Every startup team comes across one word from every investor: what is the market size for your product or service, or what is the market size for the product or service. This is something, which every startup founder finds it difficult to justify if the product or service his startup is does not have any data pertaining to the market.
So the next question comes to the startup team is how to find market research for their product or service, which they can substantiate, to investors for benchmarking.
Market research is done with two types primary research and secondary research. Primary research is basically done with a market research firm, which specializes in preparing the questionnaire, the analysis after having the questionnaire filled from the target audience. This is a lengthy process and also a costly affair, which many startups cannot afford.
For which let us understand with e.g startup which is into pet cemetery cannot bring any market size or market demand data so if they hire market research agency, then is where a sample size is created of target audience and questionnaire is made to elicit the response of the target audience which will help in understanding will there be takers or customers for this kind of service.
The above steps will cost a lot, as there is no secondary data available the startup team has to go with gut feeling yes that there will be customers. At this junction a financial plan will help to understand the cost required for implementing the service and how long will they have to burn to be alive and sales that need to be brought in to survive.
Startups at some point have to have faith in the problem that they are trying to solve as every problem may not give enough market data to justify the acceptance of the product or service of the startup.
This leads to the question is market research necessary, yes market research is necessary till a certain point to give you clarity on perception of the target segment of customers and it does not give any advantage of being successful as just market research is showing.
For e.g setting up e-commerce startups thinking that market research shows customers will buy and market size is also huge does not guarantee success of the business.
Market research is essential but only till a point, many startups dwell into thinking of having market research is sure to get success.