If you build it, only 1% need to come.
For most organizations, increasing market share and sales is the primary objective. Many focus on how to tap into new audiences and product areas through marketing. The fact is, sometimes revenue generated from one percent share of the market may be enough to make your venture successful. Take Samuel Adams Beer. It still has less than 1% share of market, but the company’s annual sales are now over $950 million. Their original investment was $100,000 (now that’s nice ROI).
Nevertheless, 90% of business start-ups fail.
So, how do you beat the odds? For starters, you will need to test your business or product concept with your target audience. This is not the time for a DIY approach. You want results you can trust to help you make informed decisions. After all, you’ll be putting your heart and soul into this business. This does not mean you have to ignore feedback from family and friends, just try not to let it overly influence your thinking. Instead, use a methodical, comprehensive and professionally guided approach. One that will help insure your business’s success.
Participating in qualitative research will provide you unbiased answers and valuable directional insights.
In-depth interviews and focus groups conducted by an experienced research team with potential buyers and influencers are a great example. Is there interest in, or demand for, your product/service? Is your vision of the concept ideal, or can it be improved? What is its optimal positioning, brand name, logo, advertising strategy, packaging and website? What is its perceived value? What are customers willing to pay? And, how does it measure up to the competition?
To insure validity, third-party professionals must manage both the research planning and preparation, and the analysis and reporting steps. Your reward will be, without exaggeration, a strategic goldmine. Many come to realize this within the first hour of their first focus group. Sometimes your audience “gets it” – sometimes they don’t. Either way, you will benefit from the answer. Just 5-10 interviews and 3-4 focus groups will usually provide enough data to confirm your assumptions, or guide you in the development of a new direction.
Quantitative research will confirm the final direction or conclusions from your qualitative research.
Here, larger sample sizes provide higher confidence levels in your results: 400 and 800 completed, random surveys yield margins of error of +/- 5% and +/- 3.5% respectively. Perhaps best of all, you can leverage your research to persuade investors and distributors and make presentations at business conferences. Some of your research participants can even be coaxed to allow use of their feedback for testimonial purposes.
Other research worth considering includes market studies and competition analysis.
Plotting a competitive brand map (example) is by itself an illuminating marketing process. Each approach will help you identify opportunities and potential hurdles.
Certainly, there are decisions outside the research arena that can also determine success or failure. However, in every case, the best decisions you make will be informed decisions. Professionally conducted, third-party marketing research gives you the information, insights and direction you need to be significantly more certain you get your 1% –and more.
Guy is a retired partner at RDW. Outside the office, his priorities are food, family, friends and celebrating life.