3 Low-Cost Ways to Do Market Analysis for Your Potential New Business
You might think your business idea is going to be a hit. Whether it sprung from a hunch or from a need that you or someone you know had, if you didn't think your idea was a good one, you probably wouldn't be taking steps towards launching it as a business.
The thing is, you need other people to be excited about your idea too—excited enough to become paying customers. That's why, before you go all in on your new business, it's a good idea to do some basic market analysis.This isn't just an exercise in gauging demand—it also provides you with a chance to evaluate your business model, make improvements, or adjust your marketing strategy before you launch to maximize your chances of success right out of the gate.
With that in mind, here are three cost-effective ways to get a sense of whether your idea will stick.
1. Focus Groups, Re-imagined
This may seem like a strategy reserved for huge corporate entities or agencies, but focus groups can be a great strategy because they allow you to talk directly to potential users. And they're even easier to pull off in the digital age.
If you have access to a group of people who fit your likely target audience who are willing to gather in person to chat about your idea, go for it. But, barring that, Facebook and LinkedIn groups can provide powerful platforms to do this in a lighter-touch way. Seek out groups that are full of the people you think your idea will most help, and then create a post explaining your idea and asking for candid feedback. Pretty soon, you should have a comment thread full of thoughts on whether your idea is compelling, ideas for improvement, and the like.
You could take it one step further by offering to let people try a free beta version of your product in return for giving you feedback. For example, if you're launching a coaching business, you could offer a free half hour session to test out your method. Then, ask for feedback—you may be surprised to find that customers react differently than you had expected. In addition, you can use their reviews as early testimonials.
2. BuzzFeed Quizzes for Your Business
In case you haven't noticed, people love taking quizzes and polls these days—so why not capitalize on that to get some feedback on your business idea? A simple survey is an easy ask, and it's easy to distribute widely. When you invite this type of feedback, you're telling your audience that their ideas and feedback are important to you.
There are so many tools out there to help you create a great survey—SurveyMonkey and Typeform are two popular ones. Writing questions that give you useful answers can be tricky—Zapier has a great primer to help. Consider including questions about:
- How much people deal with the problem you're trying to solve
- Whether people would be interested in your product or service
- What people would expect or be willing to pay for your product or service
- If there are any features or benefits people would expect or desire
- If people use any competitive products or services, and what they like or dislike about them
Once you've made your survey, share the link with as many target users as you can. You could even create a small incentive, like a drawing for a prize, to encourage even more people to participate.
3. Shopping the Competition
Looking at direct and indirect competitors is an extremely important part of basic market analysis. Direct competitors are those who sell exactly the same types of products or services your potential new business will offer. Indirect competitors are those whose products and services are significantly different from yours, but which basically fulfill the same market need. When researching them, look into:
- Specific products or services
- Features and benefits
- Customer experience
- Buying journey
- Marketing channels and campaigns
- Brand identity (mission, vision, tagline, etc.)
- Brand following
- Search rankings and keywords
It might seem like a lot, but spending some time digging into all of this should be insightful. For instance, if your analysis reveals that the market is somewhat saturated, you may need to justify why another option is warranted. If competitors offer similar products at a lower price point than you can afford, you may need to differentiate your brand, products or services sufficiently to justify a higher price point. If you hear customers of your competitors voicing the same complaint, that might provide a way you can differentiate yourself.
Shopping the competition can also inspire you with ideas about how to run (or how not to run!) your own operation. Look for things that you think work well or inspire customer engagement that you can infuse into your own business model.
Doing a thoughtful and thorough basic market analysis doesn't have to slow you down or involve expensive research. It could be vital to your decision making process and help you better prepare to start your new business.