Founded in 2015, MMC has grown to become a highly reputable research and marketing agency, known for high quality, transformative work. Vicki Shouksmith, Research and Project Manager at MMC, answers some commonly-asked questions about market research and how startups can make use of it.
At which stage of starting a business should an entrepreneur begin to think about market research?
From the very start. Whilst this doesn’t need to be extensive in the beginning, from the moment an entrepreneur has a spark of an idea, they should start to think about how they can quantify and qualify whether there is a market for the product or service they’re creating.
What kinds of challenges can market research help to overcome when someone is launching a new business?
In the early stages, market research will help to determine whether a business idea has the potential to scale. Research done well will ensure that time and resources are not spent on an idea that is unlikely to become a viable business.
Market research will also identify any changes that could be made to a product or service to make it more appealing to the target market, and therefore increase sale projections.
When launching a new business, marketing budgets tend to be on the small side. Market research can be used to discern customer profiles within the larger target audience, allowing for an informed and well thought out marketing campaign to be developed.
Can you explain some of the market research methodologies that are the most commonly used amongst business start-ups?
Desk-based research tends to be the go-to. With plenty of respected sources widely available on the internet, a desk-based research report can be produced for little more than the entrepreneur’s own time.
Drilling down into more specific market sizes is where you might need access to more specific research databases, but you’d be amazed at what you can find through trade organisations and associations as well as the likes of ONS and readily available data. Quite often it’s national statistics that are sourced which can be particularly useful in supporting grant or funding applications.
Telephone interviews with prospective customers are also a cost-effective but informative methodology to utilise. A 15-minute phone call can ascertain what solutions customers are currently using, and what does or does not appeal about the product or service in development.
Do the methodologies change depending on the size or type of the business?
The overarching methodologies tend to stay the same, but how and when they are applied can often be influenced by the size or type of business.
Desk-based research will provide you with the sizes and opportunities for your product or service, however engaging with prospective customers is where we often find the real depth of data.
We often say that a fusion of quantitative and qualitative data is the best way to uncover thoughts and opinions – the true “voice of customer”.
Surveys (quantitative) will help establish ‘what’ customers think and a deeper dive through some focus groups or interviews (qualitative) will then provide you with the reasons as to ‘why’ they think or behave the way they do.
The combination of using both can be incredibly effective, while they also each have their place individually.
For example, a more established business is likely to have an existing customer base which can be contacted via email – opening the door for quantitative online surveys. The larger the business, the more budget is allocated to market research, allowing for the opinions of greater sample sizes to be captured.
The same is true for the type of business. For a B2B product or service, telephone interviews during working hours tend to yield the highest response rates, whereas, a company wanting to test perceptions of a new product line will likely want to conduct focus groups.
Are there any examples of startups which you think have used market research well?
We have just completed some research for a tech startup that is looking to source funding through Innovate UK for a COVID-19 response tech solution. Providing evidence on market size in the UK and abroad has enabled them to quantify the opportunity and perform a gap analysis. Alongside this they had conversations with key players in their chosen market, which has provided them with a rounded picture of their market.
The initial market research they conducted has been a good example of underpinning any future marketing strategy.
Taking this data to the next level would mean exploring marketing strategy techniques such as producing SWOT and PEST analyses or creating buyer personas and marketing plans.
Are there any common pitfalls that entrepreneurs should be aware of when it comes to carrying out market research?
The main point to remember here is to remain objective and acknowledge what the market research is actually telling you.
An entrepreneur, who has already dedicated a huge amount of time and effort to an idea, doesn’t necessarily want to hear that their product or service isn’t resonating with the target market.
This is why independent market research agencies exist.
If someone is too close to something, there is a tendency to lean towards the people who are of the same opinion as them and ignore any contrasting views, because the latter is often seen as criticism.
It can be hard when a potential customer is dismissive of a product or service in development, but it’s important to remember that if you probe into why they feel that way, it can help to create a product or service that is infinitely better than the original idea – simply because it’s tailored towards what the target market actually want, rather than what someone thinks they want.
What has your own market research told you about how the COVID-19 pandemic is affecting business owners?
The COVID-19 pandemic forced new ways of living and working on everyone, but, as a business owner herself, our Managing Director, Natasha McDonough, recognised that business owners might be facing additional pressures.
Our research found that 54% of business owners deemed their mental health and wellbeing to be worse during the pandemic and subsequent lockdown than it was in the six months prior. Concerns around cashflow and losing business, together with the responsibility they felt towards their staff, were all cited as contributing factors.
The research identified that having a good support network was key, particularly in regard to peer-to-peer support, ensuring business owners could have conversations with others who understood the position they were in and the issues that were likely weighing on their mind.
We’re looking forward to taking this research to the next level and working with partners across the North East to create a resource hub for business owners to turn to when they’re in need of support.
MMC has partnered with funding providers to provide fully-funded market research and marketing strategy support for startups and small businesses – find out more here.