Let’s be perfectly honest with each other. Market analysis is essential for any startup and while some newcomers to the world of startups may be skeptical of this claim, more experienced entrepreneurs testify to the significance of market analysis.
Research the competition
Once you step into the arena of entrepreneurs, you have to know who you’re dealing with. You are more likely to anticipate your competitors’ next move if you learn how to keep track of their actions. This gives you the leverage to go one step further. Digging deeper than just their web pages is always a good thing. Luckily, there are so many tracking tools which will reveal who, when, and where mentions your competition. In addition to this, some of them will simply pinpoint the trends in social media regarding your specific niche.
Obtaining valuable information straight from the horse’s mouth is crucial in this business. Tapping into your customer base will yield results because you will find out about their preferences and needs. Although you may think that your idea is likely to meet their demands, the analysis will show if you’re right or wrong.
You can see if your idea resonates with their needs by conducting paid surveys on specialized sites or simply creating questionnaires on social media. People tend to be rather honest in these surveys because they are usually done anonymously. And if you decide on conducting a survey, try to be concise and insightful with the questions because it is the only way to obtain relevant answers.
Is there a market for your idea?
This is possibly the biggest question. But how and where do you get the answer? Analyzing the numbers which indicate the revenues in the local, regional, and national market can help determine if people spend money on similar services. What’s more, you can see if the market is already saturated or it is growing at a fast pace. This is also a great moment to perform primary market research which comprises data that is exploratory or specific. Exploratory research involves revealing previously unknown problems. As such, it procures general information to be used in more specific research.
Identifying lead users
Demand validation is likely to happen if you know how to generate the leads for your new product or service. The main reason all startups need to validate their idea before launching it is its relative instability. You may have a brilliant idea but it only exists as an educated guess in your mind. The reality is that it may flunk with customers before you even know it.
After you have identified your focus group, you have to turn them into your leads. This can be done through a unique selling proposition. The customers have a problem and through this value statement, you are offering a solution. At this stage of your market analysis, you can even try and offer your product free of charge.
The components of market analysis
To sum it up, a market analysis has to contain first and foremost a niche description. The industry you are starting in has to be thoroughly outlined. This includes metrics which will show the trends, scope, life cycle, and volatility of your target industry. This point is extremely important if you’re not a sole proprietor but looking for the ways of finding investors or taking bank loans. It shows that take your business idea seriously. Next comes your target market. Just because your product or service is used by almost anyone doesn’t have to mean everyone will buy it from you. This is why narrowing down your target market will show you where to direct your marketing efforts.
Then we come to direct vs. indirect competition. You have to learn and leverage the difference between those businesses that offer almost identical services as you and those who simply offer alternate solutions. And finally, forecasting. The projections of future trends in the industry are essential in order to determine how market share and pricing will evolve during a certain period and what trends they might assume in the future.
Whatever your idea is, never skip market analysis. Not only will it indicate the viability of your business but it will also help you prioritize some aspects of your business you deemed irrelevant.
Tracey Clayton is a working mom of three girls, passionate about traveling, marketing and everything tech related. Her motto is: “Live the life you love; love the life you live.”