A guide to market research for the new business owner
Understanding market research in less time than it takes to microwave mac ’n’ cheese.
Set the timer and hit start, because while your pasta is cooking, you’ll learn what market research is and how to do it.
We promise you won’t be cooked by the end of this four-minute read.
Market research sounds complicated, but once you understand what it’s for, you’ll find it’s a lot easier than you think.
Market research is all about testing assumptions you’re making in your business plan, to figure out if your business idea has potential.
During market research, you’ll probably want to figure out who your business will be selling to, whether those people want or what you’re offering, and how much they’re willing to pay for your product or service.
Why is it important?
Market research is about understanding your potential clients and their pain points.
Knowing who they are, what they do, and how they spend their free time will help you understand what appeals to them and how to interact with them.
Knowing if you can help make their lives easier will also help you decide whether your business idea is feasible.
How to do market research
“Your market” is how many potential customers you could reach. “Market research” is about figuring out who those people are and trying to talk to as many of them as possible.
Some methods you could use to do your market research could include:
- Product/service reviews
- Social media
- Web search
- Government data (ABS)
- Google trends
There are several resources that talk you through how to do market research. We recommend these ones.
Determining your target market
The first step in market research is to identify your target market.
Your target market is the people you want to sell to. Try to learn as much as you can about who they are, what they do and what they like.
Some things you might want to know could include:
How big is your slice of the pie?
Now that you have an idea about who your potential customers are, it’s time to work out how many of them would want to buy your product or service.
The size of your target market will affect how much your business can make. You want to be sure that your target market is big enough for all your efforts to be worthwhile.
What are your competitors doing?
Understanding what other people in your industry are doing will help you understand what makes your business special.
Understanding where your competitors are struggling, or what they’re not doing, will help you see opportunities for your business. This will help your business stand out.
For a deeper understanding of how to do market research, we recommend this government resource.
Minimum Viable Product
Part of your market research is also about creating a minimum viable product (MVP). Your MVP is the most basic version of your product or service that people will want to buy.
Think about the MVP of a car.
The most basic function of a car is to get passengers from point A to point B. Sure, it’s nice to have air conditioning and leather interiors, but not all of your potential customers will need those things.
For your MVP, just focus on what you need to put in your car to get it to run. You can always add the bonus features later.
A great way to figure out your minimum viable product is to create prototypes or sample products. Your prototypes don’t always need to be functional – they can just be models or mock ups. Next, test your prototypes with potential customers.
If your business is a service business, you can test your prototype by practicing how you would carry out your service, or offering test services for free.
Testing your prototypes will uncover any issues with your product or service that you may not have thought about.
Top 3 takeaways
- Market research is about testing the assumptions in your business plan.
- There are a variety of ways you can carry out market research.
- The same methods you use to carry out market research can be used to test your MVP.
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