While almost everyone claims to have done some market research before starting a business, think carefully about just what that has entailed for you and your business. Have you dug in as deeply as you truly wish to dig before starting the business? Those who don’t conduct thorough market analysis leave themselves open to being blindsided by truths about the demand and supply of your product or service.
One of the reasons people are less thorough than they probably ought to be is a fear that they won’t find much demand at all for their product. I’m here to tell you that this could happen, but that it will actually make your company stronger. If you know where there is already cutthroat competition for a small amount of demand, you can side-step that specific zone and make your product aim at a different market or distribute it in a different way. While the idea of market analysis may seem daunting, I promise that knowing is better than not knowing, and you’ll find out information that helps you launch on excellent footing. Here’s how to get started.
Step 1: Learn As Much As You Can About Your Product/Service
The first step is simply fact-finding: you know how you want to offer your product or service, but dig into everything that you can learn about the topic. Is it created or sold differently in different places? What are the turnaround times, distribution channels, or any other relevant features that could impact the way your product is perceived when it enters the marketplace? What kinds of people buy this product, and what are they expecting from it? If you think you’ve found out enough, assume you need to take at least double that amount of notes: the most interesting information you’ll learn is when you press deeper and learn more.
Step 2: Do a Deep Dive on Your Competition
Turn your attention, in particular, to those who will compete with you directly. This could mean other individuals offering this service in your town, if you are brick-and-mortar or otherwise in-person, but it could also mean the same kinds of individuals who are doing eCommerce with you and competing for similar keywords. See what you’d change if you ran their businesses, and try to develop as concise a sentence as possible about why your business is different from them. At the same time, give credit where credit is due: if you realize that a competitor is doing something that will work way better than your plan (obviously, something publically seen, not a trade secret), don’t be afraid to change your plan to save money and time.
Step 3: Think About and Research How Customers Are Dissatisfied
Most companies that have been established for a while have gotten into a rhythm where they are accustomed to the norms. As a newcomer, you have the advantage of being able to question the status quo. Ask customers as much as possible what they love already and what they wish was better in the purchase, distribution, or quality of the product or service you wish to offer. Take note of things that annoy them or are mildly frustrating – do they not like having to wait a long time for shipping? Do they wish they could buy online instead of in-store? Note the patterns and consider how your new business could offer these new valuable changes.
Step 4: Try to Document What You Can Offer That’s Better
Once you have all the information, coalesce it into some very specific, actionable items. You may want to offer a million new features, but you know they will drive price up beyond what people will pay. You may want to offer lower cost, but you know that the brick-and-mortar store you are opening needs a higher price point. Figure out where you want to offer a better product and how you can keep it comparable in price and quality to your competitor’s products. What will be your distinctive elements?
Step 5: Look Back In Time and Project Future Growth
One thing to consider carefully is how the demand and supply for this product have grown over time. Did someone invent this product recently, spiking demand but leaving people wondering whether it is here to stay or just a fad? Maybe it’s a product that has always been around but has recently gotten a new feature or new distribution model. Track what has happened up till now in demand and supply so that you can create some projections for the future. If the demand is likely to only go up a little, you’d want to make sure you have a plan for poaching market share from other companies. If this is a time when market demand is exploding, you may only need to make sure you have good marketing to get new business, without having to win over loyal customers from other companies. This part of the process really helps you shape your game plan for your first year or so of opening the business.
Step 6: Keep Up the Feedback and Statistics As You Start Your Business
Now that you’ve done all this research, start keeping track of your own statistics and feedback from customers. Essentially, you want to create a recording system for yourself that will help you continue to see what is happening in the market using data you collect yourself. As your customers mention that they wish the packaging was more streamlined, or that they could arrange local pick-up, or that you sold at craft fairs, or whatever it might be, track how many people are saying these things and explore what it would mean to put their recommendations into practice. At the same time, track sales so that you can notice if a spike occurs after any new strategies, marketing plans, or other changes are implemented. This data helps you stay ahead of the demand for your product and to continue innovating if you notice a spike and want to capitalize on it further.
With these steps, you’ll be prepared to continue noticing and following the market so that you can always offer something that will surprise and delight your customers.