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Market research and spying on competition
Guide for startups and small businesses
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Introduction
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Market research can be divided into 3 main categories
Market research
Consulting methods
Off-line research
On-line research
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The simplest methods are used by consultants and only require a bit of imagination
Market research
Consulting methods
Top-down
Bottom-up Off-line research
On-line research
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Off-line research are a must not only in physical good businesses
Market research
Consulting methods
Off-line research
Interviews and discussion with (potential) customers
Being where your (potential) customer is
Work for your (potential) customers
Store checks of competition
Mystery shopping at competition
On-line research
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The last group of on-line tools puts at your disposal numerous solutions giving you in-depth knowledge of your competitors and markets
Market Research
Consulting methods
Off-line research
On-line research
On-line interviews
Facebook Audience Insight
Customers profiles on facebook/instagram/pinterest
Keyword Planner for Google AdWords
SimilarWeb
Branch sites and reports
Slideshare and Youtube
Markets for applications
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Type of markets
Existing
Better Product
Resegmented
Niche Strategy
Low cost
New Market
New users
New product
Some methods are more useful on a specific type of markets…
Mainly consulting methods Off-line and on-line research of
customers for proxy or similar markets
Off-line and on-line research of customers for similar business models
Off-line and on-line research of customers (chosen segments) and competition
Off-line and on-line research of customers and companies on similar / proxy markets
Some usage of consulting methods
Off-line research of customers and competition
On-line research of customers and competition
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Material presented here I discuss in more details in the courses mentioned below. Click on the left picture to go to the FREE course on how to conduct the market research. Click on the right to get 50% off for our course “How to analyze and improve your startup”
Free -50%
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Consulting methods
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The simplest methods are used by consultants and only require a bit of imagination
Market research
Consulting methods
Top-down
Bottom-up Off-line research
On-line research
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…the one you will for sure use is bottom-up approach where you go from single (typical) consumer to market research
First you should imagine the typical users
Then you should try to guess his consumption level
By estimating the number of typical users you and their consumption level you get the rough size of the market
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…sometimes it makes sense to divide markets in segments and estimate them separately (i.e. average and typical users, women and man, people in different age groups or segmentation by lifestyle)
Segment A
Segment B
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…lets do a simple example. Imagine that you want to make an application for franchised restaurants
You pick the sample group / area you want to estimate i.e. city (here Warsaw)
You count the number of all restaurants in the area
For the chosen area you count the franchising restaurants
You check the population of the whole country – here Poland
Assuming similar density as in Warsaw you scale up the number of franchised restaurants proportionally to the population
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…to make you better at this method imagine you want to sell home made dog food….. First you have to estimate how many dogs they are…..
First you should pick your sample – can be your friends or neighbors
Next step is to calculate how many dogs they have
Once you have the number also calculate how many households they are in the sample
It is now enough to know how many households there are in the country
And assuming similar proportion as in your sample you scale up the number of dogs
+
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…with the number of dogs you just have to estimate the number of food eaten per year by average dog…..and you get to the size of the food market
We have the number of dogs in the whole country. Now we have to get from here to the dog food
This requires us to estimate additionally how much food would average dog eat per year
In this way using annual average consumption per dog and the estimated number of dogs we are able to estimate how much food is eaten every year in the country
+
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Lets sum up the bottom-up approach
Bottom-up approach enables you to estimate within one minutes the indicative size of the market
It is very good for the B2C markets
For better estimation you should segment customers and increase the sample size
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When to use top-down approach?
You know the size of the whole market
You are interested in a specific segment of the market
Segment is big enough
You are thinking about niche strategy or low cost strategy (market re-segmenting)
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For a change lets see how it would work with top-down approach
You use the total market size to get to the size of the segment in which you are interested
You have to use some sort of sample measure
By applying the result from the sample you can get to the size of the segment in which you are interested
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… let’s use the top-down approach to estimate the market for science fiction books sold in Poland….
