in a manner that will resonate with your audience’s needs. These factors will lead your business to high conversion rates, revenues, and sales.
How Does Market Research Evaluate Business Ideas?
Market research is entrepreneurs’ best friend as it is used to discover the common preferences and characteristics of customers, competitors, and current and upcoming trends that may affect your business.
By thoroughly researching your customers, competition, and industry at the initial stage, you will make informed decisions to turn your business idea into a reality.
How To Perform Market Research?
There is no one clear-cut way of performing market research. Generally, starting wide and slowly narrowing down your research as you move forward is best. The following are critical steps for performing efficient market research:
- Engage With Small Targets
There are many ways to reach the target audience with, it’s best to start with exploratory research by asking simple questions followed by what will open up valuable insights. You can do this through:
- Surveys.
- Emails.
- Phone calls.
- Focus groups.
- Network to get participants.
- Establish A Buyer’s Persona
Connecting with your target audience is the key to brand engagement and influencing buying behavior. If you don’t, you could waste valuable time and resources promoting your brand to wrong audience.
You can create your buyer’s persona by answering questions like:
- Where do your customers live?
- How educated are they?
- What pain points, interests, and desires does your audience share?
- What industry do they work in?
- What language do they speak?
- Analyze Data
You will acquire a plethora of data throughout the whole process. Ensure you are equipped with a remarkable system that will help you organize all the data so you don’t get overwhelmed. You can organize the data by doing the following:
- Create distinct buyer personas if you have multiple audience types.
- Sort the data into groups to understand the bigger picture.
- Build a chart to see how desires, pain points, needs, and characteristics overlap.
Conclusion
Market research is imperative for businesses that want to understand, identify, and segment their target audience. Moreover, it will give you a high-level understanding of your target industry overall, providing you with the data you can use to establish a budget and competitively add prices to get positive results.
