5 Market Research Methods to Test Your Business Idea May 8, 2024
Leveraging primary market research to increase your business’ success.
What do you do when you have an idea for a product or service?
You start doing some research!
For most, this usually looks like studying possible competitors and other offerings in the market, getting feedback on your idea from a select few, trying to understand potential demand, taking status of the economy, and considering if it’s even something you’re capable of doing.
Most of the time, these actions are done in a haphazard manner with little to no intention, and a lack of clear steps to take moving forward.
We want to offer you a few strategies specifically designed to help you get in front of your customers as fast as possible so you can get critical feedback, iterate on your idea, and sell something that people want.
The best market research is research that includes talking with your ideal customers!
In today’s article you’re going to learn:
The difference between primary and secondary market research.
Why primary market research is crucial for your business.
5 methods you can start using today to collect data and validate your idea.
When it comes to assessing the demand for your product/service idea, you need a blend of both secondary market research and primary market research.
Primary market research involves collecting data directly from the source. It’s conducted specifically for the purpose at hand and is customized to meet the needs of the research objectives. Since primary research involves gathering new data, it can be time-consuming and costly.
Examples of primary research methods include conducting surveys, interviews, observations, or experiments with target customers.
Secondary market research involves using existing data that has already been collected by someone else or for another purpose.
This data can come from various sources such as government publications, industry reports, academic papers, or market research reports.
Secondary market research is usually more cost-effective and less time-consuming than primary research because the data is already available. However, it may not always perfectly fit the specific needs of the research project.
Examples of secondary research include analyzing industry reports, market studies, census data, or academic journals.
Note: If you’re interested in getting secondary market research support, please submit a Secondary Market Research Request with us today!
After working with hundreds of entrepreneurs every year, we tend to find that there’s a lot who rely purely on secondary market research, without rolling up their sleeves and getting quality, primary market research done.
We want to help you in this endeavour.
When starting out, most entrepreneurs will naturally do a mix of both types of research, albeit not in great detail.
Here’s an example case of Entrepreneur Paul:
Paul experiences a paint point.
Paul wonders if anyone else experiences the same problem.
Paul finds some interesting statistics online and talks to family and friends.
His close network says, “Paul, this idea is amazing! You gotta launch this business!”
Paul goes all in without doing any further investigation.
Paul makes millions.
Ha. Ya right.
If it were only that easy to do and watch the dollars roll in!
Compliments and cherry-picked data aren’t what you’re looking for.
Paying and raving customers are.
A business involves people paying for your product or service. In this way, purely seeking feedback from family and friends isn’t enough. Likewise, looking solely at macro industry trends won’t give you adequate detail on your specific customers and niche.
It’s time to broaden your feedback circle and enrich your offering with important data! The following methods are focused on the desirability aspect of your product or service.
You’ll also need to make sure your idea is feasible and viable. However, these aspects are beyond the scope of this article. If you want a bit more detail into these, please check out our article, How to Validate Your Business Idea.
1. Discovery Survey
Use surveys to understand customer pains, desires, and the value proposition of your idea.
When to do it:
You can leverage the discovery survey when you’re trying to get a clear grasp of your value proposition. Often, this is when you have your initial idea and begin sharing it with others. You can do quick surveys at various points of your customer journey as well.
Why it’s important:
Used to understand your customers pains and desires. Helps you get a better understanding of your value proposition, and how you can deliver it to your customer in the most effective way.
How to do it:
Set a clear purpose for the survey. What are you hoping to achieve?
Write the survey (keep it brief!)
Select your target customers.
Set a launch and end date.
Launch it!
Online Surveys – Use a tool like Typeform, Survey Monkey, or Google Forms. You can send to a small, select group of people and expand after getting enough information. Or, you could create a post on social media, or ad campaign to drive traffic to the ad. It might be helpful to include an incentive for completing the survey, like being entered into a prize draw.
In Person Surveys – Get your survey, grab a clipboard, and get out there! Figure out where your ideal customer is and ask those questions. Note: Be respectful of solicitation, privacy laws, and knowing which public places allow such activities.
Keep in mind that surveys confirm only what people say, not what they’ll actually do.
2. Customer Interviews
Conduct qualitative interviews to gain insights into customer needs, willingness to buy, and unmet needs.
When to do it:
At the early stages of your idea. You might have an idea, or an MVP/prototype of your offering.
