We all have that one entrepreneurial friend. That friend with a great idea and an even greater smile who used to put his heart and soul into developing the concept of his dreams. He spent hours in his mancave, alternated pizza nights with sleepless nights and firmly believed that success was at his fingertips. Turned out the only thing at his fingertips were his unkempt nails; his startup failed, there was no market need.
An overwhelming 90% of startups fail and the number one reason is the lack of market need. Many entrepreneurs underestimate the importance of market research because they are blinded by their vision. They get so excited about getting their hands dirty that they rush through the research phase, either because research is considered too costly or seems irrelevant at that stage. As a result, those entrepreneurs encounter difficulties in objectively understanding the business environment and could end up finding themselves trying to sell products on a market where there is no actual space for them.
Unsurprisingly, this market space is occupied by the 10% of startups that were better prepared; market research is their goldmine. Speaking in official terms, market research is the process of testing the viability of a new product or service. Market research is the key to unlocking valuable insights and can be performed through primary or secondary sources. Primary research being new and direct information gathered among the potential audience of the product. Secondary research involves gathering data from existing sources, put simply. Sure, market research can be overwhelming. It is easy to get lost in the data and it might not provide you with the results you were hoping to see. So, why bother? Let us take a closer look at how market research will benefit your business
1. Backing Up the Business Idea
Before aiming for the moon, it might be wise to know where the moon is. This requires that impactful market trends are being analyzed so that opportunities for growth can be identified. Sometimes this means that you will need to start with an open mind and that you should trust the market research to lead you to your niche. This will create space for your business idea to be tailored so that is actually makes sense.
2. Understanding the Customer Base
Targeted interviews and surveys can help you identify who your customers should be, what their needs and wants are, and how they can best be reached. Direct target market research saves you guessing work by identifying the true market need, making it easy to cater your product accordingly.
3. Getting a Grip on Competition
Competitor research aims to identify both your direct competitors as well as indirect competitors and allows you to look into their strategies. A proper competition analysis might reveal insider information about their value proposition which simply is not visible from the outside. Understanding how the competition’s value proposition works will help you to differentiate yourself in order to be different and ahead of them.
4. Developing a Viable Business Concept
After the market dynamics are understood and the competition’s secret spots are not so secret anymore, it is time to dive back into your own business concept. By wearing those newly obtained objective glasses, you should be able to create a concept that is suitable to the market, wanted by your potential customers and will differentiate you from the competition. This is where you can truly get your entrepreneurial juices flowing.
5. Convincing Potential Investors
Finding investors is known not to be the easiest step in developing a flourishing business. Yet, we can agree that it is rather essential. Without any doubt, investors are interested in startups with minimized risks and maximized potential returns. Market research helps to clarify just that has shown to significantly increase the chances of investors buying in to your genius idea.
This might all sound like a lovely fairytale for startups, but the truth is that market research is not only important for starting businesses. It is key for any company to stay on top of its game, to continuously scout for opportunities and threats and to alter its business model where necessary. Start small, dream big!
This is where we jump in…
About Amstel Lab
Amstel Lab partners with startups and scale-ups to commercialize your business. On the back of our experience, we have developed the unique Amstel Lab method: a tailor-made approach to maximize success. We test your markets, refine your product, innovate your commercial approach and execute your strategies. Any good idea is worth seeing through.
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