It’s easy to get carried away with an idea for a business – many entrepreneurs are so involved with their idea, they fail to see it objectively. Entrepreneurs may say that they have their ‘million-pound idea’ but they’ll need to do the research to prove the truth behind that statement before they can really move their idea forwards. This guide will outline some of the ways you should go about researching your idea.
There are two types of market research. Primary research involves directly collecting data for analysis. Secondary research relies on research carried out by another party or other sources such as newspaper or journal articles. Although undertaking primary research tends to be more expensive, it will relate directly to your research objectives and will provide a more accurate picture of the marketplace.
Primary research methods
There are three ways to carry out surveys - postal, online or face-to-face. Surveys tend to have a very fixed set of questions and allow for ‘closed’ responses (e.g. yes/no answers, rather than gathering opinions). It is usually easy to quantify the data gathered and to use the results for statistical purposes.
Interviews can be carried out by telephone, face-to-face or over the internet, e.g. via Skype. Interviews usually have more ‘open’ questions than surveys and allow respondents to give their opinions. Although this can’t be easily quantified, it allows people to give greater detail, e.g. to explain exactly why they like or dislike a product.
A focus group allows researchers to gather a group together to ask them about their opinions, perceptions and attitudes. Although the structure is fairly similar to an interview it allows respondents to interact with each other and discuss the product – they may, for example, be willing to share opinions with each other that they would not wish to share with an interviewer.
Test marketing allows marketers to test a product in a small area or a particular demographic group before it goes on general sale. Test marketing is used to make sure a product or service is suitable for its intended market.
Secondary research methods
Trade publications will contain articles and statistics specific to the industry you are operating in. They will be of use when you are looking to find a general overview of how an industry operates.
Most of the major news providers in the UK have business sections. By checking these on a regular basis you will be able to find details of anything that may affect your business idea, e.g. regulation or policy changes.
Although these are likely to provide only fairly limited information about rival companies, competitor websites are likely to provide you with some details as to what you are likely to be up against.
Commercial market research
Mintel, Keynote and Euromonitor all produce reports that are available to buy. The reports can also be found in libraries, although you may have to visit a business library to find these items. Reports such as these are usually geared towards a specific industry, market or sector and are updated annually or bi-annually.
Although Government statistics are not likely to be geared specifically towards your target sector, they may be able to help you find out details of demographics in your local area to give you an idea of who you will be marketing your business to.
Analysing your research
Aaron Keller, professor of marketing at the University of St. Thomas in the USA, has suggested that when analysing their research, entrepreneurs should examine it from four perspectives: company, customer, competitor and collaborator. This will allow entrepreneurs to examine their business from all angles and discover any potential pitfalls.
Company - Research should be examined in terms of the features of your product or service, how it will benefit customers, and the message you will be sending to your customers.
Customer - When applying research findings to customers you will need to consider three groups: purchasers (those who buy the product/service), influencers (those who influence the decision to purchase) and end users (those who will directly use the product/service). You will need to examine how your findings will affect each group and whether you will need to make changes accordingly.
Competitor - Here, there are again three groups: primary, secondary and tertiary. The groups describe how directly similar businesses will compete with your company. Your research will need to address how competing with each group will affect your message.
Collaborators - Collaborators are those who may have some interest in your success, but do not directly receive payment or any reward for your success – for example, the media or organisations that sell to your customers. Your research will have to examine how these groups are affected and if their success will affect you, and if so, how.
SWOT analysis is a framework that allows you to examine the internal strengths and weaknesses and external opportunities and threats that may affect your business idea. The strengths and weaknesses will most likely be found by undertaking primary research, e.g. if respondents have said in your research that they like your product and would buy it or if they think it needs to be changed. Opportunities and threats would usually be found in secondary research, for example, competitors going out of business or changes in the market.