As someone with few resources, I can only do market research through observations, talking to people and using google questionnaires in addition to finding secondary research done on the topic. However, is this method of "market research" acceptable when I want to present my ideas to potential investors? Is there some sort of more valid form of market research?
First of all, the fact that you are talking about market research ('validation') is great. I've seen so many startups invest time and money, only to find out later that no ones wants/needs their product, or that they only want a certain aspect of it (whilst the startup spent money developing a whole bunch of other features), or that they aren't willing to pay the requested price. So you're already one step ahead.
Also, the sooner you validate your product, the better!
The best ways to validate your idea is to see whether people are willing to actually pay for your product/service. The best way to get investors, is to show (1) that you are solving a need, (2) that you have traction, and (3) that the investors will get a nice return on their investment.
As for methods of validation, here are the most efficient methods.
1. Check that people will actually buy/pay for the product. You can do this by setting up a Wix or Wordpress website (this can be done for free / very low costs). If your venture is a mobile app, then you can create what’s called a Clickable Prototype (“CP”) (a visual of the app in which the images change when you click on something - you can do so using the Apple Keynote tool or Microsoft PowerPoint). On the website, include the price of the product/service, and enable people to order it (YES, even if it doesn't really exist yet!). I am happy to explain how this can be done whilst still being fair to your potential customers (the people who click the "buy/download” button).
2. Determine your target market/customers.
3. Spend a small amount (say $100 - depending on your budget) on the most relevant platforms and promote your product/service - linking to the website that you created.
This way, after only spending a very small amount, you will be able to know (if you did it right):
a. Do people like your product.
b. Do people want/need your product (not the same as 'a').
c. Are people willing to pay for your product? (not the same as 'b' - and this being the most important stage)
d. How much they are willing to pay. (you can check this by having 2-3 landing pages with different prices on each).
2 last important points:
a) In order to rule out external factors like an unattractive landing page or advertising campaign, and assuming you have the time, create multiple landing pages / advertising campaigns, with different designs.
b) During the above process, don't forget to check how much it costs you for each user/customer that clicks the "buy" button. If for example each click on your promotion/advertisement costs you $2, and only every 10 people who click go on to the "buy" page - that means each sale is costing you $20. Then check what your average profit per sale is, and then you'll know if your service/product is worth pursuing (obviously there are additional factors like return customers, referrals etc, but you will get a good estimated/validation of the idea/business).
Regarding questionnaires and talking with people, these methods are also very good, but it is crucial that you implement them correctly, otherwise your results might be misleading.
I’ve successfully helped over 300 entrepreneurs and I’d be happy to help you. Doing validation correctly can save you a lot of time and money. Before the call, and in order to make the best of your time, please send me more information about your product/service and your target market.
Best of luck!
Answered 3 years ago