Do you have a great business idea that you’re working on? Are you about ready to invest capital into it? Not so fast. According to the Small Business Administration, only 50 percent of all new businesses survive beyond the first five years and you should do your research to ensure your business doesn’t do poorly from the beginning. but not many people know how to do market research for new business.
Among the various proposed reasons, one underlying theme comes up. Failed businesses likely didn’t engage in market research processes. Market research is an essential but often overlooked element of starting up a business, bringing a new product to market or for making most any new business decision.
Here are 5 reasons doing market research can save your business from going belly-up before its time:
- Who is your audience?
Who are your clients? Who will buy your product? What is their average age? Male? Female? College-educated? High school dropouts? Without a healthy grasp of the type of person interested in your product, you won’t know where to find them, or what their interests are. Learning about your potential customers is a vital step and an important reason for conducting market research. Chances are you already have an outline of your potential customers. That’s great, but be open for new revelations on that score. You might find a bigger audience with higher purchasing power if you keep your eyes open.
- What locations does your audience frequent?
Once you have a basic understanding of your audience, you will want to find out where they spend their time. It’s easy to assume that gamers spend time on gaming forums, and anime fans on anime forums. But getting down to the nitty-gritty of which forums and what social media sites takes doing research. Plus with all the focus on online platforms, you shouldn’t neglect physical locations either. Knowing where your audience likes to hang out will guide your advertisement placements.
- What can your target audience afford?
Doing research on your target audience will help you understand how to price your product. This is where a deep understanding of your target audience begins to pay off. If you know that your product is for college-age kids with little pocket money, then your pricing should reflect that. Conversely, if you are selling a high-end piece that only collectors will be interested in, price accordingly.
- Who is your competition?
Ever consider that your new product might not be so unique after all? That fact can be a hard pill to swallow. But it’s better you find that out now before you’ve sunk your nest egg into your new business idea, only to find that someone beat you to market. Getting a clear-eyed view of your direct competitors can help you think of ways to position your product in a unique way and for a different audience. Your unique selling point could be your price, your eco-friendliness, or something else, but you will only discover your strongest selling points as you research the competition and find out what they aren’t doing.
- How will you hook your target audience?
Strong ad copy boosts sales. We all know that, but there’s a step that comes before drafting up your marketing plan. Creating persuasive advertisements to move sales starts off with understanding your audience’s emotional triggers. If you’re selling to teens, you should know that a teenage girl likely values social acceptance over other emotional appeals. But if you’re selling to female business owners, these are women looking for ways to increase their realm of influence. Your ad copy should reflect the differing desires of your consumers and the best way to find out what your customers’ expectations are through market research.
If you don’t know where to start in finding statistics, turn to the U.S. Census Bureau for basic demographic information. For targeted information, hire a market research firm. Any investment upfront that will help you better position your product will only boost the chances of your long-term success.