Have you ever thought about why market research is very important before starting any business or launching a product? Market research is the insight of everything around the market in which you are going to launch your business or product/services. It is very important to analyze your target customer, their demand, behavior, competitor within that market and analyze what unique way you are going to contribute to the market and what will be your competitive advantage.
Let’s see the steps to follow:
The very first thing to do is to dissect the decision-making process of the customer.
What drives any individual to become a customer?
Here are the key drivers:
1. The problem recognition: The first process is to find out what your target customer is looking for in products/services that you are going to offer. Is your product solving a problem or fulfilling a need?
2. Search information: This is the stage when customers start gathering information about the products/services they need, whether you are shortening the problem gap or not.
3. Alternative evaluation: After the customer selects any product/service they start looking for alternatives that best replace what they have chosen.
4. Purchase: After following the above steps customer finally decides to avail the product/service based on information gathered. These purchasing decisions are based on emotional connections/experienced or capitulate the advertising and marketing campaign or most likely a combination of all that has occurred.
5. Post-purchase evaluation: After you made it, it is very important to keep the track on the customer whether they are satiate or not. If the customer finds your product/service exceeds their expectation they will be your potential brand ambassador influencing your potential customer.
Another most important thing to take into consideration is your competitor. When you think of competitors first thing that comes in your mind are your direct competitors who are targeting the same audience with similar products/services. The one you sometimes miss are your indirect competitors who target the same audience with different products/services fulfilling the same needs and wants of your target customer.
For example ‘McDonald’ and ‘Burger King’ are direct competitor, customer approaches when they are hungry but some other restaurants who are satisfying the same can divert the customers. The customer who is thinking of having a burger at McDonald’s might end up at some other restaurant with some other dish. Hence startups must evaluate how their direct or indirect competitors are reaching out to the customer and how much market share they hold. The market share of your competitor gives an idea about how much gap is there for you.
And finally why anyone buys from you?
Always remember – don’t sell, demonstrate the tangible benefit of your product/service to your customers. Your product may make their life simpler or your service might help them feel better for themselves. Thinking about how your business can benefit your customers will help you gain competitive advantage.
Thats all for now, we will come back with another post on why analyzing consumer behavior is a key ingredient for startup’s success.