Market research is important in order to build an efficient business plan. If you are here that means you are also looking for the best market research tips for startups.
When you explore the market for the first time, it is important to take note of the companies that are operating in your industry.
For the most part, startups begin with a confrontation with other startups. They plan their strategy in such a way that they are able to outshine their rival startups. Planning in such a way could be effective in the short run, but for sustained growth, this may prove to be ineffective.
Market Research Tips For Startups
Here are 5 market research tips for startups that will help you avoid the mistakes that may prove to be a barrier in your entrepreneurial journey:
Inspecting the population composition
Population composition refers to the ratio of males, females, older people, or children in a region. Demand for a particular commodity is highly affected by the population composition of a market.
For instance, if a market has a larger proportion of women, then the demand for women’s clothing like saree, or salwar kameez, or accessories like lipstick would be more. Similarly, starting a garage will be lucrative in a town or a city, where the majority of the population owns a car, or a bike, rather than in a village.
Calculate the substitution effect
Substitution effect refers to substituting a product or service in place of other when it becomes relatively cheaper. Comprehending the significance of the substitution effect is vital in order to provide products or services with non-substitutable capabilities.
An example best suited to explain this concept would be a comparison between Pepsi and Coca-Cola. If the price of Pepsi falls, and that of Coca-cola remains the same, the demand for Pepsi is likely to rise.
Identify your competitors in the market
Spot the leading players in the market. Compare and contrast their performance to yours to take further improvement steps. This will help you evolve branding and marketing strategies for sustainable growth.
Moreover, knowing your competitors will help you better price and place your product in the market with the right business schemes.
Strategies to attract investors
Investors are important for a business because they will enhance capital for your startup. They will guide you to manage the funds precisely as their own money is at stake.
There are various ways through which you can attract investors. Some of them could be:
- Selling a prominent position of your company
- Pitching a high return on investment
- Promote your user engagement and metrics
Thus, while doing your market research, it is fundamental to have an analysis of strategies to attract investors.
Check industry trends
Try to answer the question of what the nature of the industry in which your startup will exist is. During the entire process of market analysis, a description of the industry will help a startup owner to make a better business plan. The focus then should be shifted to the target market. This is about finding out exactly who your product/service is designed for. You need to fully grasp what are your customers’ wants are and whether they are satisfied or not.
To conclude, it is important to do your market research at the initial stage of making a business plan in order to achieve sustained growth and profit.
Related posts: 4 Extremely Costly Startup Branding Mistakes
Frequently Asked Questions
What are substitution goods?
According to price theory, substitute goods are at least two goods or services that can be substituted for each other. For example tea and coffee
What are the various ways of market research?
The most common ways of market research are surveys, interviews, focus groups, and customer observation.
How to conduct market research?
In order to conduct market research, first, you should identify your research objective, prepare your questions, gather your research, interpret your findings and reach a conclusion.