You have an amazing business idea. How do you know if there is a market? Is it really something people are willing to buy? Before you pursue your business idea, you want to validate the market with market research and customer discovery.
Identifying if there is a market can save you tons of money, time, and hardship. “No Market Need” is one of the most common reasons why startups fail. Just because you think it is an awesome idea does not mean others will agree.
Market Research
Market Research involves collecting information about consumer needs and preferences. The process involves researching, analyzing, and evaluating information about the market, available products and services, identifying the potential customer base, identifying customer segments, learning about the industry, and evaluating the competition. Market research helps you learn about your target market’s characteristics, location, needs, and available solutions.
This type of analysis provides a macro view and allows you to estimate the market size. However, market research relies on statistics and facts. Market research does not help you answer questions that have not been answered before and does not help you uncover unknowns. You only find what you are looking for.
Customer Discovery
The term “customer discovery” originated from the customer development phase of the Lean Startup method. The customer development phase focuses on testing your startup’s hypotheses about the customer. Customer discovery allows you to: (1) Define your hypotheses, (2) Test the hypotheses, (3) Test your product or service concept, and (4) evaluate the customer feedback and adjust accordingly.
Customer discovery involves getting to know your target customer and how your product or service can best solve their problem. A survey, focus group, or interview are a few helpful techniques. It provides insights on your market, their current solutions, and the pros and cons of the current solutions. Customer discovery allows you to ask real people questions to uncover what they actually need and value. It provides a micro perspectives and also allows you to uncover unknowns.
Synergistic Combination
When you combine both market research and customer discovery, there is a synergistic effect. You benefit from both a macro view of the market and a micro view of actual people. The macro view will help you quantify the market opportunity, learn trends, and understand the industry forces. The micro view will help you identify your target market, guide product development, and direct the positioning of your product within the market.
Need Assistance?
As a specialty center of the Wisconsin Small Business Development Center and a business outreach program at the University of Wisconsin-Whitewater, the Wisconsin Innovation Service Center (WISC) can help you make informed decisions based on research on market opportunities, competition, and customers. WISC helps inventors and innovators understand the market potential, evaluate the feasibility of the new idea, and solve manufacturing and distribution challenges.