Market research - Why is it important and how to do it well
To you and your friends, your business idea sounds great.
But is it really?
Could it be even better maybe?
This is where market research comes in!
Done well, your market analysis can give you some concrete information to further develop your business idea.
As we mentioned previously, your market evaluation may lead you to refine, rethink or revise your initial idea (and this is a good thing!).
Set clear market research objectives
There is a lot of information out there, and we mean a lot.
It’s so easy to get side-tracked and overwhelmed.
So, it’s smart to set out with clear market research objectives to give you a strategy to follow.
Before you open Google to start your market evaluation though, write down what information you want to collect and what questions you want answered.
Step 1: Research your business idea
- Your industry
Time to get into detail, ready?
From the information below, you will be able to create your template for market research.
Here’s how to do market research
1 - Customers
Who will be buying from your business?
Here, your market evaluation will be looking at your customer base and why they would want and need to buy from your business.
- What your customer looks like
- How old they are
- What do they do for a living
- Their likes and dislikes
This exercise is called the buyer persona. Remember, there may be more than one buyer persona who will love buying from your business.
Then have a look at why they need this product or service from your business.
What pain-point/s does your business solve for them? The top pain points usually revolve around saving time, saving or making money and having peace of mind.
Now, where would you get this information from?
Try the Australian Bureau of Statistics for population figures and census information.
Try industry reports collected by third parties. For example, companies like Mintel and Euromonitor. Be aware, that some third parties will charge for industry reports and some are freely available (start honing your Google search skills!).
Try Google Trends – this service analyses the top search queries in Google search across various regions and languages.
2 - Competitors
Conducting a competitive analysis will give you valuable insight into who your competitors are and how many there are.
It can also provide you with information on what they are doing right and doing wrong (powerful intel for you to strengthen your business!).
Compare your products or services against your main competitors and try to answer these questions:
- What is your unique selling proposition? That is, what is different about your products or services?
- What price point are they selling at?
- What target audience are they selling to?
- What marketing and sales strategies are they using to attract these customers?
PRO TIP: Don’t forget to widen your research circle to indirect competitors – these are the businesses who sell different products and services in the same category, but their audience is like yours.
For example, if your business sells high-end rugs for the home, you may want to include businesses selling wool carpet. Or if your business is a takeaway noodle joint, the sushi and Indian takeaway shops down the road will be your indirect competitors.
Where do you get this information from?
- Again, Google will become your best friend here. Use a whole raft of search terms, as well as those suggested by Google.
- Become a secret shopper. Go shopping at your competitors and pretend you are a customer. Ask lots of questions, you’ll be able to recognise their sales tactics.
- Take a walk in your local neighbourhood to see what businesses are around and who would be a direct or indirect competitor to your business. Look at the number and type of shoppers to give you insight into your clientele.
3 - Industry Reports
Let’s now delve into the state of your industry. This will give you a broad view and help you to understand the environment you will be competing in.
Is it a new industry or an industry that has been around for a while? What changes or trends have taken place recently?
Where can you get this information?
- Government departments are great for this sort of information. Try the Australian Bureau of Statistics for size of industry and value.
- Third-party industry reports – companies like IBIS World, BIS Oxford Economics, Gartner and IDC for technology – can help with industry profiles, market overviews, forecasts, consumers, supply chains and main activities.
- Try your local council for business information. They collect information and resources designed to help invigorate their business sector and the local economy.
What did your market research uncover?
Next, your business will need to provide two physical addresses.
Unfortunately, a PO Box won’t be accepted.
You’ve got a lot of information now, haven’t you?
It’s time to organise your data for your research objectives. Go back to your objectives and answer the questions you sought in the beginning.
Next, analyse this information.
This can help you sift through the information you collected during your research and identify actionable next steps for your business.
Use the insights you’ve collected in your market research to guide your decision-making. Identify all the actionable steps your business needs to make next.
Always keep in mind your market research objectives, so you don’t get side-tracked…and you’ll soon be well on your way to setting up your business for success.
Don’t get stuck with how to do market research, Sleek is here for you. Use our chat box to shoot through a quick question or call us on +61 2 9100 0480
Some of our other articles you might want to read:
- How to choose a business name. The dos and don’ts
- Business structure – which one is correct for you?
- What is an ABN? How to apply for an ABN