You use the total number of books sold in your country
Then you go to the bookstore that belongs to the biggest chain of bookstore and check what percentage of the shelves are take by science fiction books
If you use this proportion to the whole market you should get the rough estimation of the science fiction book segment
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Off-line research
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Off-line research are a must not only in physical good businesses
Market research
Consulting methods
Off-line research
Interviews and discussion with (potential) customers
Being where your (potential) customer is
Work for your (potential) customers
Store checks of competition
Mystery shopping at competition
On-line research
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Off-line interviews
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As a part of the market research you have to define what characteristics should have in your MVP. Off-line interviews are perfect for this purpose
Find a problem worth SOLVING
Find a solution that someone will WANT TO PAY for
This will determine the features and functionalities of the MVP
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Conducting face-to-face interviews is very important because it allows you to find or confirm the existence of the problem
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There are a few rules of interviewing to keep in mind:
• Minimum of 15 respondents
• Talking face to face
• Neutral place
• Do not record - take notes
• Prepare script of the interview with ready questions
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
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While interviewing have in mind the following advices:
Set the stage
Identify the segment
Introduce the problem
Test the problem
Verify the solution
Ask for something
• Highlight the aim of the meeting • Explain what you will talk about and what you will ask him to do
• Check which segment he/she belongs to • Collect the demographic data and specify the segment to which belongs the
respondent
• Explain the problem • Explain how you came across the problem and why you believe it is important • Sometimes not to lead the witness speak generally about problems in the
respondent field or skip this stage entirely /move it to the end of the interview
• Ask the respondent to rank problems from the most important to the least important
• Ask about other related issues / problems they think are worth mentioning • Try to understand respondent ‘s point of view • Discuss problems in the order of importance and how the respondent solves
them what solution he is using • If he does not show interest this it means that there is a discrepancy between
your business model and the reality • Ask for another meeting to discuss the solution (in the future this may be one of
the first customers) once you have something that shows • Ask for several contacts to his friends to also perform a conversation with them
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
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Pay attention to the signs saying that your idea is a good one:
YES Money
Did they already try to solve the
problem?
How interested is he?
Nonverbal communication
The responder wants to pay for your solution right away
The respondent tried himself to solve this problem
The respondent has a strong interest and passion in talking about the problem
The respondent is animated and leaning forward (positive body language)
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
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Disturbing signs that may show that the idea is not entirely good:
NO
Focus
Did they already try to solve the
problem?
How interested is he?
Nonverbal communication
Respondent is not focused on the conversation and the topic; seems distracted
Respondent did not undertake any attempts to solve the problem
The respondent talks a lot about everything but not about the problem
The respondent is slouching in his chair of his shoulders are slumped; shows a lack of any interest (negative boy language
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
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Use interviews to answer 3 important questions:
Is the problem serious?
Does the problem affect a large number of people?
How the problem has been solved so far?
or or
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You need to assess all interviews according to standardized scores
Design assessment criteria
Define responses
Assign points
4-10 criteria 3-4 closed replies Fore example. use scoring system form 0 to 10 points per answer
Come up with at least 4 criteria for scoring respondent's behavior during the meeting
Come up with 3 types of answers, to which you can assign your observations, for example: • Yes • More or less, • No,
or • Yes, by itself, • Yes, at my request, • No
Assign scores to answers for example: • Yes-10 points , • More or less-5 points, • No-0 points
Set the threshold for
judging whether it makes sense to solve the problem or not – should be around 75% of Maximal Total Score
# options
Description
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
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If the total score is below set threshold then you should reconsider what to do next
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
Is the total score above the threshold?
YES Proceed with market research
NO
Abandon the idea
Look for a subset of interviewee for which
the total score was much higher
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Below you can find some examples of evaluation criteria allowing you to check what is the attitude of the respondent to the problem
Did the respondent sort by importance the problems presented by you?
Has the respondent been undertaking any active steps to solve his problem?
Was the respondent focused during the interview and engaged in the conversation?
Did the respondent agree to another meeting related to the presentation solution?
Did the respondent refer you to other people with whom you could talk?
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
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Using the top-down and bottom-up analysis you can calculate for how many people the problem is interesting enough so they can spend some money on the solution
TOP-DOWN ANALYSIS OF AVERAGE RESTAURANT REVENUES • The total amount spend by people in the
USA on eating in restaurants • The percentage of the amount spend in NY • The number of restaurants • The calculation of revenues per one
restaurant
BOTTOM-UP ANALYSIS OF AVERAGE RESTAURANT REVENUES
• The average number of tables in a restaurant • The percentage of reservation of tables and
average price per table • Multiplying the number of days in the year
(including seasonal effects)
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Suppose you want to design a new solution that helps people lose weight…
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…then you should check whether people are trying solve the problem and if yes how do they do it?
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The fundamental question to yourself: Do I want to deal with this problem over the next 5 years?
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People say what they think the other person wants to hear, so use the 4 measures to prevent "guiding the witness" (push polling)
Do not show your emotions
Ask specific questions
Dwell on asubject
Watch for signals
• Avoid biased expressions like: "Do you agree with that ..." – it may lead them to the answer you expect; ask questions in reverse, so that he has to disagree with you to show that he cares about the problem
• When the respondent knows something about you, i.e. you're a vegetarian, he will be inclined to positively respond to questions about the protection of the environment
• Look neutral, do not send signals, and do not suggest any point of view
• We get an honest answer when we put the respondent in uncomfortable situations, for example ask for prepayment of 100 EUR
• The more specific questions, the more realistic answer • Ask about friends. Do not ask him if he "smokes pot", but "what percentage of your
friends are doing it" – reflects his approach
• Ask 5 times the question "why"
• You can interview accompanied by a partner who will follow body language of respondents; maybe something causes nervous ticks and indicates a sense of discomfort
• Columbo-style question: unexpected question that asked after you had already said goodbye to the respondent. In this way, you can surprise and confirm or deny something important, what has been said earlier in an interview
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
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Where you can find respondents?
• You can watch someone that does not necessarily have to reply with the same;
• Do not spam these people, only when they mentioned about an interesting question you can speak to them;
• It allows you to reach a large demographic data; • You do not have to have their in your contacts; • There are specific groups you can join. They focus on
specific topics
• All contacts are mutual • By searching you can specify the size of the market,
i.e. restaurants, because they have own pages • You can also join groups and invite them to
participate in the tests or interview
Family, Friends, Neighbours
Where Type of business Comments
• Limited number of respondents; • Small differences in demographics; • The answers may be subjective; • On the other hand, you can count on friends for
honest answers
• Mobile application • Site media • Retail • B2C Products • B2C Services • UGC • SaaS
• SaaS • Site media • B2B Services • B2B Products
• B2B • Mobile application • SaaS • Site media
• all
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
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You will learn more on interviewing customers from the books below. Click on the cover of the book to get to the Kindle version
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Being where your customer is
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Typical day
6-7 AM Home: wake up, washing up, dressing up, breakfast
7-8 AM Transport : going to the university (by bus, train, tram or subway)
8 AM-2 PM University: classes at the university
2-5 PM Cafe: meeting with friends from the university; determine what needs to be done in projects and dividing responsibilities
5-6 PM Transport: homecoming
6-8 PM Home: free time, relaxing at home
8-11 PM Home: doing homework, projects
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T T W S S
T F S S
T T M W F
T W F S S
T W F T S S
M
Additional activities
T
M W
T F S S
M
What When How long Why
Babysitter
Dance
Driving licence
Travel
Student group
Party
M
S S
T
F
T M W
2, 3 times a month
once a week
10-12 times a month
once a quarter
once a week
once every two weeks
money
health and fun
Personal development
relax
learn, experience, fun
fun
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Perfect place for students advertising
fitness cafe billboard newspapers
subway bulletin board at the university
club
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Work for your customers
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Imagine that you want to open your own restaurant. What could you learn by working for a well established restaurant?
• What does the consumer like, prefer, buy, order?
• How old are they, what gender are they? • To which social group do they belong? • What is the customer segment? • How many consumers visit the restaurant
daily? • How many consumers stay inside and order
the food? • How big is the conversion rate? • How long does the restaurant prepare meals? • How much do ingredients cost? • How big is the restaurant? • How many clients can fit in the restaurant /
What is the capacity of the restaurant?
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Imagine that in order to prepare for your SaaS startup you decided to do some consulting and learn more about your clients
• How serious is the problem? • How the problem has been solved so
far? • How much does it cost him? • Are there any competitors on the
market? • What solutions do competitors offer? • What about the infrastructure? • Is there a need to install additional
equipment? • How much can they spend on
investment? • What is the payback period of the
proposed solution? • What is the depreciation of the
proposed solution in time?
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Store checks
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5 10 15 5 35
Number of SKU
Location:
Number of salesmen: Competition: Saturn, Karen Notebook, iSpot
Size:
Number of SKU
Presented products
Structure of the exposition (%)
=100
PC Laptop Printers Phones Monitors Photos Others
-6E+
Knowledge of the product offer
Sales skills
How active salesmen are
Behavior Usage of marketing materials
Level of service
• Salesman was able to respond to the request placed by the customer and it seemed that he had deep knowledge of the products
• Salesman did not try to figure out what price level I was interested in. Surprisingly was proposing always the cheapest products
• Salesman did not show the full potential range of benefits coming from the purchase (price of the software was for some models incl. in the price, possibility to buy in installment)
• Salesman was very enthusiastic during the talk • Salesman did not try to convince that the price is good and did not try to understand why I leave
without the purchase • Salesmen did not try to do some cross selling or up-selling to other customers who purchased the
base products
Shopping mall
70 sq m
2
Other observations
Here you can see an example of store check for B2C – a shop selling computers
Laptops:
Pendrives: Firma No. of pieces
Cool drive Kingston Toshiba
6 1 1
Brand No. of pieces
HP Toshiba Asus Sony Samsung Lenovo Fujitsu
10 11 5 3 2 1 1
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10 5 85 00000
Store profile
Location: Rating of the location:
No. of salesmen Competition level:
Size:
Number of SKU
Presented products
Structure of the exposition (%)
OSB Others
=100
-6E+
Ability to adjust the product to the customer
Technical knowledge and knowledge on the application of the products
Ocena pracowników składu
Center 1 500 m2
4
Service level
3
Plywood Chipboard MDF i HDF OSB Plank Veneer Countertops Furniture fronts Fittings Other
0 0 0 2 0 0 0 0 1 1
Number of competitors in radius of 3 km
3
Fittings
No. of SKU
Lead time
Home delivery
Other services offered
Shop with fittings
Limit on receivables
Payment terms
Other non standard products
immediate
n/a
no
Yes
n/a
n/a
Building materials
Here you can see an example of store check in B2B sector for a company selling wooden semi-products
Sales skills
How active salesmen are
Knowledge of the product offer
50
You will find comment s to the store checks along with 3 advanced examples in our course “How to analyze and improve your startup”. Click on the picture below to get 50% off for the course
-50%
51
Mystery shopping
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Mystery shopping has 3 stages and concentrates more on the customer experience
Preparation of the visit an choice of channels Visit Data analysis
and conclusions
Prepare the scenario of the visit with written questions
Chose recording tools (hidden cameras, phone, pen and pencil)
Make a list of things you want to collect (marketing materials, offers, contact details)
Chose channels and the sample
Execute the visit according to the plan and collect data
Analyze gathered data Prepare summary Try to map the customer
service process from what you have gathered
Analyze the offers and materials to understand the legal construction
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On-line research
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The last group of on-line tools puts at your disposal numerous solutions giving you in-depth knowledge of your competitors and markets
Market Research
Consulting methods
Off-line research
On-line research
On-line interviews
Facebook Audience Insight
Customers profiles on facebook/instagram/pinterest
Keyword Planner for Google AdWords
SimilarWeb
Branch sites and reports
Slideshare and Youtube
Markets for applications
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Facebook Audience Insight
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Facebook Audience Insight is a module available to Advertisors but can be also used for market research
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An example of using the Facebook Audience Insight you will find in the on-line courses. Click on the picture below to go to the FREE course on “How to conduct the market research”
Free
58
What enables you Facebook Audience Insight
You can choose any segment on the basis of demographics, income, behavior, interests and other criteria
For the chosen segment you can see how active and in what way do they act on facebook, how much do they spend (relatively), what do they buy, what are the household characteristics for the chosen segment, status and what are their interest (what pages do they like)
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Customer profile on facebook
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You can learn a lot by looking at your potential customers profiles
Try to figure out what language use your target group, how do they communicate and with whom (family, friends from school, friends sharing their passion etc.)
Visual language (photos, images) are as important
Language and the way they express themselves
Description Where to look for it?
You can check what people are interested in and what kind of communication from brands /companies they react to Likes
Activity
Comments Staff put on the timeline Photos
Pages liked Liked posts
You can understand better what do they do in real life
Comments Staff put on the timeline Photos Events
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Keyword Planner
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You can learn a lot by having a look at the searches fed into the google
You can see for what people were searching and how many searches there were
Size of the market (in terms of people interested or rough number of transaction) can be estimated on the basis of it
Size of the market
Description Tips
Key word planner gives you estimate how much you would have to pay per click for a given keyword
If you know how much paid traffic you want to attract you can estimate the needed budget for google AdWords (ads showing when people search)
Potential money you would have to spend on marketing
Use many different phrases Look what keywords pop-up Look how many clicks there were per
keyword
Look at the price per click but also look for the number of searches performed. Ideally you would want to have a lot of searches at lowest possible cost
AdWords gives some estimation on the level of competition
Sometimes it is not that optimal (for conversion purposes) to go for Page 1 in searches. Those willing to go beyond Page 1 are more likely to convert
Always when thinking about the marketing budget have in mind how much you benefit from a customer. CAC should be much lower than LTV
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…here you have an example of key words for t-shirts in USA
64
An example of using the Keyword Planner you will find in the on-line courses. Click on the picture below to go to the FREE course on “How to conduct the market research”
Free
65
SimilarWeb
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SimilarWeb enables you to spy on your competitor and learn where they get the traffic from as well as what is the engagement of their customers
Estimated Visits Time On Site Page Views per visit Bounce Rate Favorites subdomains
Customer engagement
What you can learn Application
Estimate how much attention you can get and what level is achieved by competition
Traffic source (direct, referral, mail, social, etc.) Countries where they come from Referring sites Top destinations Detailed analysis of search traffic, social and
advertising
Where customers come from
Guess marketing and sales strategies used by others
Estimate their cost
Audience interests Similar sites Connected / similar mobile ads
Audience analysis
Analyze specific group of people i.e. customers of specific company
Figure out where you customer gather and how you can approach them
68
You will find example how to use SimilarWeb and draw conclusions in our course “How to analyze and improve your startup”. Click on the picture below to get 50% off for the course
-50%
69
Slideshare and Youtube
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Extremely useful can prove Slideshare and Youtube. You can find thanks to them many useful materials….
B2B SaaS 2-sided markets E-commerce Retail SMCG Media site
Type of business for which it is useful
Strategy summaries Case study analyses Annual reports Materials used in content marketing Sales pitch to customers (B2B) Comparison of competition Market reports (size of the market, main
players) Sales process Examples of marketing materials
What you can find there
SMCG / FMCG E-commerce Mobile applications Media site B2B Retail SaaS 2-sided markets B2C Services
Interviews with CEOs “How to use it” movies Movies done by users – praising,
comparing or using the product Materials from conferences where product
or strategy is discussed Marketing movies and commercials Sometimes mystery shopping movies
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Markets for application
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..if you are into mobile applications or B2C markets you should have a look at mobile application markets
Which markets you should have a look at
How many users have the applications How the application is perceived by customers What is working well and what is not in the
application Is it still used to the same extent
What you can learn from the markets
Nr of downloads Average rating Nr of comments (positive and negative –
calculated separately) Dates of comments – if you have a lot of
comments and the beginning and afterwards nothing it may mean it is not used to such extent anymore
Markets KPI
Apps on the market: Amazon App Store: 330 K Google Play: 1 500 K Windows Phone Store: 300 K App Store (Apple): 1 400 K
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Branch sites and reports
74
I strongly recommend you to take both our on-line courses. Click on the left picture to go to the FREE course on how to conduct the market research. Click on the right to get 50% off for our course “How to analyze and improve your startup”
Free -50%
75
If you sign in to our newsletter you will get a package of 15 useful tools. Click on the picture below to go to our site
76
Baza casów
Have a look at our presentation on Slideshare and our resources
Źródła funduszy Baza narzędzi
Książki startupowca
77
Have a look at our presentation on Slideshare and our resources
Koncepty Franchisingowe
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