The primary purpose of market research for startups is to determine scientifically the viability of the business concept and model being proposed. The three key elements that are studied through such research are – the market, the competition and the customer. A well conducted market research will provide practical insights which are essential for the entrepreneur as well as the investors regarding the profitability of the venture. Traditionally such research relied heavily on methods such as customer interviews, surveys and focus groups which have now given way to more innovative and high tech methods which can get accurate data within shorter span of time.
This primarily refers to testing the feasibility of the concept that startup is planning to launch in the market. Market research for startups is therefore essential to find the viability of the project through analysis of the market forces and opinions of domain experts. Showing prototypes of the idea to potential customers is a proven means of deriving realistic responses from them which shall indicate its acceptability in the market. Engaging in meaningful discussion with customers and market experts after demonstration of the prototype will provide a fair idea regarding its usability and acceptability. If the response is positive it infuses confidence not only in the entrepreneur but also among the financiers as well. Negative responses on the other hand are indications that either the project needs to be abandoned or you need to suitably reconfigure it as per the inputs received through such interactions.
Designing the Concept
When you have a great concept that has business potential it is essential to make an empathic design that will meet the needs of the customers. The best way to go about this is to observe the customers rather than ask them questions about their preferences. One of the biggest benefits of market research for startups is that it lets you see how the customer will behave rather than create designs on hypothetical beliefs. Even at times the customers do not know what they really want. Thus real time observation will tell you what they themselves cannot clearly explain. In a large number of instances the customer will ultimately come around to accepting a new concept which he was initially reluctant to try out. Thus researching the design aspect of your concept holds the key to innovative products which were unexplored before both by the businesses as well as the customer.
These are the early adapters of concepts and technologies well before they became common in the markets. Market research for startups should focus on the requirements, experiences and feedback from these lead users to create unbeatable products. Lead users are those people who will not hesitate to adapt to the emerging trend and hence they become invaluable sources for obtaining vital information that can help you design products to be competitive and innovative. Assuming these lead users as a sample market you can effectively judge the viability of the product in commercial terms. Thus the importance of startups in having closer interactions with these kinds of lead users to get a better picture cannot be over emphasized.
Quality Function Deployment
This is the vital link between what the market research for startups has indicated through ideation, designing and interaction with the lead users and what the final product looks like. The process is like an engineering tool that first takes into account what the customers like and then goes on to design a product that can match up to those expectations. Thus the process ensures that the product actually lives up to what the customers desire out of it. Thus the final product will out as a market informed design that has a higher chance of success since it based on a thorough research and backed by scientific processes. The product thereby possesses better market potential inherently.
The whole process of conducting a market research for startups and implementing its findings may be far more complicated than the way it has been described here. There are several practical considerations and constraints which the entrepreneur must address before the dream takes a real shape. However the market research for startups shall prove to be an invaluable tool in this direction.