How to sell research services
How to Do Market Research!
I have an exciting investment opportunity only for Two Cents viewers: Beard Oil for dogs!
I call it Groomio, and itâs a guaranteed success!
How do I know?
Trust me!
I just feel it in my gut!
No serious investor will trust their money to your gut.
And you shouldnât either.
No matter how good you think your idea is, before you mortgage your house or quit your
day-job, you owe it to yourself to thoroughly investigate its market viabilityâthat is,
a realistic, data-driven prediction on whether it can succeed in this marketplace.
This applies to Fortune 500 companies and handmade soap sellers on Easy.
One way or another, the market will judge your productâŚwouldnât you rather hear
the verdict before you sink your life savings into it?
Ruth here has been giving her homemade artisanal soaps to her friends and co-workers as gifts
for a while now, and getting a lot of positive feedback⌠enough that sheâs actually entertaining
the idea of starting a small business.
But before she retires from her office job, how can she know whether thereâs really
a market for this?
The answer is market research.
Marketing research companies generate exhaustive reports on pretty much any industry you can
think of, including the Handmade Global Soap Market.
They include findings like market size, growth rate, demographics, industry leaders, even
how facial scrubs perform vs. liquid body washes.
And itâs all available to Ruth as a downloadable pdf for⌠$4,000.
Maybe Ruth can afford that, but I canât.
Fortunately, there are plenty of cheaper options.
I found this free report from the non-profit American Pet Products Association, which says
that U.S. spending on pet products and services grew at an average rate of about 5% annually,
comfortably above the GDP average, and that pet ownership is increasing, especially among
millennials, with dogs leading the way.
This is all good news for Groomio, because the bigger a market, the more potential customers,
and the faster itâs growing, the more new customersâwho are much easier to sell to
than older customers already stuck in their ways.
The report also tells me that the average dog owner spends $84 a year on grooming supplies
and servicesâvery useful info as I decide on a price.
A major part of market research is analyzing competitors.
If Ruth wants to get into the homemade soap market, she needs to know what the successful
brands are, how much they cost, what are the most popular ingredients and scents.
She can even request credit reports on these companies for a fee (unlike personal credit
scores, business credit scores are publicly available) which will tell her whether theyâre
financially stable, and how much risk there is in the industry.
Search engines and social media have made collecting this type of information easier than ever.
A simple Google or Twitter search will often tell you who the major players in an industry are.
With a GoogleAd account you can see how much competition there is for your keywords.
And Google Trends is an easy, kinda fun way to find out whatâs hot and whatâs not.
(Seriously, you can burn of lot hours here.)
I can see that the search terms âdog groomingâ and âbeard oilâ have both grown slightly
over the last 5 years.
I can tell what times of year theyâre most on peopleâs minds, what geographic regions
they live in, even what related searches tend to overlap.
This can all be useful when designing my product and advertising strategy.
All of this is considered secondary market research, information that already exists
that you can purchase or find for free.
But if youâre really serious about success, you need to do primary market research, which
means collecting data on your own.
Itâs often more expensive and time-consuming than secondary market research, but it always
saves you money in the long run, because you narrow down your audience and focus only on
the features that theyâre interested in.
For example, Martin wants to introduce a new sandwich at his popular food truck: a double-bacon
BLT with garlic aioli and truffle oil.
Before rolling it out, he asks his existing customers to fill out a survey, posts some
polls on his companyâs social media accounts, and just to be really thorough, pays a web
service to get survey responses from the types of people who frequent food trucks.
Lo and behold, he finds that people who tend to like bacon DONâT like truffle oil (because
itâs disgusting).
He almost wasted a lot of money on an expensive ingredient that wouldâve actually lowered sales.
Thanks, Primary Market Research!
Many experienced market researchers will tell you that when it comes to collecting data,
nothing beats face-to-face conversations.
Thatâs because customers are humans with emotions, and the most successful products
are ones that solve a pain.
âMarket painsâ are anything that causes frustration or inconvenience in a consumer.
Itâs a problem that your product could potentially solve, and the best way to find it is talking
directly to people.
Big companies conduct interviews with lots of people of varying demographics and regions,
but just because you canât afford that doesnât mean you shouldnât talk to people when you can.
Butâdonât bother asking your friends and family!
Theyâre likely to be nice and encouraging when what you need is brutal honesty.
For instance, Ruth starts taking her handmade soaps to the local farmerâs market, and
makes sure she strikes up a conversation with anyone whoâll give her the time.
She notices a trend in people who say they wouldnât buy handmade soap online because
theyâre concerned about the packaging waste.
Aha, market pain!
She decides to make sure all her packaging is made from recyclable materialsâand that
itâs mentioned prominently in the advertising.
For the truly introverted entrepreneur, the internet does offer a sneaky shortcut to finding
market pain: the dreaded comments section.
If your competitor has one, youâll find people happy to complain about drawbacks or
features they wish the product had.
Thereâs even a successful electronics company that has made its whole business model developing
products based on complaints in Amazon reviews.
âI love this nose hair trimmer but I wish it was waterproof!â Bam, market pain.
This is a very generalized overview of market research.
Thereâs a lot more to it: industry lifecycle, market penetration, federal regulationsâ
Oh shoot!
I forgot to check if animal cosmetics require FDA approval!
Thankfully, there are a lot of resources out there.
The Small Business Administration provides lists of organizations that offer free market
reports, and can help connect you with a counselor or advisor.
But be careful of business coaches who think their job is to just be your cheerleader.
While this encouragement is nice, you donât want to be encouraged off a cliff.
Ooh!
The results of my survey are in!
The percentage of dog owners who say theyâd be interested in Groom is⌠4%.
Maybe I shouldnât take out that loan just yet.
And thatâs the most important part of market research: objective honesty.
No matter how much you love your idea, if the research tells you otherwise, wellâŚ
that can be a good thing!
It means you just saved yourself a lot of money and effort.
And freed up your time to develop an idea that will work.
And thatâs our two cents!
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If youâve ever conducted market research, share your experience with us in the comments!
