Market Research on the Web
Use the Internet to find out if your business has potential.
Q: I have an idea for a business, but first I need to find out if there's a market for it. How should I go about doing this?
A: It's easy to spend tens of thousands of dollars on market research, but the good news is, you don't have to. In particular, if you're starting an e-business, you can use the Internet to your advantage to conduct your research on a very wide audience that you wouldn't otherwise be able to reach.
A lot of market research utilizes the Web, newsgroups and e-mail as platforms. But before you start polling potential customers, the first step is to take a look at the competition. Find out who else is offering the same products or services, look at their Web sites and see if you can determine how successful they've been. If some of your competitors are publicly held companies, this is a lot easier because their annual reports will be publicly available. If not, you'll have to go by feel, appearance and what they say on their Web sites. Granted, much of it is nothing but puffery, but you may be able to derive some useful information out of it.
Once you've compiled a list of competitors, you can then create a survey. Some of your survey questions will revolve around which of those competitors the respondent has heard of, as well as which they may have purchased from in the past. Other survey questions, of course, will describe your offering and ask whether or not the respondent would be interested in using it. Be sure to include variables-for example, a question may read, "Would you buy this product if it were priced between (a) $10 and $15, (b) $16 and $25 or (c) over $25?" Make sure to include questions that highlight any options you may be considering to get an understanding of what specifically your audience will buy and what they won't. (For example: "Would you prefer to buy this product with option A or option B?")
Now-how do you entice people to take time out of their busy schedules to complete your market survey? Depending on what you're offering, some people may do it just because it interests them. But, in general, you have to offer them something. Companies with deep pockets sometimes offer cash rewards, but you can offer something as simple as a discount on future purchases, a free sample, travel vouchers or a coupon book.
The next big question is, where do you find all these people? Of course, you could ask your friends and family to participate, but you'll get a more accurate response from strangers who are not afraid to offend you. Here's where you really put the "e" into "e-business." Besides posting the survey on your existing Web site, you can also attract people to your market survey by posting small notices in relevant newsgroups and discussion boards. Placing an ad under the "Free" section of any Internet-based classified page, advertising whatever freebie you're giving away in exchange for participation, will also get you a lot of responses. If you have an e-mail list of existing customers, prospects, associates and so on, that's another resource.
An important point here is that the people who take your survey are very likely to be eventual customers. So keep track of that contact information. When your product becomes available, make sure they know about it.
Dan Blacharski has more than 15 years of industry experience, has written several books and writes about business and technology for a wide variety of trade publications. A Silicon Valley refugee, Dan now lives in South Bend, Indiana, and covers high-tech start-up news in his Startup Trends newsletter. Free subscriptions are available at http://www.startuptrends.bigstep.com.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.
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