Stage 1: SWOT analysis, which will bring out your business's strengths, weaknesses, opportunities and threats. If the results at this stage suggest that there are enough opportunities, you can then move on to carrying out more thorough primary and secondary research.
Stage 2: Primary Research. This involves a lot of legwork. It means getting off computers and books and actually going into stores and shops, trying to gain an understanding of your product or service will be received. You have to go into the field to find out what prospective customers, suppliers and yes, even competitors think of your idea.
o You could find many consultants who will carry out this research for you but you may find it worthwhile to carry out the exercise yourself. Also, the contacts you develop during this phase can help you carry your business forward.
o Try meeting as many people in the industry as you can. They will be in a great position to give you some solid advice about the industry.
o You could also speak to potential suppliers about the current scenarios in the market and where they feel they need help the most. Try and understand where the gap in the market is where your product or service will fit the best.
o Another good source of information may be non-competing but similar businesses in other areas. They could give you valuable advice and guidance.
o You could also try speaking to businesses selling products and services closely related to what you are trying to do. For example if you are trying to enter the business of hand-made shawls, you could speak to businesses dealing in custom shoes or hand-made scarves. They could provide advice as well as referrals to potential customers.
o Potential customers are by far the most important part of primary research. In fact, experts say, you have to attack this potential source like a guerrilla. Be tough and get as many names to speak to. Try and understand who will be most interested in your services or products and what features they are looking for.
Many entrepreneurs stand outside of malls and stores trying hard to speak to sympathetic customers to understand what they are buying and why they are buying them. If lucky, they will even be willing to try a sample of your product. It is absolutely essential that you get into the field, speak to as many people as you can and get as much of honest feedback as you can. You should ask tough questions and find out what customers think of your product. Will they buy it or wont they buy it? If they wont buy it, why wont they buy it? Will they buy it at a different price? Get all the complaints and warnings that you can find. It is better that you hear all the negative feedback now before you start so that you can take corrective measures if possible or at the worst, dump the project before putting in more money.
o Another very useful tool to consider are focus groups and surveys. Focus Groups are just a group of potential customers all gathered in one place and who will provide you with actual qualitative answers on the good and bad sides of a product or service as also their opinion on what could be done to improve them.
You have to learn to be objective while dealing with focus groups so it may be best to bring in a professional facilitator who will know how to conduct a focus group, ask specific questions and knows how to listen. Ideally, one should try to get as large a focus group as possible. For example, as a thumb of rule, if you were aiming at a market for 100,000 consumers, a good focus group would have about 400-500 in your focus group so that the results can be statistically significant.
o You use the latest technological innovations to your benefit by using online polls to the same effect. Create an informative, promotional website with a complete, helpful description of your product and then ask for feedback from visitors. You could also ask all your friends, family members and colleagues to take the survey and to reply honestly to the questions asked. Get more visitors to your website by sponsoring ads on related websites or newsletters. And of course, you could use pay-per-ad advertising such as Google AdSense or Microsoft adCenter even if all you are looking for is just feedback on your product.
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