Doing: Execution in a New Venture
We start with understanding the customer ("market research" and how to go about it), as this is the first thing that has to get "done" in a new venture.
At the heart of every start-up, there is an unmet need or unsolved problem. Validating that the need is real, that it can be solved in a way that is acceptable to the prospective customer and that the customer can be reached and persuaded to buy and use the product are the key questions that lie at the heart of whether a new venture is viable. Once these questions are answered, the entrepreneur can move on to answer other important questions about technology, competitive position, the economics of the venture, the availability of financing, etc.
The work of understanding the customer is foundational for the venture.
- Understanding customer needs and preferences is the basis for deciding whether the venture is worth undertaking at all.
- The quantitative understanding defines the scale and scope of the venture.
- Understanding customer processes dictates the selling and sales fulfillment plans of the venture.
- Understanding customer decision making is the foundation for the marketing activities of the venture.
The work of understanding the customer is market research.
Market research is ongoing
Market research is the process by which you understand your customer base or your potential customer base. Market research is the first thing that an entrepreneur must do, and it never stops:
We generally divide market research into primary and secondary. This table is a high level overview of market research from the perspective of the entrepreneur.
- The process of careful observation of a pattern of behavior or process
- Involves understanding purpose, context and related activities
- Requires understanding motivation (positive and negative) surrounding various components
- Structured conversation with potential customer
- Involves listening and gathering data that is offered spontaneously and unprompted
- Allows for getting direct feedback on a specific product concept
- Opportunity to probe on many aspects of the customer's environment that may affect likelihood of success of the venture's product
- Allows for getting information which the potential customer may not be able to provide explicitly, such as "Would you actually use this?
- Requires some vehicle (like a prototype) for performing the experiment
- To provide reliable information, the test must be carefully planned with explicit criteria
- Often good source of information regarding relevant factors in the company, such as financial position, strategic priorities, culture as well as the basics of the business
- Usually the primary means of quantifying opportunities, segments, primary customer attributes
- Good source of information about current solutions and alternatives
- Important supplement to primary research
Media and other public sources
- Good supplement to above
Finding and understanding a customer - Primary Market Research
Primary market research is the qualitative research is a process of understanding as much as you can about a particular customer:
- Needs, problems, issues
- Alternative solutions
- Buying process
Quantifying a market opportunity - Secondary Market Research
Secondary market research is the process whereby you estimate the number of customers who could possibly buy your product (your "market opportunity"). Good secondary market research is always based on solid primary market research.
Attached to this page are some tools that can help in the process of market research, competitive analysis and market launch. The templates outline the basic questions that you should ask as you go through the process of understanding your market, understanding your competitive position and creating a plan to respond to the market need. These documents are:
- Market Definition Template
- Market Segmentation Template
- Competitor Analysis Template
- Market Launch Plan Template
In addition, there are documents attached from Pragmatic Marketing on the concept of "personas" and their role as a foundation for market research.