As someone with few resources, I can only do market research through observations, talking to people and using google questionnaires in addition to finding secondary research done on the topic. However, is this method of "market research" acceptable when I want to present my ideas to potential investors? Is there some sort of more valid form of market research?
First of all, the fact that you are talking about market research ('validation') is great. I've seen so many startups invest time and money, only to find out later that no ones wants/needs their product, or that they only want a certain aspect of it (whilst the startup spent money developing a whole bunch of other features), or that they aren't willing to pay the requested price. So you're already one step ahead.
Also, the sooner you validate your product, the better!
The best ways to validate your idea is to see whether people are willing to actually pay for your product/service. The best way to get investors, is to show (1) that you are solving a need, (2) that you have traction, and (3) that the investors will get a nice return on their investment.
As for methods of validation, here are the most efficient methods.
1. Check that people will actually buy/pay for the product. You can do this by setting up a Wix or Wordpress website (this can be done for free / very low costs). If your venture is a mobile app, then you can create what’s called a Clickable Prototype (“CP”) (a visual of the app in which the images change when you click on something - you can do so using the Apple Keynote tool or Microsoft PowerPoint). On the website, include the price of the product/service, and enable people to order it (YES, even if it doesn't really exist yet!). I am happy to explain how this can be done whilst still being fair to your potential customers (the people who click the "buy/download” button).
2. Determine your target market/customers.
3. Spend a small amount (say $100 - depending on your budget) on the most relevant platforms and promote your product/service - linking to the website that you created.
This way, after only spending a very small amount, you will be able to know (if you did it right):
a. Do people like your product.
b. Do people want/need your product (not the same as 'a').
c. Are people willing to pay for your product? (not the same as 'b' - and this being the most important stage)
d. How much they are willing to pay. (you can check this by having 2-3 landing pages with different prices on each).
2 last important points:
a) In order to rule out external factors like an unattractive landing page or advertising campaign, and assuming you have the time, create multiple landing pages / advertising campaigns, with different designs.
b) During the above process, don't forget to check how much it costs you for each user/customer that clicks the "buy" button. If for example each click on your promotion/advertisement costs you $2, and only every 10 people who click go on to the "buy" page - that means each sale is costing you $20. Then check what your average profit per sale is, and then you'll know if your service/product is worth pursuing (obviously there are additional factors like return customers, referrals etc, but you will get a good estimated/validation of the idea/business).
Regarding questionnaires and talking with people, these methods are also very good, but it is crucial that you implement them correctly, otherwise your results might be misleading.
I’ve successfully helped over 300 entrepreneurs and I’d be happy to help you. Doing validation correctly can save you a lot of time and money. Before the call, and in order to make the best of your time, please send me more information about your product/service and your target market.
Best of luck!
Answered 4 years ago
Market research is a big ocean in itself .
What will be acceptable to the investors :
a) Primary Research (market size, market segment, customers behavior, product costs, profits, competition etc )
b) Secondary research from public and commercial sources (market size, market segment, customer needs / wants/ desires, current players in the market, concentration of the players etc)
You should be able to reconcile the differences in the two research methods ( e.g Primary research market size may differ from Secondary research market size. Which one is more realistic you should be able to understand the differences and align your proposal accordingly )
I think Yes these would be acceptable to the investors or say
that these are the minimum things that investors will seek from you
However What will attract investors to your proposal are the following things
a) Profit potential ( be prepared with cash flows, income statement, balance sheet simulation ) for next 5-10 years, you should be aware of financial ratios , break even analysis
b) Your own beliefs in the product ( what is USP of the product, what will make it sell, what will drive profits)
c) your commitment levels
(your role and your own evolution as the product grows)
d) your depth of research or knowledge of the market and product
(Yes primary and secondary research )
Feel free to reach me for any support and help
Answered 4 years ago
There are a lot of things someone can do to do market research with few resources.
1) Internet is full of data already collected ready to be used: google trends, searches, keyword and queries analysis can already give you an approximation of "what to search". Tools like Ubersuggest, Buzzsumo, but also Google Keyword Planner, and hashtag research on Twitter and Instagram help a lot.
2) when it comes with products Alibaba, Aliexpress and Amazon can help you see what the world is buying: trending products, best selling products, most rated products...
