Ground Truth and the Importance of Market Research
by Karyn Greenstreet
Published on this site: December 14th, 2005 - See
more articles from this month
I know. I know you're excited about your new business. I know
you have a great idea and when you tell others about it, they
think you have a great idea, too. A great idea is the birth
of a new small business.
But as a self-employed small business owner, you can't afford
to take chances on ideas without getting more information
about what your entire market audience wants and what they're
willing to pay for it. Talking to 10 or 20 other people isn't
enough. You've got to talk to thousands.
In the military and in NASA, they use a term called "ground
truth." While they can observe things via satellite and
other distant monitoring devices, nothing beats getting down
on the ground and seeing what's really happening in real life.
Here's NASA's explanation of how they use Ground Truth:
http://asd-www.larc.nasa.gov/SCOOL/groundtruth.html
So, how can you get ground truth about the viability of your
business idea? The answer is market research. Market research
is a study of your consumer's preferences and your competition.
Sometimes you'll hear it called a "feasibility study."
Through surveys, literature research, internet research,
and other information gathering techniques, you can learn
the trends in your industry, as well as individual preferences
of your potential customers. If you're in a well-defined industry,
like toy manufacturing, you might find that your national
professional organization has already conducted research studies on behalf
of the members of the organization.
Why is market research necessary? Because we all have different
tastes, different ideas about what's important in our lives,
and different ability (or willingness) to pay a particular
price for what we want. Often the small business owner thinks
they have a great idea for a new product or service, only
to discover that people either don't want that service or
product, or they're not willing to pay the price that the
small business needs to set in order to be profitable.
Sometimes they discover, joyfully, that not only do people
want this new product or service, but that these same people
can suggest other new products and services that would work
well with the new idea, allowing the small business owner
to see future growth into new areas. Or maybe they discover
through their market research that if they made a small change in their
product or service, for instance, making a product with a
red cover instead of a blue one, that people would buy it
more often.
Another purpose of market research is to discover what your
competition is doing. Say that you want to create a new type
of office product and you think your idea is unique. Take
a look at what's on offer at the Staples, OfficeMax and Office
Depot websites, and you might discover that your competitors
have already created a product to solve the same problem as your
product solves. Does that mean you should then give up the
idea entirely? No, not necessarily. What it means is that
you now have some ground truth about what you're up against
if you want to go head-to-head with these competitors.
You need to know the ground truth about your ideas before
you spend countless hours and money taking a new product or
service to market. I know that it feels like it's putting
a damper on new business idea creation, but in fact, it's
just the opposite: I'm encouraging you to find out what your
customers want, and what they will pay for it, so that you
can ensure future success.
Karyn Greenstreet is a Self Employment expert and small
business coach. She shares tips, techniques and strategies
with self-employed people to boost focus, create sustainable
motivation, and increase profits. Visit her website at http://www.PassionForBusiness.com
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