Marketing research for your business idea

Any business plan or start-up worth its weight will start from a foundation of marketing research. A crucial element of the business which will determine if there is demand for the business and if it is feasible. Talk to any successful entrepreneur and one of the first bits of advice provided will be to ensure that you have a good idea of the business product or service will actually sell in the market place.

Market research can play an important role in answering many of these questions and increasing your chances of success. It is much better to invest time researching before you invest your money.

Market research techniques can be basic or sophisticated. You could:

    * canvass the opinion of friends and colleagues
    * survey the public about whether they would use the product or service
    * ask customers of competing products what improvements they would like to see
    * use focus groups to test your product or service
    * monitor your competitors' activities
    * look at what has and hasn't worked in your industry or market niche
    * hire a market research agency
    * try a small scale trial launch - perhaps through your own website or one of the online outlet or auction sites

It is very important that you are as thorough in your market research as possible, as mistakes made at this stage of development could prove costly later on. Remember, the more information you have, the better you will be able to understand your potential customers, the marketplace and how your product fits in. For more information, see our guide on common mistakes when starting up - and how to avoid them.
Plan the development of your idea

Try to identify the key stages or checkpoints in the development of your idea. Each checkpoint gives you a chance to evaluate the progress of your product or service and decide whether you need to make any changes. It will also allow you to consider at the end of each stage whether to progress with the idea. Any idea that has no realistic chance of success should be dropped before too much time or money is invested.

Your checkpoints may include:

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      designing - turning your idea into a product or service that can actually be sold
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      prototyping - creating a usable example of your product or service, which can then be tested
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      protecting - applying for a patent if you have invented a product or type of technology
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      financing - raising the money you will need to get your business started
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      operations - setting up the structure of your business, eg finding a suitable location, hiring staff, etc
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      marketing - working out how you will sell your product or service

At some stage you will probably wish to discuss your idea with a third party. This could be informally, such as seeking advice or encouragement from friends or family, or formally, by hiring a professional consultant, talking to your solicitor or accountant or forming a partnership or joint venture with another company.

Remember, once you put an idea into the public domain it can no longer be considered confidential or a trade secret. You should therefore take steps to protect your intellectual property.

Before talking to third parties, it is a good idea to ask them to sign a non-disclosure agreement to prevent them from sharing the details of your confidential discussion with others. See our guide on non-disclosure agreements.
Intellectual property

Your intellectual property is what sets you apart from competitors. It could be your company brand, invention, design or creative work. Protecting your intellectual property makes strong business sense.

Remember that you cannot protect an idea in its own right but you can protect the tangible work that you do to realise your idea.

There are several legal ways to do this:

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      trade marks restrict others from using your brand or logo
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      copyright protects original literary, dramatic, musical and artistic works
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      patents protect inventions
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      design rights and registration protect a product's appearance

If you form a partnership or joint venture, draw up a contract defining who owns the idea and what the share of future profits will be.

You must seek professional legal advice before taking any final decisions. A good place to start is by contacting your local Business Link.

You can also contact The Intellectual Property Office with your queries. They can help you protect your brand, creative work or invention. You can apply for a patent online with the Intellectual Property Office.
Test the market

Product testing is important throughout the design process. While you are developing your product or service it's a good idea to keep testing the market to make sure you are still on the right track. You can do this by using:

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      Focus groups - ask small groups of your target customers what they want from your product or service.
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      Questionnaires - try to get as wide a sample as possible.
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      Prototypes - show an early version of your product to customers. You may find that your prototype will go through several stages of development as you refine your idea.

You may need to respond to suggestions from users by modifying the design. Don't be discouraged, as most successful entrepreneurs do not view this as a failure, but as a learning curve.

It's a good idea to send your product to a large or very reputable potential customer or user. A positive testimonial will prove invaluable as you approach other customers.

You may want to consider testing even after your product goes on sale. Ongoing contact with customers can uncover both the shortcomings of your product and possible opportunities that you may have missed.

Once you have a final product, you can then set about building a brand. A brand includes everything that is visible to the customer, such as the product name, its packaging and its delivery.

You also need to consider your pricing policy. You need to cost all the materials, other inputs, machinery, processes and administrative time realistically. You will need to research different suppliers and the cost of marketing and distribution. Then check on the price at which your competitors are selling to customers. You can determine the price of your product or service so that it is attractive to customers as well as making you a profit.

Make sure that you spend enough time and energy on this before the real investment starts.