3) More specific websites like Statista, where you can start from free but then you will have to pay
Internet IS data! Everywhere
Answered 4 years ago
Hi - the best market research to present to potential investors for a start up is revenue generating customers. It is possible that you are at an idea state. I doubt you will get funding without customers, a minimum viable product, and a revenue model, no matter what market research you may submit to them.
Market research through observation for a small business is perfectly acceptable if backed by a working business model.
Hope this helps.
Answered 4 years ago
I think if you really want to win the "YES" of your potential investors when you present your ideas,you should have a profound and realistic ideas that pertains to your subject.
Google is way enough but make sure to search the exact wordings that pertains to your project so it will give you specific inputs.
Speaking of inputs, why not try to make a consultation to the expert. They have the best ideas how you can make your presentation a success.
Answered 4 years ago
1. Start by identifying who you developed your product or service for.
2. Engage your target customer in the real world.
3. Form 3-4 focus groups to provide feedback to improve product or service value.
4. Present the improved product or service to a second set of focus groups to determine what price they are willing to pay.
You then identify where your best prospective customers can be found in groups and harvest them via direct and digital presentations.
The key to business development and scaling at early stage is to not depend solely on digital platforms and keep your pitch simple and value-driven.
If you value over 2 decades of profitable growth experience, book a call and I will bring profitable growth to your young company.
Answered 4 years ago
Hi there. One of easiest ways I conduct market research is with a free website called Answer The Public. You can plug in keywords or groupings of words related to your industry and learn what types of questions people are asking online about the topic. Another thing you can do is follow what I call the PIGGLY method: Search Pinterest, Instagram, Google, Groups, LinkedIn, and YouTube to see what's currently showing up within your industry, the language people are using with regard to the needs/wants/desires, and then write a blog or create a video to present to those people. Validate the need before presenting the opportunity to an investor and you'll make that conversation go much smoother.
Answered 4 years ago
The professional way is to invest money into a research firm and other companies which provide such information to your industry. It appears you are doing it the grassroots way, which is fine, however I would work with someone who has an expertise in market research, and go more in depth with researching for data and information. If you'd like to talk more about conducting market research in this manner, feel free to give a call. I'd have to take a look at what you have done thus far and assess what has been done right, or wrong, etc. al.
Answered 4 years ago
First, virtually all businesses face competitive markets at home and abroad. Competition, direct and indirect, will undo your best plans if it possibly can, certainly their activities create a “moving target”, demanding that strategies be adjusted continuously. Markets and customers are volatile too. Markets are affected as much by fashion and fad as by economics. Customers are increasingly demanding, ever fickler and their loyalty to products and brands is harder to win, and then has a more temporary hold than in the past. A host of external factors act on markets and affect customers’ willingness to buy. These include: economic factors and what customers can afford, political factors and how markets are allowed to operate, social factors affecting how people live and therefore what their needs are, technological factors such as the rise of information technology, and environmental factors that may affect choice and regulation. All these things are dynamic, though the pace of change and impact may vary. The net effect of all this can be summed up in one word: risk. Business is an uncertain undertaking. For example, launch a new product (reputedly with a success rate of only one in ten) and the risk is all too obvious. In some businesses, with the long lead times and massive capital undertakings of, say, manufacturing an airliner, this effect is maximised. Management must assess risks in all its decision making and, while there may never be one, provable right course of action, what is decided always matters and there may regularly be a great deal hanging on the decisions that are made. Decisions are assisted by knowledge and in this context, information really is power; and this brings us to the role of research. Market research is a body of techniques that provides information to assist decision making in business. It does not remove judgement and experience from the process, rather it supports them by providing a better basis of fact. It can do a whole range of things from confirming a suspicion to unearthing new, previously un-thought of facts and opportunities. Sometimes this new information changes matters just a little, though maybe significantly. Sometimes it may reverse a situation.
A clear definition of market research is: “The systematic problem analysis, modelbuilding and factfinding for the purpose of improved decision making and control in the marketing of goods and services.”
This implies that research is not just an information tool, it is a means of providing guidance to help improve the abilities of management within an organization, as well as a means of making a contribution to the management of the marketing mix. It can be used to help decide on the marketing strategy required to meet the challenge of new opportunities; which market gaps to approach; and which are the key areas of interest for future marketing strategies.
