To conduct market research for a startup, you need to identify and track your competitors, stay on top of industry trends and develop insights about your ecosystem.
Technical founders in particular tend to take a product-out approach when building a startup. They create a product first and then figure out how to bring it to market. But by relying on market research to inform your product development and go-to-market strategy first — what we call the market-in approach — you can dramatically increase your chances of success.
In this article you’ll learn how to conduct market research effectively as we cover these topics:
- What is market research?
- Why is market research important?
- What are the five types of market research?
- Is market research necessary in a startup?
- How to do market research for a startup
What Is Market Research?
Market research is the collection and analysis of data about potential buyers of a specific offering and the companies that serve them. By conducting market research, startups can get insights into the needs of their customers and the current state of the competitive landscape.
Why Is Market Research Important?
Market research important because it is the critical first step in adopting a market-in approach to strategic decision-making for your business. It requires leaders to step away from the day-to-day tasks they spend much of their time on in order to understand what’s going on outside their company — including changes to their industry, evolving customer needs and expectations and new competitor offerings.
While it may be difficult to take time away from the activities required to run the business, the insights gleaned from this approach can pay huge dividends in the form of quickly differentiating your company to find product market fit, develop a killer go-to-market (GTM) strategy and ensure the long-term (and often short-term) success of the business.
What Are the 5 Types of Market Research?
The five types of market research involve identifying and understanding your target customer profiles, user personas, market trends, competitors and ecosystem.
For pretty much any B2B market you’re planning to compete in, these are the key aspects to understand and track as part of your market research program.
- Target customer profiles: Which companies are you planning to sell to, and what’s important to them?
- User personas: Who are the people within these companies that are using your product?
- Trends: What’s driving buying decisions or changes in this market?
- Competitors: Which companies are addressing customer needs today?
- Ecosystem: Which related technologies, vendors and communities are vital to the growth and evolution of this market?
Target Customer Research
Gaining a clear understanding of the companies that will be buying your products is perhaps the most important step in achieving product market fit.
A common starting point is determining which size companies you’ll be selling to, because requirements, purchasing processes and budgets vary drastically when comparing startups to enterprises or non-profit organizations. Other key details include geographic restrictions and industries, such as hospitals, universities or professional sports teams.
Of course, companies themselves never buy software. People buy software. So understanding exactly who in your target companies will use your product and who will be impacted by it are critical to actually making sales.
In addition to understanding their roles and responsibilities, you’ll also want to learn as much as you can about the problems they’re trying to solve and which products or approaches they’ve tried in the past that didn’t work.
What’s driving buying decisions or changes in the market: New technologies? Regulations? Or evolving customer expectations? These trends will dictate which companies thrive and which struggle in the years to come.
Which products are companies using to address their needs today? How well differentiated are these offerings? What resources do these companies have available? Are they well-funded or just scraping by? Are these products the best at solving the problem, or are they being overtaken by newer products that better suit the needs of customers today?
Which related technologies or communities are relevant to this market? Are there certain products most companies are using that you’ll want to integrate with? Are there active communities that you should contribute to in order to better understand user needs and help them understand your perspectives?
Is Market Research Necessary in a Startup?
These details are especially important for startups, where the length of time to identify product market fit and execute your GTM strategy can be the difference between success and failure. These insights are also important to demonstrate to potential investors that you deeply understand what it takes to succeed in your market, acknowledge potential risks and can execute on your plan to effectively win a significant portion of the market.
In many markets, large incumbent vendors have spent years aligning their products to customer needs, while building up extensive sales, product management and customer success teams to ensure they’re meeting those needs and expanding their footprint throughout the organization.
Competing as a startup means you often need to disrupt this process and drive customers to adopt your product instead. That requires you to intimately understand what customer needs are not being met, what market forces prevent the incumbent from addressing these needs and how your product uniquely solves this problem, ultimately aligning your offering with the customer’s buying process.
Your market research program is the key to uncovering these insights.
How to Conduct Market Research for a Startup
While there’s no doubting the importance of a successful market research program, gaining a full perspective of the market and continually staying on top of changes can be a significant investment of time and energy that takes away from other important activities.
Fuel watchlists offer a single view of all your competitors so you can stay on top of their product announcements, new investments, marketing activities and more. Insights are aggregated and delivered according to your schedule, offering just the right level of information whenever you need it.
Fuel also curates the latest news and analysis across hundreds of markets to help you stay on top of developments from industry leaders, direct competitors and even sources you may not have been considering. These insights ensure you’re aware of evolving market forces as well as potential new competitors that haven’t quite yet landed on your radar.
Fuel dynamically identifies related companies that may play a key role in your market opportunity so you can track them as well. These insights can be generated based on individual competitors or as top movers within your industry. Being aware of the moves from these related companies ensures you’ll know right away when there’s a new competitor or potential partner you should be focusing on.
Getting started with market research doesn’t have to be a major decision. That’s why we built Fuel as a SaaS platform that allows you to jump in quickly to conduct market research for a startup without any commitment.
Sign up for free today to start generating insights specific to your competitors and market opportunities.