We start with understanding the customer (“market research” and how to go about it), as this is the first thing that has to get “done” in a new venture.
At the heart of every start-up, there is an unmet need or unsolved problem. Validating that the need is real, that it can be solved in a way that is acceptable to the prospective customer and that the customer can be reached and persuaded to buy and use the product are the key questions that lie at the heart of whether a new venture is viable. Once these questions are answered, the entrepreneur can move on to answer other important questions about technology, competitive position, the economics of the venture, the availability of financing, etc.
The work of understanding the customer is the foundation for the venture.
- Understanding customer needs and preferences is the basis for deciding whether the venture is worth undertaking at all.
- The quantitative understanding defines the scale and scope of the venture.
- Understanding customer processes dictates the selling and sales fulfillment plans of the venture.
- Understanding customer decision making is the foundation for the marketing activities of the venture.
The work of understanding the customer is market research.
Market research is ongoing
Market research is the process by which you understand your customer base or your potential customer base. Market research is the first thing that an entrepreneur must do, and it never stops:
We generally divide market research into primary and secondary. This table is a high level overview of market research from the perspective of the entrepreneur.
|Media and other public sources||
- Needs, problems, issues
- Alternative solutions
- Buying process
Secondary market research is the process whereby you estimate the number of customers who could possibly buy your product (your “market opportunity”). Good secondary market research is always based on solid primary market research.