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Minimum Viable Product (MVP)
What are the main advantages of primary market research
Oct 1, 2024
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How much does it cost to understand your customers? A pre-seed stage start-up will need to pay between £5,000 and £30,000 to evaluate the benefits of primary market research. The price depends on the status and experience of the third-party agency or specialist you hire. But don’t be afraid, most future unicorns met their first users while using free tools for conducting research. We’ve already described it here.
For pre-seed startups, conducting primary market research is essential, but it's important to approach it with a clear plan to maximise value while conserving resources. In a business environment where time, money and people are limited, even a small investment needs to be justified. We explain the criteria you need to focus on to maximise the impact of primary market research.
What is Primary Market Research?
Primary market research is the process of gathering unique data by interviewing your target audience. Put simply, before you launch a product, you go straight to your future users and ask them:
- Will this product really solve their problems and challenges?
- What features do they want to see in it?
- How easy is it to navigate the MVP application?
You can read more about how to run a successful startup here.
Primary market research is the first feedback you can get on your idea. This information helps to understand the level of demand for certain products or services and helps to fine-tune the offerings that are to be provided to the clients perfectly. It also helps in establishing areas where the commodities or services on the market do not meet the requirements of the customers or even the reasons as to why customers are leaving an app or even a site.
Want to learn more about other ways to research user needs?
Olga V.
Business Manager
Primary vs Secondary Market Research
So, how does primary research differ from secondary research? Let's take a look:
- Primary research provides original and tailored data that gives direct insights from customers in real-time. Collecting this data can be costly and time-consuming;
- Secondary research is faster, cheaper and more accessible because it uses existing data. However, the results may not be specific enough or up to date for a certain market.
So, if you want to make informed, customer-centric decisions, better choose primary research. To find out more about how both types work, read the article.
What are the basic types of market search for your MVP
Let's give a short overview of their objectives, differences, the tools they use, and the results you can get.
Primary Market Research Techniques
We've already mentioned popular primary research methods such as surveys, interviews, focus groups and observations. You can find a detailed review in this article. Now let’s talk about other primary market research techniques you can use to get more in-depth data.
Test marketing
Test marketing refers to a systematic measurement of the demand for the new product or service through its launch towards a particular group of people for intense studying purposes. This assists companies in knowing the consumers’ needs, where the price problem lies and the impact of the advert on the sales before the mass marketing of the product.
⚡The Coca-Cola Company does a lot of test marketing to predict the potential demand for new flavours in different markets before a global launch. For example, when the company was preparing to launch Coca Cola Life, a low-calorie cola, it first introduced the product to consumers in Argentina and Chile. They were interested in how people would respond to the stevia sweetened drink. From this information, they improved the product before going into other countries.
Field Research
Field research is about getting out into the real world and finding new solutions through observation, surveys or interviews. It allows companies to understand how their products and services are used in everyday life, providing insights that may not be apparent in controlled environments.
⚡Toyota typically observes how drivers use their cars in major cities such as Los Angeles and Tokyo. This research helped them to develop the Eco Mode feature for the Toyota Prius, which optimises fuel efficiency for city driving. It is perfect for urban areas where there is a need to improve fuel economy.
Questionnaires
Questionnaires are the list of questions that you can use in digital surveys to collect data from a large number of people. They should consist of different types of questions, such as multiple choice, open-ended and rating scales. This primary research technique is a cost-effective way to gather information and feedback from people.
⚡Glossier, a beauty brand, often uses online questionnaires to gather information about customers' skincare routines and preferences. The responses are used to inform new product development. For example, the company launched its Milky Jelly Cleanser because customers rated it as a gentle and effective cleanser for daily use.
Intercept Surveys
Intercept surveys involve approaching people in public places such as shopping centres, airports and railway stations to get immediate feedback on their opinions or behaviour. They are usually short and designed to capture real-time responses.
⚡Starbucks often uses in-store customer surveys to measure customer satisfaction and gather feedback on new menu items. For example, they asked customers in selected stores about their experience with new cold brew options. The insights they gained from these surveys helped them refine their recipes and decide which drinks to launch.
Having trouble choosing the right technology? Let's get in touch to find the perfect solution for you
Olga V.
Business Manager
Advantages of Primary Market Research
Now, let's get why primary market research is so crucial for your startup? Here are some of its advantages.
Tailored Insights
Primary research provides data that is 100% relevant to your specific business needs. You are not relying on a broad, outdated industry report. Instead, you are asking your actual customers for their input. So you can tailor your product or service to meet market expectations.
✍ Example: After conducting user interviews, the SaaS startup discovered that many of their users found the dashboard to be overwhelming. Based on this insight, the company decided to simplify the user interface. This resulted in a 20% increase in user retention.
Real-Time Data
Market conditions can change rapidly, and primary research provides the most current information. Whether you need feedback on a specific feature or insight into consumer attitudes towards your pricing, you will receive data that is up-to-date, rather than information from an industry survey that was conducted last year.
✍ Example: An e-commerce platform that sells eco-friendly products uses live surveys to determine which new product categories to introduce based on changing customer demand for sustainable products.
Deep Emotional Insights
While numbers are important, they don't always provide a complete picture. Interviews and focus groups can help us understand the emotional factors that drive customers' decisions. These methods can reveal why customers love or hate certain features, why they remain loyal, and why they may leave.
✍ Example: A food delivery startup interviewed potential customers and found that they loved the idea of personalised meal plans, but disliked the lengthy process of entering parameters such as weight, height, activity level and more. The company decided to streamline this process and saw a 35% increase in new customer sign-ups as a result of these changes.
While numbers are important, they don't always provide a complete picture. Interviews and focus groups can help us understand the emotional factors that drive customers' decisions. These methods can reveal why customers love or hate certain features, why they remain loyal, and why they may leave.
Competitive Edge
All data gathered through primary market research is unique. Rather than simply copying what the competition is doing, you can base your product development on what you think might work and make informed decisions based on the preferences and behaviours of your target audience.
✍ Example: A fashion tech startup conducted research and found that their customers wanted gender-neutral clothing. In response, they quickly launched a new product line and were the first to capture this part of the market.
Informed Decision-Making
Direct feedback from your audience means you're not guessing. Your decisions about product features and marketing strategies are based on data. This reduces the risk of launching a product or strategy that nobody wants.
✍ Example: A fintech startup used primary research to test its pricing model before launch. As a result, they understood that the subscription types were too expensive. So they created a tiered pricing strategy that met their users' expectations.
Let’s also mention the disadvantages of primary research. It can be expensive, time-consuming and take a long time to complete if it involves face-to-face contact with customers. It requires some prior information about the subject, and ideally market research skills to get the best results.
Key Conditions and Criterias for Primary Market Research
To maximise the impact of primary market research, it's important to have clear objectives, target specific participants, and use a flexible but focused approach. This will help you avoid wasting money and ensure that your research has the greatest possible impact.
Here are some key conditions and criteria to consider when deciding when and how to conduct primary market research for your pre-seed startup.
Clear Research Objectives
Before you start researching, it's important to be clear about what you want to learn. To help you do this, ask yourself the following questions:
- What is the problem you are trying to solve?
- What hypothesis are you testing?
- What specific information do you need to make a business decision?
✍ For example, if you are a pre-seed startup, you may be trying to validate your product idea or identify pain points in the user experience. It can be helpful to focus on one or two key research questions that will guide your research and help you make more informed decisions.
Targeting a Niche Market
Pre-seed startups often target niche or emerging markets, so primary market research should focus on gathering data specific to your target audience. At this stage, general market trends won't help, so make sure your research is tailored to people who fit your ideal customer profile.
The market segment or user group should be well defined, with clear criteria such as age, occupation, interests or specific needs, to ensure that the data collected is relevant. For example, if you are building a meal prep app for busy professionals, focus on collecting data from people who fit that profile, rather than general food enthusiasts.
Timing and Readiness for Feedback
You should conduct primary research when you are at a stage where the feedback can be used directly to improve your product, service or strategy. This is typically the case in the following situations:
- Idea validation: Before committing too many resources to a development project, it's important to validate the idea with potential users;
- MVP testing. When you have a minimum viable product and want to test initial reactions;
- Feature iteration. To refine existing features or services before scaling.
Make sure you are ready to make changes based on the feedback you receive. There's no point in collecting data if you can't implement improvements.
Cost and Budget Considerations
Primary market research can be expensive, especially if you hire third party agencies. However, there are cost-effective ways to gain quality insight. You should choose methods that fit your budget and still provide valuable insights. Here the low-cost primary market research techniques:
- Surveys – use free tools such as Google Forms or SurveyMonkey to collect data from users;
- Interviews – conduct virtual interviews using platforms such as Zoom or Google Meet to gather insights from customers;
- Observations – use free or low-cost analytics tools to monitor user behaviour on your website or application.
Make sure the methods you choose are cost-effective and offer a good return on investment. For example, instead of running a face-to-face focus group, consider holding a virtual one to save costs. We have talked about other services that are free and useful in this article.
How to Conduct Primary Market Research
Now, let's take a closer look at what primary market research is. Let’s take a look at some of the most common methods used in primary market research.
Accessible and Relevant Participants
The quality of your research depends heavily on the people you involve. If you cannot access your target group or recruit enough relevant participants, your data may be biased or incomplete. Therefore, it is important to focus on securing access to the appropriate group of participants before you begin your research.
Here are the criterias for selecting participants:
- Participants should closely match your target customer profile;
- Make sure they're accessible through the channels you use (social media, email, etc.).
✍ For example, if you're developing wearable health technology, make sure your participants are health-conscious individuals who have expressed an interest in fitness devices.
Sample Size and Data Quality
For pre-seed start-ups, a large sample size is not always necessary. However, it is important to have a sample that is representative enough to ensure the validity of your findings. A smaller, targeted sample of participants can often provide more valuable insights than a larger, random group.
Choose a sample size that's appropriate for your research method. For example, interviews require fewer participants than surveys. Make sure the sample is diverse enough within your target market to capture different perspectives.
Flexibility in Research Design
In the pre-seed stage, it's important to be flexible and adapt to changes in your product direction and market focus. Primary research methods should be chosen with this in mind, allowing you to change your questions and focus as you gather more information.
Your research approach should be iterative - able to evolve as you learn more. For example, after initial interviews you may discover new insights that lead to follow-up questions you hadn't considered.
Focus on Actionable Insights
Primary research should provide you with clear, actionable insights that have a direct impact on your product or business decisions. It's not necessary to conduct research that simply produces data without driving change.
Make sure that the questions you ask lead to specific, actionable feedback. For example, if you're testing a landing page, avoid asking, "Do you like it?" Instead, ask "What's confusing or unclear about the layout?"
The advantages of primary market research can only be realized if you use a systematic approach that includes:
- A clear research objective or hypothesis to test;
- Real users who can provide feedback on the product or service being tested;
- Reliable data collection methods that ensure you are collecting accurate and relevant information.
Let's have a quick call to discuss if you have everything in place to start the research
Olga V.
Business Manager
FAQ
How can primary market research help my pre-seed business?
Primary market research can benefit your pre-seed startup by helping you understand the specific needs and preferences of your target audience. This information can be used to refine your product and improve the user experience, making data-driven decisions that reduce the risk of launching a product or service that does not resonate with customers.
How long does it take to conduct primary market research?
The timeline for primary market research can vary depending on the scope of the project. Simple surveys can be conducted in a few days, while more in-depth methods such as interviews, focus groups, and test marketing may require several weeks to gather sufficient data.
What tools help to conduct primary market research?
Popular tools for conducting primary market research include:
- SurveyMonkey or Google Forms for surveys;
- Zoom for remote interviewing and focus groups;
- Hotjar for tracking user behaviour;
- UserTesting for usability testing.
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