How to Do Market Research Before Starting a Business

How to conduct market analysis, and should it be carried at all? Many entrepreneurs think that as soon as they start selling their products or services, people will immediately buy them. In fact, it’s not always the case. Therefore, it is necessary to research the market to understand how much the product being introduced to the market is necessary for the consumer.

The Essence of Market Research

Market analysis is one of the most important components of any startup strategy. By conducting a correct market analysis, you will have a clear idea of ​​the path you need to follow to develop your business. Besides, a good market analysis will allow you to interest investors, bypass the market pitfalls, and attract customers. In its essence, market research is the identification of features unique to a particular market, which is aimed at making the right decisions regarding your business. By conducting market analysis, you can collect valuable data that will help you get to know your customers better, determine appropriate pricing, and identify competitive weaknesses.

What to Include in a Market Research Sheet?

The market analysis should include an industry overview, target market research, competitor analysis, key predictions for the business, and various rules to be followed.

#1 — Industry Overview

At this point, you should consider the current state of your industry and determine where it is heading as a whole. This will help you get an idea of the key industry metrics, such as size, trends, life cycle, and projected growth or decline. Even if you are going to start trading in Nigeria, in-depth market research will help you identify profitable deals. This is where professional Forex trading platforms like Forextime will be of great service to you. They are packed with multiple instruments and tools for in-depth market analysis, be it industry in Nigeria or any other country.

#2 — Target Market

It is important to have a clear idea of ​​your target market from the start. This is where many aspiring entrepreneurs make the mistake of thinking that the entire market is all of their potential customers. By analysing the market while narrowing down on your real consumers, you can make the most of your marketing budget, attracting loyal customers who will spread positive information about your business. The target market described in the business plan should contain the following data:

  • Target audience: you should pay attention to the demographics of your potential customers, such as age, income level, place of residence, etc. You also need to outline the psychological profile of your customer: you need to know their interests and habits, and also be able to explain how to satisfy their needs.
  • Market volume: you should do your research and find out who your competitors are. At the same time, you need to determine how much your customers spend annually on your product or service. As a result, you will get an idea of how big your potential market is;
  • Competitive analysis: your main goal is to identify the weaknesses of your competitors. Does a competitor have customers who aren’t happy with the service? What offer lets you stand out from the crowd of your competitors?

#3 — Forecasts

Making business forecasts is another important part of in-depth market research. Instead of outlining general business “predictions,” you need to keep an eye on the following:

  • Market shares: when you know how much money your future customers are spending, you can determine what market share you can capture. Be practical, but don’t make a bad bargain when selling your products/services;
  • Pricing and Gross Margin: this is where you should develop your pricing structure and justify the discounts you are going to offer to your clients. Your gross margin is the difference between the cost price and the selling rate.

#4 — Market Rules & Regulations 

Are there any specific government regulations or restrictions in your market? If so, you will need to know about them. Consider the costs of complying with these regulations. Finding a solution is important, especially when you are looking for an investor or are going to take a loan. 

Final Say

A cool business idea is half the battle. Painstaking analytical work and careful planning are highly important as well. Moreover, it’s better to spend time on market research before you invest in your brainchild.

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