Another reader question asked about how to do market research.

There are several main purposes for market research.  Market research can help you, (in no particular order):

• see the size of your potential market,
• anticipate the needs of your market,
• develop an advertising strategy,
• know what price your product can bring in the market, and
• know where to reach your market (online sales, stick and brick, affiliate marketing, etc.).

A complete market analysis will address five main questions.  First, and perhaps most important, how do your customers hurt?  Their pain will drive your marketing strategy.

Second, what are your company’s skills?  This will allow you to match your skills to customers’ pain.

Third, what is your competition?  This includes direct competition and substitutes.  Don’t ignore the ultimate substitute: doing without.  But if you know your customer’s pain better than they do, this won’t be a problem.

Fourth, who are your collaborators?  These are upstream suppliers and downstream retailers if you have them.  You need to understand their goals, strategies, and relationships to your competitors.

Last, what context could limit your possibilities?  This includes legal, cultural, technical, or political factors.

Most entrepreneurs with a good idea see with that idea a particular hurt their idea solves.  What they lack is the creativity to see how their idea applies to other problems, thus they greatly underestimate the size of their potential market.

So far this just says what market research can tell you.  But how do you get it?  To do it yourself you may want to take advantage of a few resources.

With online survey software and  a list of emails for a group of your ideal customers, you can see how much pain comes from the problem you want to solve.

A few tips for online surveys:

• keep it short – the more pages involved, the less likely they are to finish,
• don’t ask for too much personal information – people don’t like to give it out,
• do ask the questions that will tell you the most (this is the most difficult part of a survey), and
• do offer something free for survey completion (i.e. a mail survey I received with a dollar bill – I felt obligated to respond, or product or service discounts).

Interviews can be even more effective even if you collect fewer responses.  Buy lunch for a few people who would be ideal customers and quiz them about their needs.  Remember, you are not trying to close a sale, you are discerning pain that you can offer to solve later.

If you can’t remember anything else just remember Field of Dreams and you’ll know how to reach your customers:

Ease his pain.

Tags: Business Plan, Creativity, Entrepreneur, Knowledge, Marketing Plan

This entry was posted on March 26, 2010 at 12:28 am and is filed under Marketing Plan. You can follow any responses to this entry through the RSS 2.0 feed.