As a start-up founder looking to validate your business thesis or a product or business leader in a growth stage start-up, you may have a strong hypothesis or gut feelings around consumer needs and intended usage of the products or services. However, to strengthen the product-market fit and to develop a viable business model, you may feel the need to understand consumer behaviour in great depth.
What are the attitudes and beliefs of the target consumers today?
What products and services do they use today?
How much do they spend on this?
What are their key gaps or frustrations?
Would they be interested in a product or service like this?
What barriers they may have?
Who could influence them?
How do I find new avenues of growth or improve/ strengthen my product and proposition?
What preliminary work do you need and when do you get into a formal market research done? What does research costs? Who are partners for MR?
Where can Market Research help?
Market research can help at all stages in the journey from ideation to product launch or when looking to further grow/ improve an existing product. However, it’s important to be clear on the answers we are seeking and decisions we would take basis the research. This process, much like any exercise is GIGO (Garbage-in-garbage-out). When our own questions or business-use context is unclear, we can end up collecting large amounts of information that provide no insights.
Data turns into information and information is insightful only from its practical application and business-use case.
Let’s take an example. One of the early-stage start-ups working on a Foodtech space, felt the need to map the market to identify gaps. They did a survey and collected a lot of data on consumer habits. However, they then struggled to use the research data as they had not captured the specific product attributes and benefits, they should have validated given their use case. The research had instead been designed for as a market mapping generic exercise. The same information could be highly insightful for a different use-case.
Where and how to get started?
It’s always better to start with the business objective and the decisions one needs to make. Ask yourself the following questions? Use our D-I-G framework.
What decisions do we need to take?
What information gaps do we see (to make these decisions)? What do we know / would like to validate and what would we like to find out?
What are critical questions which need a thorough deep dive? Which are some other good-to-have information areas.
Working with a specialist consumer insights company is also helpful in clarifying your D-I-G areas as these experts will ask you the questions that can help prioritize your core information needs. Apart from the information areas, an expert will consider, the life stage of the business, the size of the business, the risks and the investments which are dependent on the outcomes to determine the research method and scope. This brings us to the next topic.
How to ascertain the right research design?
Designing a research study is both an art and science. There are various research methodologies and sampling frameworks that can be used to answer the same business question. Much akin to a medical practitioner’s role, where any decent doctor can prescribe a whole list of standard tests but a good doctor is able to listen-in to your symptoms and suggest a course of specific tests and treatment.
A base knowledge of market research tools can guide you on some basics aspects like quantitative vs qualitative research; a good consumer insights specialist can help you cut the process, save time and money and focus on answering key questions in the most agile and efficient manner.
Target Audience: Defining your target audience in a way that these consumers can easily be identified. To design research’s target audience some discussion on the intended business audience may be required. Typically, using a combination of demographics, affluence and purchase behaviour or attitudes is helpful to define the target audience.
Methodology: The method or type of research is decided based on the most efficient way to DIG. Many a times a combination of methodologies is required to answer all the key information areas. There are many methods within quantitative and qualitative research.
Sampling and Sample size: A sample is a representative sub-group of your target audience universe. Except for census, all studies leverage the rules of sampling to optimize. The decision on sampling technique, and the sample size considers the degree of reliability and detail needed for the business decisions. Here one considers the law of diminishing returns to optimize the sample size. For some information needs a few in-depth conversations or observations may be more useful while for some a minimum sample of surveys may be needed.
How to choose the right partner?
Look for the following when making the choice of a partner:
1. Relevant Expertise: An expert can add a lot of value in designing and decoding the research. This could be industry experience that helps them understand your business use-case better or a subject-matter expertise on the type of business question itself for example expertise in product-market fitment or innovation work.
2. Judging credentials: One good way to assess a partner or proposals is to go beyond the credentials on paper and evaluate the quality of the engagement early-on. Is the partner asking you some questions that help clarify the business questions? Are they questioning any assumptions or making relevant suggestions? Do they have a perspective on the question or the category which is helpful?
3. The Project Team: Always ask for the key people who will lead the project. In a large company, typically the new business development and the project execution teams can be very different.
Pitfalls of formal Market Research
Almost every business needs some type of a market survey or consumer research at some point in their journey. Beware however of using market research as a crutch! Market Research is not a good substitute to spending time in the market via consumer connects or immersions ourselves. Further, we should not use market research to outsource key business decisions. Business decisions, informed by sound market research, on the other hand, can really help you unlock growth!