Would you shell out $200 for a pair of shoes without trying them on? Plunge into a steaming bath without dipping a toe in first? Of course not--but people do the business equivalent every day. Many an entrepreneur has found out too late that nobody wants to buy hand-quilted Christmas stockings at $24.99 a pop, or that moneyed customers won't trudge to the unfashionable part of downtown for luxury stationery.
The paradox: Conventional market research is expensive (corporations regularly budget tens or hundreds of thousands of dollars for it), but no one needs it more than a startup entrepreneur. A couple of marketing blunders won't put a giant manufacturer out of business, but just one can sink an entrepreneur with shocking ease.
This article walks you through the basic steps of do-it-yourself market research. We'll skip the tried-and-true but unaffordable techniques--like focus groups, professional surveys and direct-mail questionnaires--and fast forward to ideas for those of us with more creativity than cash. The focus is on startup research, but many of the same techniques can also be used to refine your marketing plan for an existing business or to figure out why it's not flourishing the way you think it should.
You'll start by roughly defining your typical customers, determine if enough of them exist, and, finally, try to decipher their buying habits, preferences and prejudices.
Step 1: Define Your Target Customers
Your "target customers" are those who are most likely to buy from you. Resist the temptation to be too general in the hopes of getting a larger slice of the market. That's like firing 10 bullets in random directions instead of aiming just one dead center of the mark--expensive and dangerous.
Try to describe them with as much detail as you can, based on your knowledge of your product or service. Rope family and friends into visualization exercises ("Describe the typical person who'll hire me to paint the kitchen floor to look like marble . . .") to get different perspectives--the more, the better.
Here are some questions to get you started:
- Are your target customers male or female?
- How old are they?
- Where do they live? Is geography a limiting factor for any reason?
- What do they do for a living?
- How much money do they make? This is most significant if you're selling relatively expensive or luxury items. Most people can afford a carob bar. You can't say the same of custom murals.
- What other aspects of their lives matter? If you're launching a roof-tiling service, your target customers probably own their homes.
Get specific. For example, if you're selling collectible comics through a Web site but aren't willing to brave international export regulations, your customer location can stay in the United States. Or if you're planning to open a custom-tailoring shop and need busy executives to come for three fittings, you may need to limit it to your local area.