Market research for startups

Starting a new business is an exciting but challenging venture to undertake. As an entrepreneur, you’ll need to invest significant time, energy, and resources into bringing your vision to life.

Entrepreneurs must make strategic decisions and stay on top of the constantly evolving market. They must also stay ahead of the competition and identify the needs and preferences of their target audience.  With the fast-paced and competitive global marketplace, it’s important to understand the market for your product and your customers. About 90% of startups fail – Market research can help you stay in the 10%. By conducting market research, founders can gather valuable data and insights that allow them to make informed decisions, identify new opportunities, and find their edge over competitors.

What is Market Research?

Market research is the process of gathering data and insights on the behaviors of your customers, competitors, and economic trends related to your product. It is a crucial area to explore for a startup to validate your business ideas and product features. Market research can include primary and secondary research and qualitative and quantitative data analysis. Market research can be done on an ongoing basis for new product offerings or pivots.

Reasons to conduct market research as a Startup

Startups need to conduct market research to create a successful business. Market research can help you discover gaps in the marketplace or your own understanding of your customer. As a startup, you should be prepared to pivot your product based on the research findings you uncover, as you may find that your assumptions about customers were off. Market research, when used effectively, can impact the product design strategy, marketing strategy, pricing strategy, and even investors’ confidence in the product.

Market research can help you answer questions such as:

• Who are your customers, and what are their habits?
• Who are your direct and indirect competitors?
• What are the trends in this market?
• What can I do to differentiate my product?
• What is the perception of your current product?
• How do your customers find your product or competitor products?

The business climate for startups is highly competitive, and taking a deep dive into these questions can make a world of difference in setting up your strategy for success. When used in collaboration with UX Research, the data you collect and analyze can direct your product and product feature development. 

Conducting market research and defining research objectives

The first step to conducting market research is to sit down and establish your research objectives. Before starting the research, you should ask yourself a few questions.

• What problems am I looking to solve?
• What do I want to know more about?
• What is my timeline and budget for market research?
• How will this research be used?

Start by identifying the high level goals of the research.  Are you researching to gain a greater understanding of who your customers are? What your competition’s strengths and weaknesses are? Where you can stand out among the crowd? It’s best to define one area of study and break your research sprint into a few clearly defined objectives.

Here are some steps to follow when setting your market research objectives:

• Define the problem – Choose a problem area. The problem could be a lack of information on how to implement your idea, or too many customers are unsubscribing, or a feature is underutilized. Defining the problem will help you stay focused on your market research goals and ensure that the research conducted is relevant and valuable.
• Determine the information you need- Identify what specific information or data you need to gather to solve the problem and make informed decisions. For example, do you need information on your customers? Do you need information on a specific subset of customers?
• Set specific, measurable goals- Your research objectives should be clear, measurable, and actionable. If you want to learn more about your customers, make that more specific: “I want to learn more about the buying habits of my customers who are between the ages of 20-35.” You can measure the results of these findings, and you can also use these findings to make adjustments to your product.
• Align with the overall business goals- Your research may affect other areas of the business, such as product design. Understand the overall business goals and how you can share information to other teams to support those goals.

Choose Research Methods

There are many methods of conducting market research, varying in price, time-required, and research yielded. There are also many tools and services available to support market research efforts.

Secondary

Secondary research uses data that already exists, as opposed to gathering the data yourself in primary research. Secondary research involves collecting and analyzing data that has been published by others to either answer the research question or a similar question.  Secondary research can be used as a starting point and save time and budge, rather than repeating studies to reiterate data that already exists.

Primary

Primary research is research that you conduct yourself. There are many methods of conducting primary research, and it is a more involved process than secondary research. Conducting primary has many benefits, despite the fact that it may take more budget and time. It provides the researchers control over the data quality,  ensures that the research is relevant to the research objectives, and increases credibility.

Qualitative

Qualitative research looks at questions like “why?” and “how?” using observational findings. Qualitative research aims to understand experiences, perceptions, motivations, and attitudes of people through activities like in-depth interviews, ethnography, focus groups, diary studies, etc. The goal of this type of research is to gain a deeper understanding of an experience using non-numerical data.

• Qualitative research methods include
• In-Depth-Interviews or User Interviews
• Focus Groups
• Ethnography
• Card Sorting
• Observations/ “Shop Alongs”
• Quantitative
• Quantitative research aims to answer research questions through collecting and analyzing numerical data, through methods like surveys, web analytics, and competitive research. Quantitative research aims to examine a specific research question and test a hypothesis, and provide statistically significant answers to research questions.
• Quantitative research methods include
• Surveys
• Experiments
• Longitudinal studies
• Competitive Research
• Card Sorting

Market Research and UX

UX Designers and Researchers can work with Market Researchers to combine efforts and ensure that your product or service is meeting the needs of both the users and the market. There is significant overlap in the methods used in UX Research and Market Research that can complement each other.

Both UX Researchers and Market Researchers are looking to solve a user/customer problem and drive business growth. An integrated research approach can be beneficial to your company’s overall business goals, as all businesses need to embrace the omnichannel customer experience.

Some research techniques that are similar or overlap between UX Research and Market Research are:

• Personas and Market Segmentation
• In depth interviews and User Interviews
• Competitive analysis

Conclusion

Market research is an essential process for startups to gather information on their customers, competitors, and market trends. Market research can be conducted at many points in your product journey, as you initially explore your fit in the market, or refine and expand your product offering. Conducting market research in conjunction with UX Research is a strong way to validate business ideas and product features, and make informed decisions to stand out among the competition. By combining market research insights on the overall market trends and customer preferences with UX Research findings on your product’s usability and desirability, startups can make sure that their UX Strategy and marketing strategies align with customer needs and business goals. This investment in research will lead to more successful and effective product launches.

Slick is a UI/UX Agency based in San Jose, California with 15+ years of experience.  We bring our knowledge of the field and best practices to new products and startups.

Looking to build a new digital experience? Learn more about Slick.