The two basic purposes of research are:
1. To reduce uncertainty when plans are being made, whether these relate to the marketing operation as a whole or to individual components of the marketing mix such as advertising or sales promotion
2. To monitor performance after the plans have been put into operation. In fact, the monitoring role itself has two specific functions: it helps to control the execution of the company’s operational plan and it makes a substantial contribution to long-term strategic planning.
It describes five major types of research:
1. Market research – which, as an individual technique, investigates markets: asking who buys what in what quantity
2. Product research – this focuses on the product or service, asking what is right and wrong with the products of the company, or part of them
3. Marketing method research – examines aspects of marketing activity to see how well it is operating, asking whether communication, distribution etc. are effective
4. Motivational research – this looks at the way people think, asking about the basic reasons why people buy the products they do and what they feel about them
5. Attitude surveys – these focus on customers’ perceptions of, and attitudes to, products and to the companies who make them.
To do a successful market research follow the following steps:
i. Techniques of market research:
a. Planning market research surveys: Lurking behind most research surveys is a problem that needs solving (though this includes “positive problems” like seeking to find the best way to take advantage of an opportunity). At the outset of any study it is the researcher’s job to determine what the problem is and show how it can be solved. The researcher must develop skills in taking a brief from the ‘problem owner’ and translating it into a ‘proposal’ for carrying out the study. In the proposal the researcher states the objectives of the study, the methods which will be used to meet the objectives, the timing, the composition of the research team and the cost. This is true whether an organisation is undertaking research itself or retaining a specialist agency.
b. Desk research: There is no point in reinventing the wheel; it is costly and time consuming. If data exist, they should be used and not collected afresh. Desk research is the collection, sifting and interpretation of published data. It plays a part in most surveys, even if only to use the known breakdown of the population to guide the selection of a quota sample. Elsewhere it may involve the researcher in delving in the library or searching online databases for information on market size and structure. This is an area where the ongoing I.T. revolution has created many new options.
c. Standards and methods: Standards have had an increasing impact on the practice of market research. In the U.K. these relate primarily to the Market Research Society’s Code of Practice. Standards do not define good methods, but they encourage quality. They are intended to be implemented at an organisational level, rather than being a matter for individual practitioners – but they need to be followed by practitioners in an organisation.
d. Sampling and statistics: Sampling is a worry for most researchers who are new to the business. The mathematical basis that allows small numbers to be researched with the confidence that they are truly representative of the population as a whole (whatever the group is) is vital to research. Understanding the rudiments of random sampling is necessary, even though in most day-to-day surveys the researcher may learn to trust, say, a quota sample of 300 interviews spread across five cities. Without an appreciation of why and how different samples are selected, the researcher cannot claim to be undertaking a valid, scientific piece of work. Research must therefore be conducted in a way that brings specialised knowledge about this factor to the table.
e. Questionnaire design: Good market research is about asking the right people the right questions. Not much more, and not much less. We all ask questions in our daily life. We all fill in forms, and are critical of them if they are the least bit ambiguous. In theory, questionnaire design should be easy and yet it is one of the most difficult tasks to get right. Designing questions which draw out accurate information from everyone, which can be completed easily by the interviewer, that flow well and leave respondents feeling that they have contributed something worthwhile, should be the aim of all researchers. This is therefore an especially important part of any study and is referred to again later.
f. Geodemographics: Time was when survey samples were selected from a representative quota of the population based on sex, social class and age. Over recent years the technique has made it possible to link the characteristics of people with the neighbourhoods in which they live. This has become a powerful tool in allowing researchers to infer certain types of behaviour through knowing the geography of peoples’ homes. Geodemographics gave sampling a new lease of life. Each new census will give the techniques further development opportunities. This is clearly of most importance to research directed widely across the population as a whole; for an industrial company wanting to research buyers of, say, agricultural machinery of some sort the identification of people to contact is less of a problem.
