The number of online shoppers is exponentially growing and doesn’t seem to be decreasing anytime soon. This fact also aligns with how retail eCommerce sales are projected to reach $6.388 billion by 2024.
Therefore, building a profitable online business can be a promising side hustle or even a primary source of income. However, given that the eCommerce industry has promising market potential, the competition to generate revenue is also tough.
One of the ways to top competitors is by understanding customers’ needs and expectations through market research.
This article will walk you through the steps of conducting market research for online startup businesses. Let’s get started!
Market research is a set of actions that include collecting and analyzing data on the current market situation. The purpose of market research varies – for instance, preparing a new product, creating a business plan, applying a new marketing strategy, or running a new marketing campaign. That said, the scope of the research also differs according to the purpose.
There are two types of data collection in market research methods:
- Primary research – means the data are collected from original sources or haven’t been collected before. Generally, the research methods used are surveys or interview sessions with your ideal customers. Primary market research is suitable for determining your product’s strong and weak points and helping you decide the fair price of a product.
- Secondary research – refers to gathering and compiling existing data from many sources. The easiest way to collect this data is via the internet, but also consider other sources like government statistics and industry reports. It’s also recommended to find the newest data – ideally within the last two years – to accurately determine current market conditions.
It’s possible to research yourself or hire a third party to outsource the task. Whatever method you choose, make sure to prepare well in advance and set a measurable end goal. For example, if you want to launch a product on Black Friday, don’t start the research in January but also avoid conducting it at the last minute.
Why Is Market Research Important?
Market research helps to understand customers by identifying the pain points that your business can solve. This makes it easier to position your product for the ideal customers and align your offers to the market demand.
Depending on the purpose, here are some benefits of conducting market research:
- Test if your business idea has potential. Knowing the general market trends helps you determine your product’s relevance. If there’s no solid reason that explains why people need your product, the idea might not be worth executing.
- Widen your target audience. Data-driven strategies improve your ability to stand out from the competition and adapt to new market conditions.
- Innovate the product according to customers’ expectations. Use the market data to check if your new product or service is worth launching.
- Create the optimal product positioning. Utilize this opportunity to conduct competitive research and decide the most suitable way to place your product in the market.
- Increase the effectiveness of your marketing campaigns. By knowing the target audience better, businesses can develop the most ideal branding and marketing strategies.
How to Conduct Market Research for Beginners
If you want to build a new business, we highly recommend conducting market research before creating the business plan. This section breaks down the eight simple ways to do it by yourself.
1. Define Your Target Market
Know that you can’t afford to target everyone in the market, so choose your ideal customer. Narrowing down the target audience prevents you from being overwhelmed by mixed responses that might mislead the analysis.
Be precise about the specific market you want to research. For instance, your business wants to launch a healthy meal product. Are your customers’ kids or adults? Is it for people living in the city or the suburbs?
Each social group has different needs and concerns. So, if you randomly look for people to participate in your research, the results might not be valid or relevant. To help with this process, create buyer personas to visualize your potential customers.
2. Do Keyword Research
Keyword research is a process of monitoring the most popular terms in search engines like Google. A benefit of keyword research is to know if people are consistently searching for terms related to your product or service.
That way, you can predict whether there is an urgency to sell your product and prepare the correct strategy to launch your offer to the target audience. There are various tools to help you with keyword research, such as Google Keyword Planner and Ahrefs.
3. Research the Current Trends
Explore Google Trends, social media platforms, and industry reports to discover the current trends in the industry.
Follow these steps to gain effective results:
- Identify the trends – see which aspects are currently trending or will trend in the future, and which ones are relevant to your product or service.
- Prepare follow-up actions – think of the possible directions that the trend might develop towards and prepare in advance.
- Analyze further implications – identify what impact the trend can bring beyond just products, such as branding and marketing. The domain name you choose to register could also help in branding. Make sure to use a domain availability checker before proceeding to register one.
4. Analyze Competitors
Start by listing the biggest industry competitors. Then, observe how they market their products, the digital marketing strategies they use, and how their customers engage. Identify the approaches that work for them, and find any uniqueness your business offers that competitors do not.
Learning from and watching competitors can also help encourage fresh ideas and perspectives. Also keep in mind that when running an online business, you’re not just competing with competitors’ products or services, but also their standing and authority within the industry.
5. Prepare the Research Questions
If you want to collect primary data from your customers, reflect on the results from secondary research before preparing the primary research questions. Then, make sure to be clear and detailed to obtain relevant results.
It’s also important to group the questions by topic. Don’t ask general questions, but avoid being too specific as not every customer understands the industry in detail.
Using the healthy food business example, here are several sample questions:
- How much money do you generally spend on food?
- Are you willing to pay more for a personalized healthy diet?
- What do you wish a healthy food business could offer?
6. Choose Your Research Techniques
Given that various online meeting platforms are available, setting a schedule for primary research and keeping to a budget is easy. Choose the most suitable technique that aligns with your resources, time, and research purpose.
Here are several ways to conduct primary market research:
- Focus group discussions
- Customer interviews
7. Use Social Media
Social media is an excellent place to conduct market research. It’s free to use and allows users to have open interactions with each other and the companies they follow.
There are several suitable approaches for social media market research:
- Qualitative content analysis – post content about your products and analyze the number of likes, comments, and shares. The result suggests the attractiveness of your product or business idea.
- Social listening – compile your target audience’s opinions about your brand and competitors, and identify areas to improve.
- Polls and questions – ask questions directly through social media posts and gather insight straight from your audience.
If you don’t have a sizeable audience upon starting, share your research questions in forums like Facebook Groups, Quora, or Reddit. However, note that you can’t control the audience participating in these forums, so the findings may not be as effective.
8. Summarize Your Findings
Your research summary should be clear and easy to read. After documenting the results, here is an outline example of how to summarize them:
- The background and purpose of your research.
- Information about the target audience who participated.
- A summary of the facts and insights you gathered from the market research.
- An explanation of how your product or service can potentially compete in the market.
- An action plan for the business. Provide measurable goals, a timeline, a list of priorities, and a business outcome prediction.
Feel free to modify the outline according to your needs. If your findings contain quantitative data, compile them in diagrams or tables so that it’s easier to read.
There’s no right or wrong method when conducting market research for your business. However, you should arrange the most convenient timeline and approach according to the company’s needs and compile it in an easy-to-read summary.
In this article, we’ve discussed the steps of doing market research as follows:
- Define a target market.
- Do keyword research.
- Analyze trends and competitors.
- Decide your research technique and questions.
- Use social media.
- Summarize your findings.
Good market research empowers your business to develop the best strategies. Avoid doing guesswork to save time and money, and create data-driven plans to set your business in the right direction.