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Dec 05
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Posted by:Sanket Nikte
4 Step Startup guide for Dummies - Part 2

Market Research

 

Although one of the most crucial steps in starting any project, it is often excluded in the gusto of having the next million dollar idea. You can’t wait to start working on it, building your product and showcasing it to the world with a proud smile on your face. Hold your horses!!!

 

3 Types of Research

There are 3 types of research you need to do before you launch the product- consumer research, vendor research and competition research. They all seem self-explanatory but let’s take a deep dive into them.

Consumer and vendor market research helps you to understand a few critical things. Is there a wider acceptance for your proposition? Get real time feedback which you can incorporate into your product to make it even better. Understand the selling points of your proposition, this helps in devising a marketing and sales strategy with a higher conversation rate.

Consumer Market Research

There are a couple of different methods of carrying out a consumer survey and you will probably have to do them both. One is focused on proposition acceptance by testing the concept in the target crowd and the other is a blind survey to understand the needs and psychology of your target crowd. Although counterintuitive, run the blind survey before the proposition test. The reason for this will be clearer when you understand the method.

Blind Survey

In the blind survey, determine a suitable sample size to carry out the survey. This is an actual primary survey which requires you to face and talk to your target crowd. Rather than a questionnaire, this will be more in the style of a free form interview. Your objective here, at its core, is to understand what makes your consumer tick. What are their needs, desires, lifestyle and choices? What are their goals and ambitions? Create a set of associative keywords for your product. E.g. if your concept is to create a subscription based online health and diet magazine, the keywords could be health, image, food, convenience, commitment, motivation to name a few. Survey Monkey is a useful online resource that can help you here. Remember, this is a blind survey so do not reveal your concept. The reason for the blind factor is that it is human tendency to unknowingly mould the responses to suit the concept in hand. This is a problem because under these circumstances, you will get a biased feedback. Understand the consumer feelings towards each of these keywords. This will help you to determine which is the most common factor and feeling associated health and diet. That will in turn be the focus of your marketing and sales communication. Volvo is a good case study in this aspect. When they launched, the company promoted durability but it was their safety features that appealed to the consumers. Eventually, the company abandoned the durability campaign and focused on safety and sales sky rocketed. If Volvo had done a blind survey before the launch, they might have saved a lot of money and time. This survey will also help you in fine tuning your product to meet the consumer demands. It may also be that you have to substantially pivot from your original idea based on the research. Be ready to go back to the drawing board. Check your ego at the door. After this, you will have a proposition that is more appealing to the consumers; you should have unlocked a value proposition that will help in generating traction; but more on that later.

Proposition Test

Now it’s time to test the proposition. This would involve showcasing the product to your TG and gauging the response. This is the first public appearance of the product, also known as the beta testing. The easiest and most cost effective way to do this would be to run a social media campaign. Vinay Rao, CTO of Venture Factory (it is a startup fund with a difference- they not only fund but also provide incubation services), gives an easy step by step guide on how to implement this with an example of one of the startups they have funded, Zenparent, a platform for hyperlocal kid services and parenting resources. First step is to create a Facebook ad to test traction (we will get to that later). In this case, they wanted to validate if the content around parent child relationship is valuable to consumers. They created content for different buckets of target audience and ran ads for all these buckets. Next, they created a benchmark to test the scores. If the experiment passed the benchmark score, they were in business. This is the benefit of using social media, it also provides you with an in-built set of analytic tools which help in analyzing the response and arriving at a decision.

Vendor Survey

Along with this, you also need to conduct a vendor survey. Vendor in this case refers to point of sales (POS). It can be a partnership with another service, an affiliate program, the influencers or thought leaders that would be the first users of the product and would in turn guide others towards it or any other medium you might have devised to sell the product. Their feedback is important because they are in touch with the market and are able to guide you as to what the consumers are looking for. They are aware of the market trends and can put you on the right track early on. Take their feedback during the product development stage; it will make your product that much better.

Competitive Analysis

Competitive analysis is a no-brainer. Know your enemy is the primary rule of any combat. It has been espoused for centuries and popularized by Sun Tzu in the famous and eternal Art of War. Studying their products, their markets, their marketing strategy gives you invaluable insights. It also helps you in determining your product positioning. A good marketing strategy is to differentiate yourself from the competition by virtue of features, service, location or audience. This is how KFC challenged McDonalds. KFC appealed to the adult crowd whereas McDonalds were more oriented towards the kids. Understanding the competition will help you to understand where your product fits in. B’Brainiac also studied the competition to understand the current pricing and offering and constructed their own offering accordingly.

Remember, market research is not a one time, one shot exercise. There are a lot of iterations. Many times, you need to go back to the drawing board and tweak your plan.

 



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