Research the market
Researching the market for your idea before you start a business or develop an existing one will help you to work out if your idea could succeed. Market research allows you to collect and analyse information about your business market, so you can consider your idea's merits before you go into production or begin advertising.
If you are in the early stages of an idea you could do some informal market research by asking trusted friends for feedback and advice. As you develop your idea there are 4 key questions to answer.
Does your idea solve a market need?
It's not enough to have just an idea - if you want to succeed, your idea must have a market. Researching the market will tell you whether a demand exists for your product or service. If so, will your customers be willing to pay a price that gives you a suitable profit margin?
Who will buy your product or service?
The size of your target market is a major factor in deciding whether your idea is viable. If your idea interests only a small group of customers, a business selling that product or service may not succeed. Conversely, if your target market is large you may find there are many competitors with similar products or services.
Why is your idea different?
Can your product or service improve on what your competitors are offering? It could be better designed, stronger, faster, cheaper, easier to use or more environmentally friendly. Understanding why your idea is different means you can promote this feature to your target market and find your unique selling proposition.
Who are your competitors?
You must understand your competitors as well as your target market. Studying your competitors tells you how your product or service is different to theirs, what prices they sell for, and how they promote their business. You will need to establish a competitive advantage to set you apart from your competitors.
Market research - case study video
Market research is a vital step in determining how to set up your business. Julie Watts, Operations Manager of Bray Park Childcare Centre, explains the importance of researching market demand and benchmarking your business.
Find out why it's also important to set realistic goals and investigate gaps in the market your business can fill.