How to do marketing research

Big ideas remain unrealized because people are not sure that an idea is worth the risk. They also do not know how to do so, to find out if their idea is worth the risk. Thus, conducting a marketing research is the only way to know whether or not a business idea is worth implementing. This is a necessary stage of the business process. So, 5 simple steps to take.

Step 1: Assess the potential of your business idea.

The first thing you need to do is find people and companies that are representatives of your target audience. Sign a nondisclosure agreement with each one that will prevent them from sharing information and thus protect your idea. After signing, tell them about your product or service. Do not overload them with information, just give the necessary minimum to decide whether they are ready to become your client or not. Then ask about their opinion. Would they buy your product / service? Why? If not, what can be done better? Tell them that you need the most honest answer possible.

Step 2: Do some preliminary marketing research.

If at least one person or company among the respondents would agree to buy your product or service, move on and conduct preliminary marketing research. First, enter your idea or its variations into the main search engines (Google, Yahoo, etc.). The first thing you will know is whether there is already someone who provides your product or service. Pay attention to every company that could be your potential competitor. Write down the addresses of sites, offices, products / services offered and prices. Collect information in tabular form.
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After the information is collected, answer the following questions:

• How many competitors in the market?
  What is the total sales on the market per year?
  What market share does each of the competitors have?
  Does it seem that companies in the market get income?
  
  
  

  Step 3: Estimate the cost of creating your product or service.

  
  It is not enough to say that since another company can sell its product or service at a certain price, then you can sell yours a bit cheaper. This company may incorrectly conduct pricing policies or even conduct unprofitable activities in this market segment. So do not skip this step.
  
  If you provide a service, calculate exactly how much it costs to provide it. Add direct employee costs, additional costs and everything that comes to your mind. Carefully calculate the additional costs. Enter the cost of the phone, Internet, computers, equipment, etc. Do not make the mistake of underestimating the cost of providing your service.
  
  If you are offering a product, chat with engineers or manufacturers and ask them for a quote for the production of your product. Add this cost to your additional and direct costs. Once you have the total amount, assume how many products you can sell. Divide the total costs by the number of products you intend to sell. This will show you how much you need to sell your products to make a profit.
  
  

  Step 4: Find sellers.

  
  If you plan to sell your product through a retail network, call the company and find out who their customers are. Large companies such as Target, Best Buy or Macy's usually make contact easily. They have hundreds of procurement professionals looking for hot news. So do not be afraid to discuss your idea with them. If they are interested, say that you are at the stage of creating your own business. Ask them a few questions:
  
  • What is the margin in their retail network?
    Do they share marketing costs (or will you have to fully cover the costs of promoting your products)?
    Do they take goods for sale or buy it?
    
    This information will help you make a more complete analysis.
    
    If you are planning direct sales, try to find a seller who works in a related, but not competitive field. Get to know him better and talk about the fees he receives and how sales are going.
    
    If you are planning sales through direct marketing, call a few medium-sized companies that specialize in this area. Make an appointment to find out about their qualifications. Ask questions about the cost of marketing for your product or service. Tell them that you are planning to open your business and would like to get approximate figures. This will help to arrange them to you and get more honest answers.
    
    

    Step 5: Sum up and decide

    
    Now is the time to count all the variables. Add the cost of production and promotion of your product or service, the cost of sale (or the seller's mark-up value) and other costs. Now compare your cost with the cost of your competitors. If your product or service is more expensive, do not panic right away. Your product or service may differ from your competitors, in which case people will be willing to extra money. If your product or service matches competitors, and the cost is higher, treat it as a red flag.
    
    Now, after you have carefully researched the competitive market, it's time to decide whether to push your business further. Your task may take a week or so, but at the end you will evaluate the result.
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