How to research your market

Michael Howes
Founder | Pilot Cottage Limited
17th October 2013

“He really knew his market and his competitors”

A few years ago, a Cheltenham high-tech start-up company achieved the highest ever flotation sum for a UK business in the USA. Earlier in its history, the owner had been within just a few days of losing his house when UK investor 3i stepped in with a substantial round of investment. In talking with the people at 3i who made that deal, they said that what had impressed them apart from the product itself was the extent of knowledge the owner had acquired about both his market and his likely competitors.

Inventors often come up with genuinely fantastic and visionary ideas but get very frustrated at what they might see as the bureaucratic impediments to getting those ideas to market quickly. It is relatively easy to make the intellectual leap between the idea and the desired outcome, but a ‘trough of pain’ in getting there is inevitable.

It is also easy enough to do the desk research to identify the types of people and organisations who might buy your product or service. There are several companies who will do the necessary counts and selections and provide you with the data you need to address those markets. The harder challenge is with the psychology. Marketing is not a battle of products but a battle of perceptions. People do not always make rational choices but are influenced by previous experiences, habits, conservatism, others’ biased opinions and much more.

When you start, you do not have the advantage of an established brand. The earlier purchasers of your product or service will do so for different reasons than later purchasers. The development of any enterprise follows a normal distribution or ‘bell’ curve and although you can accelerate your progress through that curve you cannot miss out any of the natural stages of growth.

The key question therefore is ‘what emotional drivers will persuade people to buy my product or service in preference to others?’ To find out, you have to speak face-to-face with people who could potentially buy from you to understand the circumstances, prejudices and preferences they might have in making such a purchase. Once you have done that you can then test what is known as a ‘value proposition’ on them. If they perceive that the value to them is greater to the value they might get elsewhere, then you’re in business.

Your competitors at the same time will not stand idly by. They will be seeking to make offers and claims that they believe you cannot match. They will also argue that potential customers will be better off sticking with what they know and have a vested interest in subtly undermining what you are trying to do.

Also, never dismiss the input of sceptics. It is more comfortable when people tell you they like your product and proposition. On the other hand, if you do not also listen to critical comments, you may be robbed of a valuable opportunity to amend your offer and your strategy.Your competitors are not always the obvious ones. Products may not compete like-for-like. If you think of it as ‘competing for someone’s spend’ it will give you a more realistic picture of what you are up against.

A well known business plan ‘lie’ is: “We have no competition in our market space”.

Oh yes you do!

Content created by The Pilot Cottage Team © Neilson Kite / Pilot Cottage Ltd ™


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