How to conduct market research?
- What is market research ? What does it consist of ?
- When should you conduct market research?
- Are there any good reasons not to carry out a market study?
- What are the limits of market studies?
The market analysis is one of the most important parts of any startup strategy. Do it right, and you will have a clear idea of the path down which you are headed. It is one of the most important sections of your business plan and should illustrate your industry and market knowledge as well as any of your research findings and conclusions.
What is market research ? What does it consist of ?
A market analysis can be a measuring stick you use over time to see how far you’ve come, and it allows you to make projections based on data rather than guesswork. It helps potential entrepreneurs to overcome their biases and accept the truth of things.
"My product is unique, the service I want to offer will please, I have no competitors, the market is growing, etc.” These certainties are often subsequently dismissed.
The launch or development of a product or a company involves setting out:
- The needs or requirements of the market
- The existence of a trade area
- The impact of the competition
Carrying out market research is a voluntary stage which consists of asking the "right" questions which must yield constructive responses to help the entrepreneur with his decisions. The right question yields rational, objective, and non-emotional information. It also leads to other questions, so that they are linked in a logical sequence.
A market analysis includes:
- first, collecting reliable information and objectives concerning the market;
- then, processing this and analyzing it methodically;
- in order to make the right decisions.
When should you conduct market research?
It is certainly a good idea to carry out a market study when you are planning to create a new company: it is an essential part of the business plan. The market study meets a dual challenge for the future entrepreneur:
- to turn a vision of the project into the reality of the market
- to assess the viability of the project before starting
- to take a step back regarding the idea, your impressions
- to put yourself in the customer’s shoes
- to position the company project in time and space
- to achieve confirmation of the idea, concept, and choice of activity
- to get to know and understand how the relevant market works
- to evaluate the potential market and determine distribution and sales habits, etc.
Market research is also required in the context of an existing company, before launching a new product or a new service on the market. And finally, a market study is also recommended to launch a research, development, or innovation project or a large investment. This is to avoid mobilizing significant financial and human resources and risking not being able to attract sufficient customers to at least recover the investment made.
In conclusion: devoting some time to this task allows the entrepreneur to turn a passive vision of a project into an active and dynamic one, all while observing what is happening elsewhere and getting out of isolation.
Are there any good reasons not to carry out a market study?
The market study does not in itself offer a way to consolidate the entrepreneur's ideas. However, a study can plunge a project into doubt: better to know before than after!
Lost time, complexity, and budget are too often the "poor" reasons mentioned for not assessing the market and setting your company up for failure. This is the reason why one in four businesses fail!
View the market study as an opportunity to get an idea of the realities of the market, by carrying it out yourself.
What are the limits of market studies?
The market study allows you to make the best marketing decisions and to minimize risks, although these risks cannot be eliminated completely.
It is a tool for the decision-maker, but it cannot replace the latter. Don't forget that markets evolve rapidly and that studies must be updated regularly.
There are two ways of carrying out a market study: