Marketing, customer satisfaction and loyalty
Satisfied customers will follow you everywhere

The secrets of market research: how to avoid pitfalls when creating a new venture. Part 1

Share This Post On

Introduction to market research

Our aim with this series of articles on market research is NOT to deal with all the little details. There are very good books if you want to deepen your knowledge. Our aim however is to give you a complete overview of why you should perform a market research (also called “market study”) and what are the different steps to carry it out. We want to give you some tips, hints and a few secrets to help demystify this essential step in the successful creation of a new venture. Let me remind you that scientific studies have revealed the correlation between venture success and prior market research. A research by LaForge and Hill (University of Washington) for instance showed that 60% of bankruptcies could have been avoided if market research had been carried out. If you want some more evidence, let’s turn to a colleague of mine at the University of Liege (Belgium). Nathalie Crutzen (that’s her name) studied actual bankruptcies over several years at the local court of commerce. What she showed is amazing. She was able to classify the origins of bankruptcies and showed that in 30% of the cases bankruptcy was due to a misalignment with the market; in other words, the firm that went bankrupt was proposing products or services to the market that the market … didn’t want. A simple –and most probably brief-market research would have avoided.
In our series of articles we will focus on the preliminary steps of the market research agenda as well as on the synthesis of the different pieces of information collected. Below you’ll find the agenda of this series of articles that we will publish in three parts: today (Monday), Wednesday and Friday.

  1. What is NOT market research

  2. Market research methodology

    • Step 1: analysis of the market’s general trends

    • Step 2: competition analysis (also called analysis of the offer)

    • Step 3: analysis of the demand

    • Step 4: analysis of the environment

    • Step 5: synthesis

  3. Where to find data for your market research

  4. The price of a market research


In this first article we will deal with point 1 as well as with steps 1 and 2 of the market research methodology.


  1. What is NOT market research?

    Recently a would-be entrepreneur contactedus after we handed him over a quote to realize his market research. He didn’t understand what we were offering him because, he said, “it was more than an online survey”. Let’s be very clear. Market research is NOT an online survey. A survey (online or offline) is one step among many others in the market research agenda.
    Once you’ve understood that firms selling online surveys do NOT sell market research, you’re ready to embark on a journey to learn how to investigate your market in depth. Market research techniques may be richer than you ever thought.

  2. Market research methodology

There is no real methodology to conduct a market research. There are however pieces of information to collect.  The 15-step methodology that is depicted below is the one that we use at IntoTheMinds for our own customers. Depending on your very project some steps may need to be deepened whereas other may seem not necessary. For each step you will need to use various “tools” (most of them being “management tools”) to come to the desired conclusion.

Market research methodology

    • Step 1: analysis of the market’s general trends

To study the general market’s trends it lay be useful to first think about which market you are addressing. You can indeed see each market as made of different layers. Marketers often speak about main market, surrounding market, generic market and support market. Each of them corresponds (in increasing order) to a larger layer of the same market. Each next layer includes the previous one(s) and each layer has its own dynamics and its own trends which is what you are looking for.
Support market’s trends often determines the trends of the belonging sub-market; but not always. We will see this in one moment through an example.
I’ve no miraculous recipe for you –unfortunately- to find those trends and grasp the dynamics of the market. To get the big picture you will need, as a would-be entrepreneur, to read, read and read again. Specialized magazines may be a first-hand source of information. If you product or service has been developed for the B2C market it may also be wise to read journals dedicated to consumer’s behavior. Although professional marketing magazine are full of results and analysis, most of them are short-term or at best middle-terms trends. The most innovative information will have to be found in real, hard, scientific journals such as the Journal of Marketing which anticipates future behaviors sometimes ten years in advance. The good news however is that much of that high-end information is available for free. The Journal of Marketing for instance puts all articles of its latest issue(s) for free online. There is even a so-called “management summary” if you don’t have the time (or knowledge) to go through the whole paper. This is really a golden hint.
Market’s trends being shaped by consumers’ behaviors, it is also wise to look abroad in countries that are more advanced. Take for example the IT sector and in particular the smartphone industry. South Korean customers display a very particular behavior that way ahead of what you can find in Europe. In terms of technical literacy, amount spent and units sold, South Korea is a kind of lonely island where manufacturers kindly test their latest novelties. Since smartphones are everywhere today it’s no surprise that other industries try to test their innovation in Korea too. For instance we reported in an earlier article the success that Tesco encountered with its “product walls” in the Seoul metro where barcodes where displayed that commuters could scan with their smartphones to order products. This innovation was followed by Delhaize, the Belgian supermarkets group, which launched a similar test in Brussels in 2012. Soon was Delhaize followed in France by Carrefour. If you want to know more about this innovation you will find all necessary information on our blog where we published an analysis of the test as well of the results that were obtained.

    • Step 2: competition analysis (also called analysis of the offer)

“I have no competitors”. I’ve heard this sentence a countless number of times. Yet whatever your product or your service there is a 99,9999% probability that you do have competitors. It all depends on the market layer where you’ll be carrying out your competition analysis. Let’s take an example. When it was launched the iPad most probably had no competitors in the main market layer (the tablets layer). However in terms of consumers’ needs, the iPad did have many competitors. If you consider the weight of the iPad, there are other types of products which fulfill today’s needs for so-called nomad products : mini-PCs were one of them. If you think in terms of functionalities an iPad had also a lot of competitors: the iPhone was one of them (an iPad is actually only a big iPhone without the “call” function) as well as the Amazon’s Kindle. Kepp in mind that a consume will very rarely look for a 100% perfect solution. In most cases a consumer’s purchase decision will be based on a compromise between several conscious and unconscious factors. Keep in mind most consumers will be satisfied with a solution (product or service-based) that covers 90% of their needs or less. If you go for more you’ll be targeting automatically a niche market.
Competition analysis can be most of the time carried out through a Porter’s 5-Forces analysis. Yet, before you start working hard and going in every details of the competition, we suggest you what we call a “sanity check”. First make sure that the market you want to enter is an attractive one in terms of returns. It would be indeed very unwise to launch a company in a sector that has yielded constantly minus profitability over the last 30 years, right? (the latter example was that of the airline industry by the way, which has destroyed an incredible amount of value for most players since World War II). How should you proceed? Very easy. First make a list of the competitors you think about, collect their VAT numbers if possible and go online to find out how well they have performed from a financial viewpoint. If you are located in Belgium visit this site, if you are I France visit this one. The latter is not completely free-of-charge but the most basic information on your competitors can be obtained for free.

In the next episode …

In our next article on Wednesday we will deal extensively with the analysis of the demand by means of qualitative research. We will also explain briefly quantitative research. Stay tuned and keep celebrating with us the 500 articles milestone.

Tags: , , ,

Author: Pierre-Nicolas Schwab

Dr. Pierre-Nicolas Schwab is the founder of IntoTheMinds. He specializes in e-commerce, retail and logistics. He is also a research fellow in the marketing department of the Free University of Brussels and acts as a coach for several startups and public organizations. He holds a PhD in Marketing, a MBA in Finance, and a MSc in Chemistry. He can be contacted by email, Linkedin or by phone (+32 486 42 79 42)

Share This Post On

Submit a Comment

Your email address will not be published. Required fields are marked *