Why it’s important:
Helps you gain qualitative data and feedback on your value proposition directly from your ideal customers.
How to do it:
Create your script. Identify the customer pains, gains, and jobs to be done, their willingness to buy, and uncover any unmet needs. Aim for 15-20 interviews. When you take notes, ensure that you identify exact words and phrasing, tone of voice, body language, etc. In this way, having a designated note-taker might be of value when doing an in-person interview. If doing them virtually, and with the permission of the interviewee, you could use the record and transcribe feature to review later.
Reminder that interviews still don’t offer valid evidence that people will purchase your offer.
3. Competitor Analysis
Compare your offering against competitors in terms of price, product quality, and brand image.
When to do it:
At any stage. You’ll constantly be assessing the competitive landscape of your business throughout it’s life.
Why it’s important:
It’s imperative to understand the alternative choices your customers have when they are considering your offer. How you differentiate yourself can be done in many ways, but only by knowing the current and potential future competitive landscape, can you create a truly unique offering.
How to do it:
Identify a few of your competitors in your target market. Direct, indirect, potential new entrants. Create a chart to easily compare your offer against the other options available.
In-Person Observation: You might consider calling a competitor anonymously (acting as a potential customer) to ask questions about their offer. You can take notes on the offer itself, how they are selling, customer service, and more. You could also go to a physical store (again, acting as a customer) and see what the experience is like.
Online Audit: Document their online presence. I.e., Brand positioning, testimonials/reviews, website functionality, social media presence and engagement, etc.
Price: What’s the going market rate? What’s the highest people are willing to pay? What are their margins like?
Product: What is the make up of their product or service? What’s the quality like?
Capacity: What are their internal capacity and capabilities?
4. Explainer Video
Create a visually appealing video to explain your idea and gauge interest from potential customers.
When to do it:
This method is great for sharing your idea in a compelling way to lots of people at scale. Some will use this in conjunction with a crowd sourcing campaign as well.
Why it’s important:
Creating a visually appealing video can work wonders when pitching your idea, and letting potential customers understand your offering in a visual manner. Think of any great Kickstarter video you’ve watched in the past!
How to do it:
Create your script based on your value proposition and any work you’ve done with your business model canvas. Make the video engaging by using visualizations and captivating storytelling. Upload online to a website and social media. Track engagement (clicks, like, comments, shares). Be sure to close with a call to action (“Join the waitlist!”, “Buy now!” etc.) so you can get a better idea of interest.
5. Pilot Project
Offer a limited-time pilot of your product or service to gather feedback and validate demand.
When to do it:
After you’ve collected enough evidence from less costly and time-intensive tests. This is when you’re ready to put your product in the hands of customers.
Why it’s important:
To truly validate your business idea, you need to have paying customers. It’s very common for a lot of great product and service ideas to fall flat in front of a customer come point of sale.
It’s at this specific moment where you can collect extremely important data on why they didn’t buy and learn the factors that influenced their decision.
For example, you can dig into specific details for why someone did or did not buy from you. Maybe it was your brand positioning, price-point, value proposition, customer service, etc.
How to do it:
Depending on your offering, you could offer a short-term popup event, have a booth at a trade show or industry-specific event (relevant to you and your customers), create a landing page to book a discovery call for your services and try to collect payment, and much more!
In conclusion
You might be wondering which method is the best for you. Well, it all depends on your situation, budget, time, and capacity.
If you’re just starting, trying to devise a pilot project might not be best. However, if you’ve tried some other methods already and are ready to sell your offer at a larger scale, then it might be time to do a pilot project!
Just ask yourself, “What’s the best thing I can do right now that will give me the evidence I need to move forward?”
There are plenty of tests and experiments you can run, but the guiding principle needs to revolve around your ideal customer.
These are only five methods you can experiment with.
If you can think of another method, we encourage you to try it!
Just make sure you know what it is that you’re testing exactly, and how you’ll qualify it as a success so you can move forward.
If you need more guidance in this process, book a consultation today!
Additional Resources:
– Testing Business Ideas by David J. Bland and Alex Osterwalder
– How to Validate Your Business Idea
– The Importance of a Business Plan – Part 1
– The Importance of a Business Plan – Part 2
– Business Model Canvas
– Value Proposition Canvas
This article was written by Paul Keefe.
“As a WTC Winnipeg Business Advisor, I’m happy to help in any way I can. Don’t hesitate to reach out for guidance on your business journey, challenges, or any related matters.”
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