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Starting a Business? Here’s How You Can Understand Your Market in Advance

Understanding your market is a key stepping stone on your path to success, and knowing a few tricks will certainly help along the way. 

By
Jeff Broth, Contributor
4-minute read

For any business with realistic hopes of success, knowing your market is the very first step.

Building a successful business isn’t easy, even if you’ve got an outstanding product/service to offer. Starting off with a solid foundation will improve your chances.

Knowing what your customers want, where your competition lies, and how you can stand out from the crowd will always be of the utmost importance. In fact, most companies engage in market research before their product/service has even been fully developed. So, if you haven’t considered this aspect of starting a business, you certainly should be.

To help you on your way, we’ve come up with some top tips to make your journey slightly easier. 

Tip 1: Research your market

You’ve created a winning product/service, but you’ll need to know a little more regarding your specific market.

Understanding your market in detail will help drive your marketing effort and increase the Return on Investment (ROI) that you experience.

Who are your potential customers? Where are they? And what can you offer that they can’t source elsewhere?

These are the kinds of questions you and your marketing team should be asking yourselves and knowing exactly how to analyze the market is only ever going to propel you to success.

Focusing your marketing means that you are able to relate your product to the problems, wants and desires of your customers. In fact, without knowing this information, your winning product could easily get lost in a sea of sinking start-ups, which is never going to be great for your ROI.

Begin your research in the early stages

This is an especially good tip if you are planning to enter a new market. You may well be an established businessperson, but new markets are tricky. For this reason, you should always do your homework before you try to sell.

Understand the problems you are seeking to solve and work out where your ideal customers hang out, that way you’ll be able to tailor your message and deliver it directly to your target market.

Use existing knowledge, studies, journals, and reports

If there are products similar to yours, then some of your research will already be done for you. Save your precious start-up funds, and have a browse online.

There’s lots of information out there and often it just takes a bit of tenacity to dig it out.

Although it is best to look for surveys and reports that have been conducted recently, some more historic data can give you ideas on how your market will perform, especially if you are launching a brand new product.

Pinch the pennies; you don’t always need to go big

You might not always be able to fork out money for costly bespoke research.

You can always start small by using focus groups or surveys — these will work out a lot cheaper and apps like SurveyMonkey are available free or at a very low cost to help.

But don’t fall into the trap of just asking family and friends for help. They may tell you what you want to hear, rather than what you need to hear.

Make sure your data collection is truly independent and avoid leading questions — remember, you are better off being told something that is uncomfortable than finding out after you have sunk your life savings into your new company.

Tip 2: Identify your ideal customer

This is one of the oldest tricks in the book, and it is one commonly used by both large and small businesses — which means that it will work perfectly for you if you’re just starting out.

‘Identifying’’ your ideal customer means putting down on paper the attributes, likes and dislikes of the typical person who would buy your product.

Just like a fictional character from a book, even the finest details count and you can spend as much time on this as you like. You may be surprised at the types of insight that spring out from the exercise.

Whilst this will help you to understand your desired target audience on a more personal level, it will also help your team to get a better idea of the company’s direction. This means that they won’t spend time and money marketing to people who may not be likely to buy.

When starting a new business, this is a great way to visualize and cement your aims/goals/strategies. 

When you identify your ideal customer, you’ll find that the process helps to:

  • Provide your sales team with a concrete target in mind
  • Increase sales and marketing efficiency
  • Identify targets that you wish to avoid

Tip 3: Competitor analysis 

Knowing who your competition is could fairly be described as a compulsory step when starting a new business or company. For this reason, competitor analyses are almost always included in professional business plans. 

In most cases, this is an aspect that you’ll be looking into even before you have developed your product/service. The likelihood of another business selling the same products/services is high so understanding what you are going to come up against once your business is underway is vital.

So, you’ll need to know exactly where you stand, and how you measure up. To help you to identify what you need to be looking for (competitor-wise) think about the following:

  • The structure of your competitors’ business
  • Their products/services (including price points)
  • Their marketing and sales method
  • Their after-sales service
  • Their specific USPs

Once you have these then you can choose to either counter them or to develop your own USPs to overtake their customer offer.

Wrapping up

Starting a new business isn’t easy, but by following the tips and tricks mentioned above, you’ll find your journey a little easier.

Conducting proper market research is a key step to success, and a little research can go a very long way.