If you build it, who will come? Utilizing market research in a startup
Entrepreneurs, like any group of people, are not singularly homogenous. However, anyone who proudly bears the title of entrepreneur will agree that there is a single common characteristic that all of them share: the proclivity for action. A recent blog post I read stated it in a rather straightforward manner: If you want something, go get it. If you want to do something, do it. Screw the protocol. At first I felt pride at these words, and I applauded the hard driving, go getting attitude that I feel encapsulates the difference between entrepreneurs and cubicle dwellers. When I thought about it, though, this view totally eschews a primary factor in the success of start up businesses: preparation. A key part of preparation is market research, yet it is often ignored and even openly avoided. Market research isn’t the sexy side of marketing; it’s not like branding or advertising, and it’s not usually the pinnacle of excitement. However, if done right, market research can save you many headaches. Here are three simple market research tips that brand new entrepreneurs can leverage to be more successful.
1.) Don’t rely on the Field of Dreams Strategy.
Entrepreneurs are an excitable bunch, and if you’re anything like me, your business idea becomes a singularity in your life that takes all your effort and time. You begin building your business before you stop and survey your potential market landscape. I call this the Field of Dreams Strategy. Basically, you are so confident in the innovations and creativeness of your idea that you believe customers will appear out of the woodwork to utilize your business. It is easy to fall towards the logic of the film that says, “If you build it, they will come.” In reality, many great ideas fail because they were built and capital was sunk before the end user was ever really researched.
A game design studio I worked with, run by quite frankly one of the most talented and creative individuals I have ever met, ran into this same problem. The studio created an innovative game model that could revolutionize how games are built and designed. So the studio went to work, and a few months and quite a bit of cash later, a game was born. When the dust settled, everyone looked at each other and asked the question, “What next?” The idea was brilliant, so selling it should have been a no brainer. However, it slowly sank in that no one had asked the key question of who would actually pay to play this game. They had an idea of who they wanted to use the service but no concrete evidence that their desired audience would actually play the game. The positive momentum that was created during the building phase had to be put on hold so that research could take place. Avoiding a potential disaster, the company was able to work backwards, eventually define their target market, and build a solid marketing strategy around it. While it all worked out in the end, they could have saved themselves time and effort if the market had been researched beforehand.
2.) Finding the box helps you think outside of it.
Starting a business is exciting; you have the chance to do something you’ve never done before. Or at least that is what you think before you type your idea into Google. Many businesses never do this and end up making a product that someone else has thought of first. Entrepreneurs often become discouraged at this stage of the game. They give up or lose interest when they see anything similar to the idea they are building. It doesn’t have to be this way, though. Simple research into the nuts and bolts of your idea can give positive insights that let you fill gaps and be innovative. As startups, businesses have the advantage of being nimble and reaching places that bigger companies cannot. Entrepreneurs can take the time to learn from others’ mistakes and successes and to see what works and what hasn’t been tried. This can help you refine your company to an innovative core competency.
When I started my media production business, I ran into several problems, even though I had structured my company to be agile and fill gaps. When I finally sat down and did research, I found that other companies had tried various approaches similar to mine and had had the same problems. By seeing what the industry standard was, I was able to find market gaps that no one had ever addressed before. To summarize, this idea isn’t so much about what others have done but about what parts of the market others are missing.
3.) When you ask a question, be specific.
This seems intuitive—you have a product and service and you want to know specifically how it would work in the market. However, market research can quickly become a demographic percentage mire. Too much unfocused data quickly becomes unwieldy, and the ability to interpret the data plunges. There are stories of large companies spending millions of dollars on huge unfocused surveys that produce nifty graphs and slick cross tables but end up sitting on a managers’ desks collecting dust because no one knows what the information means to the company strategically. When doing any type of market research, pick a very specific question you want answered and start from there. It will save you time and sanity if you start with the end result in mind.
Market research can be hard and very confusing. That is why most large companies still outsource it. For most start ups, it is a terrifying prospect. I understand because I am scared of it, too. I am not suggesting that you become an actuary or take a census of your entire state in order to be successful. However, I feel that new entrepreneurs can gain a real advantage and lower barriers to success if they put proper thought into the market. And you thought being an entrepreneur meant you were done with homework.
Gabriel VanHuss is a grad student at Heinz College working on his Masters of Entertainment Industry Management. He has a passion for business, storytelling, and technology. He is excited for the opportunity to join an industry that is innovating in all of these areas. When not working, he enjoys watching films and playing games (for research of course).