Four Key Differences Between Market Research for Startups vs. Larger firms
StartupMarketResearch.com is aimed specifically at helping startups and small businesses with their market research efforts, as opposed to larger, more established firms. There are a number of distinct differences between the needs and capabilities of these types of firms and it is important to understand these as you start to form your market research strategy.
- Cost – Larger firms have far more money to spend on market research projects, and can therefore afford to commission research from a specialist market research agency. Ultimately the cost for large firms will therefore be much greater. This larger budget allows established firms to take more risks and conduct more exploratory research where they are less sure of the outcome. I personally have been involved in projects for major international clients where we made it clear from the outset that we would not be able to capture the kind of data they were looking for and possibly might not find anything of any significance. They chose to press on regardless, at a cost of many thousands of pounds. Small companies have to be a little more certain that they will get their money’s worth from such an engagement.
- Accuracy – The impact of the research may have huge financial implications and people don’t like to take chances unnecessarily. Most people are naturally risk averse and therefore need the research to be very accurate if they are going to base their decision on it. As a startup you may be willing to sacrifice accuracy for reduced cost and will almost certainly be more open to the research being indicative of a particular trend, rather than analysis of hard numbers. It may be that you are doing the research just for peace of mind and are therefore happy to have anecdotal evidence that you are on the right track.
- Geographic diversity – Larger business are likely to have a wider geographic footprint, meaning that they may need to capture insights from a far wider geographic distribution than a small company. While a start up may be content taking a sample of respondents from the local area, these results would be of little use to a national or international company.
- Captive audience / Available data – Established firms already have a database of customers that they can contact for feedback on their product or service. For instance, even with a very low response rate, a recognised high street retailer can obtain a significant amount of data that will help them shape their future strategy. Smaller firms have to be more innovative about how they get people to respond to their surveys, and may have to put a lot more effort into sending out emails and chasing up with phone calls to get a significant number of responses. Most firms these data collect a vast amount of data on their customers spending habbits, whether through customer loyalty cards, or account activity. This is an excellent source of data that unfortunately smaller firms won’t have access to. You can build this into your strategy from the start however, by making an effort to capture and track data, through software such as Google Analytics.
Large organisations are well aware of the importance of this type of analysis, and the most forward thinking firms have set up groups internally whose primary focus is on managing the relationships with the many research organisations they employ, allowing them to track their performance against their peers, understand the latest trends in the market and provide strategic intelligence to senior management to help them make critical business decisions.