PRESENTED BY: AMY SIADAK Market Research for Startups and Their Investors.

PRESENTED BY: AMY SIADAK

Market Research for Startups and Their

Investors

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YOUR IDEA = THE NEXT MILLION DOLLAR IDEA

Sobering Stats

Globally nearly 90% startup business fails. Only 10 out of 100 sustain at last.

Source: Harvard Business School Working Knowledge, quoting research by Shikhar Ghosh, a senior lecturer at Harvard Business School

Sobering Stats

If failure means liquidating all assets, with investors losing most or all the money they put into the company, then the failure rate for start-ups is 30 to 40 percent.

If failure refers to failing to see the projected return on investment, then the failure rate is 70 to 80 percent.

If failure is defined as declaring a projection and then falling short of meeting it, then the failure rate is a whopping 90 to 95 percent.

Source: Harvard Business School Working Knowledge, quoting research by Shikhar Ghosh, a senior lecturer at Harvard Business School

Good News

Using market research the right way, early and often in product development can provide valuable insights.

Classic Market Analysis Tools

Startups need 2-3 times longer to validate their market than most founders expect.

Startups that haven’t raised money over-estimate their market size by 100x and often misinterpret their market as new.

Classic Market Analysis Tools

Premature scaling is the most common reason for startups to perform worse.

Lack of adequate market validation (if any).

Using metrics to understand customers rather than observation.

Common Mistakes

Creating/building for yourself instead of a market.

Little or no market research or market validation.

Common Mistakes

One sided competitive analysis.

Not understanding your customers.

Common Mistakes

Not defining the correct product category.

Overly focused on metrics and variance reduction at the expense of qualitative data.

Results of using improper data

Costly in dollars and wasted time.

Exaggerated numbers that are not sustainable.

Using anecdotal information, rather than statistically valid and relevant data, leads to unsupported statements and arguments and does not support the business strategy.

Key Questions

Is there a market for your product or idea?

Competition?Pricing?Size of the

market/potential market space?

Who is your customer?

Types of Research

Market research encompasses a wide variety of types of research. The two basic categories are quantitative and qualitative.

Startups and Market Research

Quantitative data Needs to be

statistically sound Adequate sample size

Qualitative information Gather information

that will shape and develop the right product

Uncover the needs and concerns of the customers

Find the benefits that lead the consumer to buy the product

Customer experience

Statistically Relevant

Determine Sample Size Find Confidence Interval

Sample Size Calculator Terms: Confidence Interval & Confidence Level

Online Quantitative Calculators

Determine Sample Size

Confidence level: 95% 99%

Confidence interval:

Population:

Sample size needed:

Determine Confidence Interval

Confidence level: 95% 99%

Sample size:

Population:

Percentage:

Confidence interval:

Population Size

How many people are there in the group your sample represents?

The confidence interval calculations assume you have a genuine random sample of the relevant population.

Confidence Intervals and Levels

Confidence Intervals (also called margin of error) is the plus or minus figure usually reported in newspapers and opinion polls.

The confidence level tells you how sure you can be.

Qualitative Options

Concept testing and prototype testing is widely used to evaluate new product ideas.

Beta Testing

In-use or beta testing. Allowing a select group of consumers to use prototypes of the product and report on the strengths and limitations that they find.

Blind Market Research

Blind market test is useful for confidential and proprietary products Deliberately keep it blind Double blind studies to compare competitors Uncover your competitive advantage Eliminates biasness True insights into your customers experience with

your product Uncover weaknesses with your product

New Online Tools - Quantitative

Quantitative Online survey tools

Survey Monkey (Free) Google Consumer Insights Zoomerang (Free) Qualtrics (Free) Gutcheck Snapsurveys

New Online Tools - Quantitative

Quantitative Online polling

Polleverywhere.com (Free SMS Text polling) Checkbox.com Polldaddy.com

New Online Tools - Qualitative

Online Focus Groups – real time

Online discussion boards – over time Weeks or months Assign homework to see the evolution of a product

over time Group mode or individual

New Online Tools - Qualitative

Journals, diaries, blogs

SMS/Chat based discussions

Mobile market research

3 Uses for Mobile Market Research

It’s Easy, it’s flexible, and it opens up new research ideas.

1) To support online quantitative research.2) To support other qualitative research.3) “In the moment” opportunities.

Case Study – Start up

Goal – Understand and obtain customer experience in the “white space” in the home electronic and mobile accessories market to produce prototypes.

Case Study – Start up

Phase I: Opportunity Discovery via Blog Diaries

Recruited 20 participants.7 days of diary activity (blog).Respond to specific moderated questions

during the 7 days.

Case Study – Start up

Phase II: Concept Testing via Group Discussion

Review and learn from phase I.Invite participants to take part in online.

discussions.Reveal 10 new product concepts.

Case Study – Start up

Phase III: In Home Product Tests via Blog Diaries

3 new product prototypes developed and sent to each participant.

Participants provided feedback via blog diaries in the form of pictures, videos and text.

Real world use. Real insights and guidance for the development team.

Case Study – Start up

Conclusion

The research provided the management team and development team with a variety of extremely promising new product concepts.

Information based on how the product fits into day-to-day life not just anecdotal data.

Short amount of time and money invested to product key insights.

Budget spent - $7,500

Benefits of Market Research for Startups

Understand the industry trends and gather true market data – not just anecdotal.

Get a solid read on how the general public responds to their business ideas.

Determine if specific features are working as intended.

Discover opportunities for improvements.

Benefits of Market Research for Startups

Imperative when creating a viable business plan.

Learn about leading competition or threats in the market place.

Provide confidence for the business owner and reduce risk for the investor.

The kind of understanding that can move a business forward.

THANK YOU!

If you have any questions or to request consultation,please contact:

Amy SiadakHouse of Marketing ResearchPH: 626.486.1400 ext. [email protected] www.hmr-research.com