How Startups Can Use Market Research To Avoid Fatal Mistakes
Branding, marketing, advertising, and PR industries often practice an empirical approach in their search for the best decision: “let’s do our best, then launch the new logo/banner/press release and we’ll learn from our mistakes if we encounter them.”
- Branding specialists typically deal with greater risks than in advertising because it may cost billions to launch a new brand, product, or package. For them, anything that could help them make a better decision is highly considered, so much higher appreciation and attention has been given of late to market research.
- Advertising professionals often practice A/B testing (research during the process), optimizing the campaign as they start running it vs. doing independent research outside of the campaign. However, some ads such as TV commercials are very expensive in production and air time and are better off being validated as soon in the process as possible.
- PR people typically don’t have the luxury of testing a message before releasing it to the masses often due to the time sensitivity of the release. They often use the secondary research (Google, blogosphere, social media) for a way to measure the temperature of public opinion on a topic.
Still, many points could potentially be better supported by running a quick targeted survey or finding a brilliant angle to highlight advantages of a given product/solution. This is best accomplished by asking consumers about issues they have with competing offerings prior to formulating the proper positioning or company message.
It’s commonly known that the higher the stakes, the greater the need in research regardless of the vertical. In fact the high prices and long turnarounds that were practiced in market research for the past decade taught small-mid size companies that it’s a luxury they just can’t afford in their businesses. The best kept secret, however, is that all these industries can benefit from the primer market research today regardless of the size of the company or the end client’s budget.
The behemoths in your sector use data everyday to out-strategize you. Not every Fortune 500 company performs market research. Steve Jobs claims that Apple never does it. But it’s used by the majority of big businesses. It seems not every captain of industry has the wizardry of Steve Jobs to intuitively just know what their target market wants.
Small Biz and Startups Need Access to the Same Market Intelligence as Their Big Brethren
The question is, “should startups and small businesses be doing market research?” If you’re a small business owner or you’re about to launch a startup, how can you mitigate risk and discover new opportunities the way your 800 lb. competitors do?
There are many ways that you can do research on the cheap. When Aaron Patzer was starting out building Mint.com (Mint went from ideation to a $170 MM exit in 3 years), he went down to the Mountain View train station and regularly interviewed commuters who he felt represented his target market so that he could guide his product-market fit. The key is to make certain that you are surveying your target market. So don’t go asking your Mom or your friends because they may not be your target market. Even if they are, they may love you too much to be able to tell you that your baby is ugly.
Whether you use a qualitative research process like Patzer or use one of the many quantitative online survey tools, make sure you get a hold of a high quality set of panelists who represent your target market to answer your questionnaire. Once you have those ingredients, it’s time to ask the right questions.
4 Key Subject Areas To Address:
1. Have you found a meaningful pain point that your prospective customer would love to have relieved?
Necessity is the mother of invention. It’s also the father of sales success. If there is no pain that you are relieving then you will have a more challenging battle trying to launch a new product or service to market. Ask questions in your surveys that present the perceived pain and dig into their minds to determine if they see and feel the pain that you imagine. We’ve seen many market research surveys meant to evaluate for the intended pain points of the intended target market only to find that no such pain existed except in the mind of the entrepreneur. It would be a fatal mistake to build a company based upon such a delusion.
2. Have you come up with a solution that they will recognize as a unique and desirable path to pain relief?
Great. Now you have identified a real pain point and you’ve come up with a solution. But is your solution one that the market will accept as a worthy remedy? They may find your solution to be painful itself or not even credible. Test them and present your concept. All right, we know you’re paranoid and want the whole world to sign an NDA before you spill the beans but remember that ultimately it’s the execution of the idea that counts. It’s very likely that many others have already conceived of the same idea but did nothing about it, tried and failed to execute it, or are working on it right now even as you are.
3. Are they willing to pay for your solution?
The million dollar question. We’ve seen research done on ideas that, although useful, may be impossible to monetize because nobody seems willing to pay for the solution. In those cases, what’s usually discovered is that the pain really wasn’t all that painful in the first place.
4. What should be done in your branding to tell your story and make an emotional connection with your target market?
There are many aspects of the branding process that deserve careful market research and we’ve written about them as have many others. This can start as simple as evaluating logo concepts, tag lines, perception of your brand promise and much more.
Market research is way to spend a little money in order to save a lot by avoiding fatal business mistakes and increase your chances for success. Small business and startups have a lot less room for error than the incumbents in their sector who have the resources to tolerate costly errors.
The problem is that until very recently, market research has been too expensive for all but the largest of companies. Thanks to disruptive new technologies, anyone can afford quality market research if they are willing to go the DIY route, be scrappy but get the needed data points.
Besides being the CEO of the leading DIY market research company aytm.com (Ask Your Target Market) Lev has 15 years expertise in UI/UX and has worked with such companies as Oracle, Tiffany & Co, Maserati, Harry Winston, Whole Foods Market, helping them build their brands and multimedia/Web applications.
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