g. Quantitative research over the internet: The Internet has become a collection of virtual communities, and all are focused on sharing information. For some organisations the Internet may be no more than a marketing or promotional tool. For others they will benefit from operating and distributing their services over the Internet. Market Research is a service which now finds the Internet providing a new method of collecting and distributing information. As a result, web and e-mail questionnaires can be useful tools to researchers. As has been said, the sophistication of this area changes as you watch, as does the applications to which it is put.
ii. Data collection
a. Quantitative research: Quantitative research is that which supplies a number to anything that can be measured, indeed there is a large body of researchers who argue that measurement can be applied to anything. Quantitative research produces ‘hard’ data which can be defended or challenged, and which is more than just opinion. It is based on sizeable surveys which, in the main, use samples of upwards of 200 people. However, the well-rounded researcher does not see quantitative research as a technique that can stand alone. It is often appropriate to plumb people’s opinions, first using qualitative techniques before determining exactly what should be measured. The qualitative and the quantitative methods therefore are often used together in this way, though it is always somehow easier to give finding credence when something measurable is involved.
b. Face-to-face interviewing: The market research industry has been built around the core technique of face-to-face interviewing – in the street and in the home, and industrial research in the office. It is still the bedrock of many studies as it allows the interviewer to use personal skills to elicit the information in a way that enhances accuracy. It also allows the showing of visual aids, evens out the interview and allows deeper insights to be gained than through more mechanistic methods. In recent years, CAPI – Computer Aided Personal Interviewing has given the traditional technique technological advancement and efficiencies.
c. Telephone interviewing: The telephone rose in popularity as a market research tool in the 1980s as it allows interviews to be carried out speedily, and under close supervision through central control. Almost all households have a telephone (and often more than one + mobiles), this means of contact allows the researcher to easily sample households anywhere in the country; indeed it is a technique that can allow prompt contact internationally also, albeit at higher cost. It is not necessarily a cheap method, in fact it costs approximately the same as a street interview. CATI – Computer Aided Telephone Interviewing has enhanced the technique so as to increase quality and provide more detail from the interviews.
d. Postal Surveys: Sending a questionnaire through the post must be one of the simplest methods. There is a certain prejudice about the use of postal surveys, a belief that the response they bring is usually inadequate. But this is perhaps only because they are frequently used in the wrong circumstances. They produce excellent results when there is a strong relationship between the respondent and the company carrying out the research. They are suited to testing opinion and sensitive subjects and work best with closed questions. Case studies have been developed to show which approaches work best for maximising responses. You will sometimes see a similarity between postal research and direct mail marketing techniques. Both are susceptible to minor differences for their response, for example, just changing a heading, adding further explanatory text or providing an incentive to respondents makes a difference. Indeed I received a very nice pair of sunglasses from a motor manufacturer in the post this morning following my completion of a questionnaire for them some days ago.
e. Omnibus research: Omnibus studies are targeted at certain groups of respondents and are run at regular intervals. They provide the facility for an organisation to buy space for a limited number of questions in a large interview programme. Because the cost of the interviewing and analysis is shared among several organisations each contributing questions to the omnibus, it is a particularly cost-efficient means of collecting data. This is a technique which has seen an ever-expanding range of omnibuses covering all manner of target groups spring up over the years.
f. Panels and diaries: A panel differs from an omnibus study in that it is a survey of the same people each time. In practice it is not always the same people all the time as people drop out and need replacing. Care is taken to replace panel members with relevant demographic characteristics. The questions that are asked of the panel are consistent so that results can be tracked over time. This provides reliable trend data on purchasing or on such things as television viewing habits. Such panels, and they exist all over the world, are usually sponsored by large media or consumer goods companies wanting to keep a check on movements in their target markets. The panel members keep records of their purchases and activities in diaries; that term is used here therefore in a technical sense.
g. Retail audits: As the name suggests, retail audits take place at the shop or store. By checking the stock turnover at retailers, the audit companies, which instigate this sort of research, produce accurate figures on the market shares of a wide range of consumer goods. The subscribers to the audits can then use the results to monitor changes in brand shares, and within the distribution routes through which their goods are sold, and in turn to adjust their strategies in the market place to accommodate the latest situation.
h. EPOS: EPOS stands for Electronic Point of Sale. It describes a process carried out by scanning bar codes at the check-out, typically at retail outlets. This allows researchers to measure quickly and accurately which goods have been sold and at what prices. EPOS is an extension of the retail audit. It is an excellent means of tracking product data as well as furnishing researchers with a basis for much predictive modelling.
