While nearly 90% of startups make it through their first year, about 70% fail within the subsequent five years
Research from Deloitte highlights that customer-centric companies are 60% more profitable than those not focused on the customer
Methods like concept testing, product testing, BAR studies, advertising testing, and U&A studies can help in effective decision making
Startups are fun and full of energy but a proper litmus test of the market is necessary. It’s the right inputs that could define whether you are successful or not. The failure rate for new startups is approximately 90%, meaning only 1 out of 10 survive. This trend is consistent across various industries. While nearly 90% of startups make it through their first year, about 70% fail within the subsequent five years.
The above statistics clearly indicate that many startups don’t understand their market well enough. They might have a great idea, but if no one wants to buy their product or service, the business will fail. That’s why it’s so important to do market research before launching a startup. Good market research helps founders understand what customers want, who their competitors are, and how to make their business stand out. It can be the difference between a startup that thrives and one that closes its doors. So, here I outline five must-do market research techniques for a startup:
Define Your Research Objectives
Define far ahead what you want to learn through your research i.e. irrespective of whether it is for validation of new concept of the product, to understand consumer’s preference, for identifying marketing strategies or whatsoever would be the case, a clearly defined objective could direct your research process and relevant data collection.
Effective market research is critical for startups, given that about 70% of startups fail within the first 5 years due to reasons such as failure to research the market and prepare a business plan.
Concept Testing
Concept testing is really a check of whether your product or service idea would fulfil the needs of potential customers. This can be carried out using qualitative methods such as focus groups or in-depth interviews, which are fast, inexpensive, but less statistically reliable. On the other hand, quantitative research uses larger-sample surveys and brings about more exact and generalisable results. Show some potential users an app preview, a sketch, a mock-up, a prototype, or a wireframe, and get them to comment on it – its usability and desirability.
According to Bain & Company, companies with a customer experience mindset drive 4-8% higher revenue than the rest of their industries.
Product Testing
Once you have something tangible, do product testing – show the final product or a few versions to real consumers and look at their reactions. This can be done, for instance, in the form of a beta test or some controlled trial where you let the customers use the product in a real setting. Compare the results of the feedback from which to choose your working version. For instance, a young company making a new snack item might try different flavours and gather user preferences and responses to them.
Benefit-Reason Studies (BAR)
BAR studies reveal benefits perceived and the underlying reasons for why consumers feel one way or another about using a product. This in turn is an approach applied to understand what really motivates action amongst consumers. For example, if an organic cleaning product is to be launched, a BAR study can be used to understand if the non-toxic and environment-friendly credentials of the product are as important to consumers as it is.
Anticipation is built when advertising works. Place tests– Putting your product out into the select markets and getting consumer responses. This real-world feedback, in turn, assists with the fine-tuning of a marketing strategy. For instance, a gadget from a new tech startup will first be tested in the most technological cities. If it produces a good effect, the activity can be expanded across the nation. Positive response will mean it is allowed to roll further; otherwise, changes could then fuel optimisation.
Usage And Attitude Studies (U&A)
U&A studies post launch help one understand how consumers are using their product and their attitude towards it. Users’ surveys on emerging issues, satisfaction, and threats from competitors. For instance, a startup would conduct U&A research on the fitness apps to find out how often customers use their apps, which features prove to be valuable, and what problems they are facing. This is helpful in giving directions to subjects that call for updating or improving.
Research from Deloitte highlights that customer-centric companies are 60% more profitable than those not focused on the customer, emphasising the importance of putting the customer at the core of your business strategy.
Even though most businesses claim to be “customer first”, they aren’t actually taking steps to be there for their customers. An incredible 42% don’t collect customer data at all, as per HubSpot research.
It is important, too, to have pretest and posttest dipstick studies. These are mini surveys with small samples that measure interest or measuring customer satisfaction at some time during the cycle life of a product. Pretest dipsticks give opportunities to fine-tune the product or marketing strategy prior to launch; posttest dipsticks will measure the success and likely areas of failure.
Effective launch requires proper market research. By using methods like concept testing, product testing, BAR studies, advertising testing, and U&A studies, one can derive deep market insights to make effective decisions. Methods like this guarantee that your product will cater to the needs of the market and compete favourably. Deep, thoughtful research is the cornerstone of long-term success.
