The previous post discussed that you need to find the market first before you create the product. That means you need to research. This part will give you the basics of researching in the most simple terms that everybody can understand. Enjoy reading this part from Entrepreneur Philippines magazine and I hope that it will help you expand your knowledge about researching.
Most start-ups think that market research is expensive, and so entrepreneurs forego doing it. But in fact it can be done for free, it pays off in the long term, and can be considered "an investment for the entire business," says Perez of Satisfind.
What's the simplest way to research your market? Ask or interview people, even just your immediate network of relatives, friends and neighbors. Brad Geiser, director for strategics, creatives and market research at Geiser-Maclang Marketing Communications, says:
"As you interview people, your body of knowledge increases. When you're new in a business, it allows you to accumulate facts, and it's cheaper."
Personal interviews are one of the five basic methods of market research; the others are surveys, focus groups, observation and field trials. Most businesses use one or a combination of them based on the data that they need and how much money they're willing to spend to get it.
Interviews, like focus groups, include unstructured and open-ended questions and provide more subjective data than surveys. Although their results aren't statistically reliable, they also yield insights into the attitudes of your target customers and usually uncover issues related to new products or services.
Surveys, meanwhile, have five kinds: In-person or one-on-one, telephone, mail, and online. All of them are relatively inexpensive. In general, you can analyze a sample group that represents your target market with concise, straightforward market with concise, straightforward questionnaires. The larger the survey sample, the more reliable the results will be.
Observation research removes the inconsistencies between people's response to a survey or focus group and their actual behavior, because when you observe customers in action at stores, at work or at home, you can see how they buy or use a product or service -- thus giving you a more accurate picture of customers' usage habits and shopping patterns.
Lastly, field trials work by placing new products in selected stores to test a customer's response in real-life selling conditions, which can help you modify your product, adjust your prices or improve your packaging. Usually, startup business owners should establish a rapport with local store owners and websites that can help test their products.
If after your research you realize your business probably won't work out, "it's not death sentence for your idea," says Geiser, who was also interviewed in The Ultimate Guide bookazine. "A real entrepreneur will figure out a way to make it work. What people really look for in market research are new ideas, new beliefs, and new directions -- an edge. Not just what is, but what could be."
Continue on Part 5 of Start a Small Business Now: KNOW WHAT YOU WANT
Rewrite from Entrepreneur Philippines
January – February 2010 issue. All rights reserved.
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