According to an American research and consulting company CB Informationmost entrepreneurs fail because they lack sufficient financing. The second reason for failure is that the market for their products is too small.
However, many entrepreneurs and coaching professionals proceed to reject the market research phase in favor of a “fail fast, change fast” approach. Starting firms this manner – even if it means having to later adapt to customer feedback – is very fashionable, especially in the world of startups.
However, as the bitter experience of Canadian entrepreneur Tom Zaragoza shows, “learning by doing” does not guarantee that a company will gain popularity in the market. In 2017, after months of effort, Zaragoza launched its Gymlisted website to connect private gyms with users and learn that there is there is no demand for such a service.
Through my work as a professor in the field of entrepreneurial marketing, I unfortunately meet an increasing variety of entrepreneurs who are convinced that they have the idea of the century, but do not devote time to structured market research. Market research stays an essential step for entrepreneurs for a easy reason: if the owner is not a market expert, who is?
Two misconceptions about market research
Contrary to the story of the intuitive and visionary entrepreneur, in a context where modern society favors motion over reflection, it seems that market research is each mandatory and relevant – so long as the two misconceptions that stand in the way of its adoption are removed .
First misconception: Market research is a linear and rational process that is not compatible with the company’s startup phase.
In fact, it is a set of methods and tools that aim to create a continuous learning loop through alternating phases of reflection and phases of experimentation. Regardless of the size of the company, the approach is much more iterative (achieved through repetition), inductive and diverse than you may think.
As shown by “disciplined approach” proposed by Bill Aulet, a professor at MIT, it is actually possible to research the market in a structured and flexible way. The 24-step process begins with examining market fundamentals, which is an essential first step in understanding the market structure and, most significantly, the different customer segments. Once a goal customer has been identified, the process proceeds by moving often between research studies and field studies.
(“Disciplined Entrepreneurship”, Bill Aulet), Provided by the writer
Second misconception: Market research simply involves obtaining responses to questionnaires from large samples.
The truth is, surveys they do not replace market research. Contrary to what some business web sites recommend, a good survey requires complex methods that require specialized knowledge. Using free online solutions like Google Forms by inexperienced entrepreneurs often produces biased results that might not be very useful.
In light of those two misconceptions, it will be more appropriate to use the term “market intelligence”, which higher describes the two key stages of a pragmatic and agile process adapted to the creative context.
Two key steps to developing good market intelligence
Step 1: Conduct secondary market research to understand your market
Secondary market research requires the use of all existing knowledge.
A fast and effective way to do this is to contact organizations comparable to professional associations, industry committees and even chambers of commerce. These institutions have a mission to collect, synthesize and share relevant and reliable information about a given sector or market, often at a very reasonable cost.
This approach allows entrepreneurs to quickly acquire the knowledge mandatory to start constructing their first hypotheses Business model: What are the different customer profiles? What are their expectations and purchasing habits? What competitive offers are already available on the market?
Step 2: Conduct qualitative research to validate and adapt your corporation model.
The next step is to test and explore the market in the field using qualitative methods. This sort of research takes the type of individual and group interviews, and even easy observations, and allows us to deepen the hypotheses formulated after the research phase through direct interviews with people in the field.
Take an example UNIQ hotel“ephemeral” accommodation launched in 2020.
Initially by studying reports Tourist intelligence network Transat Tourism Chairs at the Université du Québec à Montreal and Camping in Quebec showed that this product could possibly be of interest to those who enjoy “glamping” and desire each nature and comfort. Indeed, UNIQ offers yurts that will be arrange and dismantled in various places.
In the second phase, it is price conducting individual or group interviews to get to know the client, his habits, expectations and possible obstacles.
This exploration phase allows you to understand which services are essential and what booking methods are commonly used.
This sort of qualitative research could be an essential step in completing the study value proposition design, a tool that helps you visualize why your idea will meet market expectations. This information also allows you to prepare a precise profile of the expected clientele using the so-calledbuyer personality”, a approach to summarizing the principal characteristics of future buyers.
Once this exploration phase is complete, you’ll be able to finish with a test to ensure there is demand for one of these accommodation. This will be done through application concept testing. This easy and inexpensive process involves sending your goal customer a printed or video description of your proposition to gauge their response and level of purchase intent.
These few good practices are not the whole lot and not all market research methods will be applied in every creative context. However, as many scientific studies have shown, market knowledge is a key factor in the success of any company.