What is market research and why is it so important?
Market research is a big topic which isn’t always easy to understand. So here is a blog post that answers all those questions in one place.
A breakdown of how you can identify your ideal customers and create a startup that solves a market need.
Nothing beats the excitement of coming up with something cool. That cool idea comes to mind and you can’t wait to develop the product.
I mean, who wouldn't get excited when they think of building a social app and they know how to build one. But this fairy tale would soon hit a roadblock when a few people really buy into the idea. At first, the idea seemed plausible enough that it got you working on it, but you later realise there are only a handful of people willing to use the product.
Most founders only think of startup ideas without putting into consideration if there is really a market for that product.
That’s why 42% of startups fail. They come up with a product or service no one really needs.
The time, money and effort it took you to build the product only to be just another stat. But hey, you could just as well be among the many successful startups.
We’ll get to see how you can identify your ideal customers and how by doing so you can set your startup up for success.
You might see a problem that seems interesting to solve and decide to come up with an idea that solves it. You turn that idea into reality and develop an exceptional product that will tackle that interesting problem.
But in reality, if that product doesn’t solve a market need, a large enough of a problem experienced by a group of people, your potential customers, then the startup will eventually fail.
In fact, in the same study that found 42% of startups fail because of no market need, Treehouse Logic, one of the failed startups, had this to say:
“Startups fail when they are not solving a market problem. We were not solving a large enough problem that we could universally serve with a scalable solution. We had great technology, great data on shopping behaviour, great reputation as a thought leader, great expertise, great advisors, etc, but what we didn’t have was technology or a business model that solved a pain point in a scalable way.”
The exact step of coming up with a product before identifying the target market is the primary reason most startups fail.
You come up with everything, from the amazing product to the advanced technology used. But if there aren’t people buying the product, then your resources would be drained much faster by trying to market to people not interested in the product or service.
A target market is simply a group of people most likely to buy your product or service and whom you direct marketing efforts to. You develop marketing strategies tailored to your target market.
So rather than spending marketing dollars on everybody, trying to maximise your reach, you spend on people who are most likely to buy your product.
What if you could kill two birds with one stone?
By defining your target audience, you spend money wisely and tackle problems that serve a market need.
With running out of money and having no market need being the two primary reasons startups fail, having a defined target market will help in:
But you’d burn your marketing budget as you try to reach different audiences with mixed marketing strategies.
When you target your marketing strategies to a specific group with common characteristics, your marketing message speaks directly to them. Most of your marketing would therefore be focused and intentional rather than all over the place spending marketing budget on people not interested in your product.
Knowing who you are talking to helps you focus your marketing efforts on a specific group of people and create targeted messaging aimed at that group.
Nike’s target market and customer base are professional athletes. You can clearly see this from their messaging on social media to their website.Athletes would identify themselves with the messaging Nike uses. Nike’s marketing is more focused and targeted. Aimed at people who are likely to buy their products.
Here’s how you can identify your own target market and create customer profiles for your startup:
Use the 4 Whys. (they are usually 5 but we’ll use 4)
That is, who, what, where and why. These questions are basic in information gathering. They are used in police interrogation, journalism, and research.
For us, we will use them to identify your target market.
Who questions fill in the external traits of your ideal customer. They give you a picture of who your target audience is.
They give you an overview of their:
The importance of this information is to better understand your target market. The information you gather should relate to your product and influence your marketing strategies.
For example, if knowing their education level won’t change how you market or develop your product, then there’s no need to have that kind of information.
How can you answer the “who” questions?
Source: SurveyMonkey
This gives you a bird's-eye view of companies you are up against. Their individual market shares and the general market.
On top of that, you can get the location of your target customers. Where your competitors get most of their traffic will be where your target market is based.
Knowing this might influence where you base your marketing efforts on. If most of your competitors are marketing to the US market, you can choose to base your marketing efforts in the US to attract potential buyers.
Information such as age, gender, and interests can influence the development of your product and the messaging you can use in your website copy and marketing strategies.
These questions reveal more of the internal traits of your primary market. The key desires that will drive them to buy your product.
Answers to these questions will help you be specific in your messaging by directly addressing their key problems and developing your product to satisfy their desires, needs and important of all solve their main problems.
How can you answer the “what” questions?
Source: SurveyMonkey
These questions reveal the places you’d find your ideal target market. Where they mostly hang out.
When you nail down where they hang out, you get to learn how your ideal customer interacts, thinks and expresses his/her problem. The language they use can inspire your website copy because you’d know how exactly they express their problem. You get to also know where you’d spend your marketing efforts and influence their decision making.
How can you answer the “where” questions?
These types of questions give you an idea of the purchasing habits of your target market and how you’d develop your product.
How can you answer the “why” questions?
Then if the cost of developing your product and meeting their needs is sound and logical compared to the size of the problem, you will have a value proposition to enter the market with.
Having some kind of representation of your ideal customer will guide you in determining if there's a market need and how you’d position your solution in the market.
By carrying out the research we’ve gone through, you’d know where your target market hangs out, who they are, what problems and challenges they face and why their need hasn’t been met yet.
All this would ensure you create a startup that solves a market need and create a marketing strategy where you’d spend your money wisely.