4 Mistakes That Startups Do During Market Research
Startups count on market research to obtain the necessary insights on how their customers behave and what are the key goals that they want to achieve to improve not just their business, but their life too. Nevertheless, knowing what information you need and how will you deploy into your startup marketing strategy is just as important as collecting the data. Only a thoughtful market research process can help you in making business decisions that will have a beneficial impact on growth and profits.
Before you think about installing market research into your growth strategy, it can be advantageous for you to recognize some of the recurrent roadblocks that startups face during their market research process. Mistakes and obstacles are not exclusively reserved for companies that are just starting their ventures. Even big corporations like Pepsi Co. and Coca Cola are making market research mistakes and lose millions of dollars during the process.
We put together four of the most recurrent mistakes that startups make during their market research approach. Take notes, and try to avoid them if possible:
1. Startups are guessing instead of knowing what are the applicable variables
If you’re old enough to remember the 80s, it means that you might have tried the newly flavored and sweeter Coca-Cola that should have replaced the old Coke. They called it the New Coke. They failed big time with their new product. People didn’t like the new taste and even came out on the streets yelling for the “classic” Coke to come back in their fridges.
The new product actually came as a consequence of a market research observation that gone wrong. The focus group that they’ve assembled needed to taste both flavors, the classic and the new one, without knowing which is classic and which is new. The greater part of the focus group liked the sweeter flavor more, and just like that, the future of the “classic” Coke has been decided: it was out. But not for too long.
In the process of doing the focus group experiment, Coca-Cola made two critical mistakes. One, the tasters were never asked the question on whether they still want to give up the “classic” and move on with buying the new one. Two, the researchers that were in charge were not appreciative of the fact that there are millions of consumers that are addicted and emotionally attached to the unique “classic” Coca-Cola flavor.
This fact points out perfectly on the significance of knowing which variables can help you made the best possible decision based on the market research results. And explains why classic Coke is still in the stores.
2. Startups are hanging on and assert prejudices and stereotypes into your strategy
As an entrepreneur or as a startup team, you may have your own set of convictions and judgments. And we get it, it’s in the nature of humanity. With that in mind, we are aware that humans are prone to make decisions based on their convictions, and decisions based on market research are not excluded.
You have to be careful with your bias when you approach market research, and when you try to interpret the data afterward. This is the time to see the broader picture and to examine every possible aspect of your target customers. Keeping an open mind during the process of data interpretation will help you broaden your views and ask yourself the right questions that will help you develop a better sales plan.
Bottom line, it is never a good thing to make assumptions. Especially in business. And especially when you need to do market research.
3. Startups don’t know precisely what to look for and where to look
Lots of first-time entrepreneurs dive headfirst into market research without first having a clear-cut picture in their minds of what type of insights they want to obtain from their target customers. And focus groups can’t really clear things up for us, as we saw from the “New Coke” example previously. You will want to find out precisely what your customers want and what they will gain from your business. And you will want to know how much they are willing to pay to have your product.
When it comes down to market research, it’s critical that you know where exactly your target customers are, instead of wandering around and survey everyone that is interested.
4. Ignoring or not interested in their competition
Face it, there is a little chance that you are the venture capitalist’s next unicorn. And almost every idea or invention out there looks like a remix from a previous one. It’s a good thing to believe in your product and feels confident, but feeling so confident that you don’t even bother to research your competition is the feeblest type of confidence there is.
One thing is for sure, you shouldn’t be that disinterested in your competitors that you don’t even know what makes their customers tick or the reasons behind their biggest decisions. You have to be aware of their strengths and weaknesses.
When you swim in the market water with the same swimmers like you, you might as well find out how they manage their businesses and how they succeed in finding their best clients.
All in all, market research has become an indispensable instrument that will assist in the hunt for your best target customers and comprehend them better. Recognizing some of the pain points that startups face in their process of market research can help your startup overcome those obstacles or consult with experienced experts that faced successfully and know where to look for the right target customers.
This article was originally published on BizzBee Blog.