Market Research and Competitive Analysis for Startups
Commercial Viability
Market Research
To achieve good results when creating a company, it is not enough to have a good business idea. It’s crucial to conduct thorough market research.
A market survey involves collecting, processing, and analyzing information about the industry environment, the state of competition, and the characteristics of potential consumers. This prior information is necessary for proper planning of actions within the firm and allows for management decisions with greater chances of success.
Phases of a Market Study
A market study follows a sequential process, consisting of the following phases:
- Definition of research objectives
- Design of the research model
- Data collection
- Classification and structuring of collected data
- Analysis and interpretation of data
- Report on the results
Data Collection Techniques
Several techniques are used to collect the necessary data for market research:
- Survey: This involves presenting a questionnaire to a person or group of people (potential consumers of the firm’s product or service) and asking them to respond. If the number of people is very large, a representative sample is selected, and conclusions are inferred for the entire population. Surveys can be conducted through personal interviews, by mail, or by telephone.
- Observation: This involves observing the behavior of potential consumers and drawing conclusions. It is important that people are unaware of the observation so they act freely. Observation can be direct or through media.
- Experimentation: This technique involves provoking consumer behavior in order to study their reactions. Experiments can be conducted to determine packaging, format, product taste, name, etc.
SWOT Analysis
SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) aims to determine, from an internal perspective, the strengths and weaknesses that characterize a business. From an external perspective, it identifies the threats and opportunities that exist in the context where the firm operates.
This type of analysis is a widely used approach for business projects. It allows assessment of how far the business idea aligns with the promoters’ capabilities for success, based on the detection of an untapped business opportunity, innovation, or the ability to do things differently.
The Study of Competition
To find the company’s position in the market, it is necessary to understand all the characteristics of the competition (those who manufacture or sell the same product or service in the same market).
To study the competition, follow these steps:
- Identify competitors.
- Research necessary information: market share, prices, suppliers, product presentation, location of the establishment, technology used, advertising methods, etc.
- Compare the competition’s situation with that of the company.
From the comparison with the competition, the company’s strengths and weaknesses can be determined – that is, the factors that give it an advantage or disadvantage over competitors.
Market Segmentation
The characteristics of the product, how it is presented, and the path it follows to reach the consumer are conditioned by the type of customer. If a company caters to the needs of each customer type, it is more likely to survive in the market and gain a greater market share. The division of customers into homogeneous groups with similar needs is called market segmentation.
Market Segmentation Criteria:
- Segmentation by sex
- Segmentation by age
- Segmentation by income level
- Segmentation by family type
- Segmentation by education level
- Segmentation by place of residence
- Segmentation by product loyalty
- Segmentation by purchase frequency