i. Qualitative research: In many studies researchers want to obtain a deep understanding of not just what is happening, but why and how something is happening. To achieve this the qualitative researcher works with small samples of people, sometimes on a one-to one basis and sometimes in small groups. These are less like interviews and more in the nature of conversations or discussions. They are long and unstructured and require considerable skill to draw out relevant information, and more to analyse the significant facts from them afterwards. Qualitative research can produce rich data, probing into people’s unconscious attitudes and needs. Because the samples are small, there is no attempt to measure responses.
j. In-depth interviews: Using open-ended and unstructured interview guides, the researcher carries out in-depth interviews to ‘get beneath’ the superficial responses. The in-depth interview permits the researcher to be flexible in the order and style of questioning so that avenues of interest and relevance to a particular respondent can be explored. This can be a valuable technique, but time equals money in all such contexts, so expenditure is increased.
k. Group discussions: In a group discussion (or focus group, a phrase that has entered the consciousness of the general public through the use of them by political parties) between five and nine people are led into an exchange of views by the researcher (who is called the moderator). The interactions between people in the group is used to flush out views that would not otherwise be raised in one-to-one interviewing. The group discussion is a widely employed technique for researching new concepts and guiding creative teams in advertising agencies. Group sessions can yield rich information, but they do require experienced researchers to direct them and make them work and obtain true responses and not just the ‘party line’. Here too costs can be high.
l. Hall tests: There are many occasions in market research when it is necessary to have people look at (or touch or taste a product). For all sorts of reasons, it may not be possible for this to take place in consumers’ homes. When this is the case, hall tests are set up. Target consumers are ‘recruited’ from busy streets and invited to a nearby hall where the test takes place. A variety of techniques may be used in this context, but all have in common using the product itself as part of the inquiry.
m. Sensory evaluation: Sensory evaluation is a tool to help the technical research and development teams design better products. It focuses on a small number of aspects of a product such as the materials that are used in its manufacture, their quality, the shape of the product and its performance in use. Data can be mapped to show where the product stands against consumer preferences and in comparison, with the competition. Because the evaluation considers several variables, this type of new product research benefits greatly from multivariate analysis.
iii. Communications, advertising, media, and the Internet:
a. Advertising research: Everyone knows the phrase, usually attributed to the Chairman of Unilever, saying I know half of my advertising is wasted, but I Don’t know which half. It makes a good point and reminds us that for all the scientific method involved these days, marketing remains as much an art as a science. But what measurement can be done of areas of significant expenditure like advertising, must be done. Advertising research employs both quantitative and qualitative techniques. Large-scale samples are used for this purpose. Backing up the quantitative studies are group discussions or in-depth interviews which test the adverts or give creative teams in advertising agencies ideas for campaigns.
b. Researching TV and radio: Broadcasting nowadays is a highly competitive business. The transaction from analogue to digital transmissions has revolutionising the structure of broadcasting and the number of channels continues to proliferate. Competition for audiences has been good for the business of audience researchers. The audience researcher can contribute his or her professional skills to identify the talent appropriate to the station, its deployment and promotion. Researchers working in this area need to deploy a wide range of research tools and do so in an area where practice changes very fast.
c. Peoplemeters: In the past research into television viewing habits was done by getting panels of people to record what they did in diaries kept in their homes. This method worked well when homes had just one television set and the family normally sat watching it together. Today television viewing is complicated by the many sets in homes, greater individual rather than group viewing, and the use of recorders. People meters overcome these problems. They are electronic devices which monitor all the sets in the home – and the viewing on video recorders. They are “plumbed in” to the homes of people selected to go on the panel and provide accurate measurement of what occurs.
d. Packaging research: Packaging is an integral part of many of the products we buy. It plays an important functional role in protecting the product, and it carries visual information describing the contents. In addition, it is a mini advertisement actively playing a final role in merchandising and inviting consumers to buy. Packaging research is used to determine how well current or new packs work. In many cases straightforward questioning in the home or in hall tests will find out people’s attitudes to packs and their design. However, other techniques such as tachistoscopes (a device which measure blink rate and are used to judge how much attention people give to things they see) are available and can show how rapidly the visual information on the pack is absorbed.
