Whether in business or just in life, chances are you’ve experienced an “if only I had known that at the time” moment.
These moments when you realize you made an error because of a lack of knowledge are harsh teachers.
While these aren’t always so serious, when it comes to your business, you want to avoid them at all costs.
One of the best ways to avoid making those costly mistakes altogether is effective preliminary market research (also sometimes called preliminary market analysis).
This is how you dip your toes into the water, determine the risks, opportunities, and competition in a potential market. Obviously though, not all preliminary market research is equal, so we’ll break down how to do market research well so you can find and take advantage of the best opportunities out there.
The building blocks of effective preliminary market research
You want to begin with a plan. Contrary to what you might think, careful planning is what enables better agile market research because it gives you clarity regarding your mission. When you know what you need to achieve, it’s easier to shift your tactics when necessary.
Determine your goals and objectives
Start by developing a list of questions you want to answer. This will help your work be more focused. After all, if you’re simply researching your market, that can easily be a vague and endless task which distracts you from the work at hand.
Some examples of questions you may want to ask are:
- What is the market for my product or service?
- What needs am I fulfilling?
- What are my potential competitors doing to address this market?
- How much will customers pay for my product/service?
- What are the potential problems my product/service may face in the market?
- How large is this market?
Define your market and broaden your spectrum
This is another case where being specific helps you focus. For example, if you’re going to release a running shoe, your market doesn’t include fashionable high heels. However, you also need to keep an open mind. Your market is for running shoes, but plenty of people run in sneakers not specifically designed for running, so they should be considered as well.
In other words, define your market but ensure that definition takes the real-world behavior of your customers into account.
Get a glimpse at the industry and market environment
Once you’ve got a good sense of your market, it’s time to examine it. In particular, you should be looking for gaps where customer needs are being unmet by your competitors. This can be done through focus groups, one-on-one interviews, examining data, or simply hiring market research professionals to conduct it for you.
In any case, the market research techniques you use should be clearly tied to accomplishing the goals or objectives you’ve already laid out. So, instead of using focus groups because you think they will be interesting, use them because they’re more likely to teach you what you need to know about how your customers will respond to your new offering.
Focus on the three main categories
To help you focus and conduct more efficient and agile preliminary market research, it helps to break things down into these three categories.
1. Look into your competitors and their strategies
Always remember that no company exists in a vacuum. No matter how novel your product or service, it’s going to be affected by your competitors. This is a chance to both get a feel for how your product or service will fit into the market and to closely examine your competitor’s strategies. This can give you an idea about what’s working and not working, insights you should incorporate into your own strategies.
2. Study the social and legal implications
This category is the most neglected when firms conduct preliminary market research. It’s easy to get focused and forget that your new strategy can be affected by outside forces like these. So, whenever possible, consult a lawyer and consider whether broader social reactions to your product or service might play a part in its success. This could be through its marketing, use, or misuse.
3. Get into the shoes of your customers
This is perhaps the most critical element of preliminary market research. It’s all too easy to imagine that we understand our customers and their needs, but this can be a dangerous assumption. Even if you’ve identified a need, there isn’t always enough motivation to “solve” it. The world is full of products that “solve” problems that don’t really exist.
Beyond avoiding that trap, understanding the motivations behind your customers actions will help you develop more effective marketing strategies to appeal to them.
