NEWS / INSIGHT
How to do market research on a budget
Tight on cash? Invest time into market research
While big businesses can allocate big money to getting to know their target market, cash-strapped start-ups, can’t.
The good news is there’s lots of guerrilla market research you can do. And it can be just as effective as the big boys’ tactics – if you do it right, even more so.
Professor Costas Andriopoulos, Professor of Innovation and Entrepreneurship at Cass Business School, says: “Founders tend to spend a lot of time in front of Google. There’s nothing wrong with that, as long as you remember it’s not the complete picture. You have to turn off your laptop, and go out and talk to people.”
DIY focus groups
Can’t afford a market research agency who’ll charge you a fortune to set up focus groups and analyse their findings? Don’t worry. You can create your own for the cost of a few tea bags and a packet of biscuits.
Invite a bunch of friends (or better, friends of friends) round to test your product or service and tell you what they think. Ask family (but not yours, get your friends to ask their families – you don’t want the passion in your eyes skewing the results). Or, hit the streets armed with a clipboard and start asking potential customers for their views. Go to where they’re most likely to be – if you’re selling health foods, head for the gym.
Google Analytics can tell you how many people are searching for a certain product in any given month. Meanwhile, get to know your competitors by checking out their websites and signing up to their emails. The British Library (www.bl.uk/bipc) has outposts around the country – it stocks £5million worth of market reports, directories and industry stats, which are free to small businesses.
Get it out there
Really want to test demand? Make some and sell some. It doesn’t have to be perfect just get a beta version out and see if you’re on the right track. Hand out free prototypes or give good discounts in return for feedback. A pop up shop or a market stall costs very little and puts you in quick, direct contact with potential customers. Or create a ‘launching soon’ landing page describing your product. You’ll be able to measure pre-orders and interest.
The most cost effective tactic there is? Start small, then test and measure everything you do.
A quick case study
Ricky Martin from Skunkworks Surf Co wanted to find out the size of the potential market for his surfboards, so he rang every surf school, surf shop and outdoor activity provider in the British Isles.
He says: “I’d ask them what sort of surfboards they were using, what problems they had with them, and how much money they’d be willing to pay for a board that solved their problems.”
After speaking to more than 400 businesses, Ricky had built up a priceless picture of the potential market for his business. At the same time, he’d created a database of possible customers.
Ricky says: “We were able to say to potential investors – look, we have this whole market mapped out, and we’ve already spoken to everyone!”