iv. Analysis and modelling:
Data analysis: Data on their own have no value. It is the implications of data that really matter – what is shows or suggests. This means that researchers have a responsibility to tease out only the data that is relevant to the objectives of the study, and to simplify them so that the user can quickly and easily see a pattern. The data must be presented in a form that the reader can understand and, hopefully, they will lead naturally to conclusions and recommendations. This part of the process may be automated and conducted largely by computer, but the job of setting up the required analysis is skilled and important. Only bad research collects large amounts of information and leaves it at that.
Modelling: Computers have enabled researchers to get more out of their data than ever before. For example, programs now exist for testing the prices which people will pay for a product. They can show the degree to which consumers will trade-off some feature such as quality or design against price. Simulated test markets can be set up. Missing data can be inferred by ‘fusing’ together sets of data. Data can be analysed to map or segment consumers to show their different characteristics or attitudes to brands. And the models can be used to forecast a course of action. This is an area of considerable complexity, as such it may be beyond the remit of many small organisations, but technological change is making it more accessible all the time.
a. Presentation and report writing: The final output of researchers’ efforts is the presentation of their work – their findings. Presentations are the ‘day of reckoning’ for researchers; a chance to make a mark for better or worse. Good presentations have a clear objective. They are short but to the point with little time spent describing the method and more time spent on the findings and conclusions. The use of visual aids to communicate the data through charts and diagrams has become sophisticated, and the use of PowerPoint means good clear information can be produced quickly and cheaply. While the personal presentation has impact, it is nevertheless ephemeral. The written report is more enduring and may be read over a long period of time. It is worth getting it right (it may come back to haunt its writer in times to come!). As with presentations, the same rules apply. The audience must be kept in mind and the writing style should quickly and clearly communicate the points leading logically to the conclusions and recommendations.
vi. Knowledge distinguishes successful companies:
The risks faced by businesses today have never been greater. Competition is fierce at every level of the market. Small businesses are likely to be funded by a family’s life savings or borrowing. The cost of failure can be extremely high for the entrepreneur and for their associates. Large businesses face the same risks except that there are more noughts on the figures. The cost of failure for the large business may mean redundancies, scrapped plant, and dire financial losses. Success and failure in business is a consequence of making the right or wrong decisions. The right decisions are easy with hindsight; much more difficult when the conditions are unknown. It is a relatively simple matter to plan the production resources and estimate the financial requirement for a business. And yet both these plans must be based on understanding the needs of the market, and on whether customers buy the products and then become repeat buyers. It is those market needs that are most often misjudged, assumed, or even taken for granted. Uncertainty about what the market wants, both now and in the future, is one of the most difficult problems with which businesses must cope. More than ever, decisions in business require robust information. If information on markets is a key to business success, it follows that the people who can supply it hold considerable power. It is the role of market researchers to provide sound information to guide business decisions, set strategies and monitor the implementations to give feedback or whether it has been successful or unsuccessful. And, one might add, it is the role of marketing people and senior management to demand or organise such information. The techniques available to researchers have been developed and polished over time. There is no area where market research techniques cannot be used. For example, they are as useful in social marketing to probe why people drink and drive as they are to manufacturers selling alcoholic drinks: as useful to the government trying to obtain recruits for the armed forces as for theatre managers trying to measure their audiences’ likes and dislikes. The skill of the market researcher is not just being able to apply a special technique, but also knowing which to apply and when.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
Answered 3 years ago
You have asked a good question. While many experts have tackled the question from the area of what marketing research is, talking about the tools needed inconducting a viable market research, I would like to tackle the question from the area of data reliability. I am using this angle because of the meagre resources at your disposal.
It is indeed a cause for concern if you are sourcing for investors. You need to be able to convince them that you have done your due diligence but without money this might be easier said than done. You can go with the Google questionnaires and all but be sure that the data is very reliable, consistent and also recent. This will make your potential investors to see that the data source is good and the proposed venture is what they can embark upon. Use also your personally gathered data and make sure that the interpretation is too notch. If you have any further questions you can call me for more help.
Answered 3 years ago