How to research the market and competition before starting your business?

A potential problem is not only a possible lack of interest from the target audience but also too much competition. So how to study the market well? Read on to find out more.

How to check the market demand?

You have a business idea, the resources to get it off the ground, and the determination to run your own business – this is a good start. However, it’s not enough. After all, the key to a successful business is to meet your customers’ needs. And the Internet is the best tool to research them.

As an Internet user, you know the power of the web. At least once you’ve checked online reviews of a restaurant you’ve been meaning to go to or an unfamiliar store that’s running a special promotion on the perfume you’ve been looking for. It’s also the easiest place to find a top-rated plumber, pediatrician, etc. So you know that potential customers are looking for information about products and services online. Take an example from them but reverse the roles!

Social media

Social media is a goldmine of knowledge about companies and potential customers, even if your target audience is the elderly, many of whom don’t know how to navigate the web. Remember that seniors often don’t do shopping themselves, but their families do it for them. How to use social media for market research?

Just ask what people are missing in a particular industry and what bothers them. Go where you can find a lot of people online. Visit forums, join community groups on Facebook, and ask questions in the comments on YouTube or TikTok. Of course, these shouldn’t be random places. Choose them based on your target audience. Opening a bar? Visit community groups in your city and find out what they are missing in the food market. Maybe sugar-free cakes, gluten-free dishes, vegetarian options, less pizza, and more local cuisine.

Surveys

Gathering information from online forums and community groups requires collecting all the information in one place afterward. This can be time-consuming, especially if you have a large number of questions. A convenient alternative is to ask for a short survey in the same places. Even at this stage, you can mention that you are planning to open a new business and offer respondents a discount on future services to encourage them to take the survey.

Google Surveys may come in handy here. This tool is quite popular, so people don’t usually have trouble using it. In the form, you can ask potential customers what they miss in a particular market, what prices they think are appropriate for a particular good or service, etc. Make sure to include a question about gender and age in the survey. This data will be useful for you to determine the habits of consumers from a particular group.

Niche market

Based on the obtained information, try to find your own market niche. What is it? The term refers to a narrow segment of the market that has not been satisfied. For example, if there are a lot of restaurants in your city, but none of them offer gluten-free dishes, then your niche would be people with celiac disease.

Market niche refers to specific needs, as general ones are usually met. Hairdressers usually offer occasional updos, haircuts, and coloring, but not everyone can braid dreadlocks. Of course, there will be far fewer customers for the latter services than for the former, but remember – these customers are capable of traveling many miles to get what they are looking for. And they are eager to tell their friends about finding a place that offers these services!

How to do a competitive analysis?

It’s a good idea to compare information about your customers’ expectations with data about your competitors and their offerings. How to go about it?

1. Find your competitors

Make a list of your competitors. If you’re planning to sell products online, then the easiest way to do this will be to enter a specific product group in a search engine. Prepare a table with two groups of companies, those that rank high in search results, and those that appear a few search pages away. This information will be useful for later analysis of your marketing strategy.

2. Set the criteria

Every industry has its own rules. Different criteria will be relevant for software developers and others for DIY jewelry retailers. However, there are common elements that should always be included in a competitive analysis:

• Communication channels – does your biggest competitor promote itself with funny videos on TikTok or flyers?Offer transparency – does your competitor provide a specific price list or offer individual pricing? Does it specify the exact scope of its services? Does it have a website and social media? What do they look like?
• Customer reviews – regardless of whether a company operates online or onsite, there will always be opinions about it on the Internet. This applies not only to its customers but also to its employees. Employees’ honest words can reveal a lot of useful information about the mistakes made by a particular entrepreneur.
• Online availability – if your strong competitor is not present online, you may be facing one of two situations. You have either found your niche, or your audience simply does not use the Internet. Find this out!
• Marketing efforts – track your competitors’ past ads, promotions, and discounts. Find out which ones were well-received and which ones were not.

Summary

Remember that you should continue to do both competitive analysis and market research on a regular basis even after you start your business. It’s a good idea to track what your competitors are doing from time to time and find a new niche. Consumer needs can change very quickly, as can leading trends. Regular analysis can help you “stay in business” and become even more established in the market.

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