market test in business plan

The Ultimate Guide to Successful Market Testing Strategies

by Modern Launch | Aug 9, 2023

Effective market testing is the cornerstone of a successful business plan. The software industry is dynamic, with rapidly changing technologies all chasing to meet the evolving needs, wants, and preferences of modern consumers. Through market testing, you can identify areas for improvement, uncover any issues or limitations in your software, and gauge user acceptance. This guide has been curated to help you understand and implement market testing strategies effectively. 

We cover 8 different strategies, from surveys to customer interviews and even A/B testing. For each strategy, we reveal useful steps, tips, and techniques to help you achieve success during your own market testing. 

Understanding Market Testing

Before we dive into the specifics of market testing strategies, let’s start with a definition of market testing:

Market testing, also referred to as product testing or concept testing, is a strategy used by businesses to gather insights about a product or service before its full-scale launch. It involves evaluating a product’s performance, gauging customer response, identifying potential improvements, and anticipating market acceptance.

Through market testing, businesses can identify any issues or shortcomings in their products or services, mitigate risks, and improve customer satisfaction, leading to increased sales and enhanced brand reputation.

Surveys are a simple and cost-effective market testing strategy for gathering insights during the development process of software applications or web apps. Surveys can be conducted via several channels, such as email, online survey tools, or social media platforms.

The survey might ask users about their experiences with similar existing applications, features they find most useful, gaps in current market offerings, and their needs or problems which the new software could address. For instance, if a company is developing a new project management software, they might survey potential users about the challenges they face with current tools – are they hard to navigate, missing key features, or perhaps too expensive?

In addition to potential users, these surveys could also be directed toward internal teams and stakeholders to gather their input on functionality, UI/UX design, and performance expectations.

Survey Tools

Here are some survey tools that can be used for gathering insights during the development process of software applications or web apps:

• Google Forms – This is a simple, free tool that allows you to create survey forms and collect responses in an organized manner. Its integration with Google Sheets makes data analysis super straightforward.
• SurveyMonkey – A popular online survey tool, SurveyMonkey offers a range of question types and has strong data analysis capabilities. It provides features like randomization of questions to reduce bias and skip logic for more advanced surveys.
• Typeform – Typeform provides a more interactive and visually appealing way to conduct surveys. It’s especially great for engaging your audience with a more conversational approach.
• Qualtrics – This is a more advanced tool often used in academic and market research. Qualtrics offers a wide variety of question types and includes advanced features such as branching (skip patterns based on previous answers) and randomization.

Survey Tips

Creating an effective survey requires careful consideration and planning. Here are some tips to guide you through the process:

• Keep it Simple – Avoid using jargon or complex language. Your questions should be straightforward and easy to understand. Also, keep the survey short to increase the chances of participants completing it.
• Use a Mix of Question Types – Use a variety of question types (multiple choice, rating scales, open-ended, etc.) to get a broad range of data. Use open-ended questions sparingly as they require more effort to answer.
• Unbiased Questions Only – Phrase your questions in a neutral manner to avoid leading respondents towards a particular answer. Biased questions can skew your results.
• Optional Is Best – Respondents may not feel comfortable or may not know the answer to some questions. Make questions optional where possible.
• Respect Privacy – Make sure to inform your respondents about how their data will be used and stored, and follow all relevant privacy regulations.

2. Focus Groups

Think of focus groups as a casual get-together where a small, varied bunch of folks get to chat about a product or service, all under the watchful eye of a skilled moderator. These discussions can provide valuable insights into consumer behavior, perceptions, preferences, and potential improvements. Quite handy, don’t you think?

Choosing Participants

Choosing the right participants for a focus group is crucial as it can significantly impact the quality of the data gathered. Here are some steps to guide the selection process:

• Decide on the Size of the Group – A typical focus group includes around 6-10 participants. This size is large enough to generate a diversity of opinions yet small enough to give everyone a chance to speak.
• Seek Diversity – Try to include a mix of participants within your defined demographic to get a wide range of perspectives. For a graphic design app, for instance, you might want to include designers from different industries with varying levels of experience and who work on different types of projects.
• Include Both Existing Users and Non-users – If you’re improving an existing product, it can be helpful to include both people who already use your software and those who use competing products. The latter group can provide insights on what might attract them to switch to your software.

Step Into Your User’s Shoes

Through focus groups, you can explore how users interact with existing software or web apps, what they like about them, and where they face challenges. Participants can discuss their preferences for user interfaces, features, and functionality. 

For instance, in a focus group for a project management app, you might discover that users find certain features redundant or that there are common tasks that no current app handles efficiently. These are great launching pads for exploration.

3. Customer Interviews

Conducting customer interviews is another effective market testing strategy. These interviews involve one-on-one conversations with your target customers to understand their needs, preferences, and pain points. 

During the interviews, it’s important to create an open and comfortable environment where participants feel encouraged to share their thoughts and experiences freely. Prepare a set of open-ended questions that delve into their current challenges, their perceptions of existing solutions, and what they expect from a software or web app like yours. 

This approach goes beyond numbers and statistics, providing a holistic understanding of your target market.

4. Prototype Testing

Prototype testing involves creating a simplified version of a product to test its feasibility and functionality. This strategy helps identify any design or operational flaws before the production phase, saving time and resources.

Conducting prototype testing can involve various techniques, such as heuristic evaluation, where experts evaluate the prototype based on usability principles.

Types of Prototypes

When conducting prototype testing, you can create different types of prototypes, including:

• Low-Fidelity Prototypes – These prototypes are basic and simplified representations of the software or web app. They can be hand-drawn sketches, wireframes, or static mockups .
• Interactive Prototypes – Interactive prototypes offer a higher level of fidelity. They can be created using tools like Adobe XD or Figma, enabling users to click through screens, interact with buttons, and experience basic functionalities.
• Functional Prototypes – Functional prototypes closely resemble the final product and can be used for comprehensive testing and validation . They are more advanced and can be developed using programming languages or prototyping tools that support interactivity and data manipulation.
• Mobile Prototypes –  If your software or web app targets mobile devices, you can create prototypes specifically designed for mobile platforms. These prototypes consider the unique user interface and interaction patterns of mobile devices.

5. Beta Testing

In the context of software or web applications, the concept of “product sampling” often takes the form of beta testing. Instead of physical samples, users are given access to a pre-release (“beta”) version of the software or web app. It’s like a sneak peek for users, letting them interact with the software, explore its features, and see how it works in their daily life or work routine.

Some people think beta testing is all about finding bugs and conducting stress testing, and while that’s true to a point, there are also some other advantages:

• Allows the software developers to collect valuable feedback from actual users.
• Users can spot issues, report bugs, or suggest improvements based on their hands-on experience with the software. 
• Can help generate buzz and increase awareness about your software. Beta testers often share their experiences with their networks, contributing to word-of-mouth marketing.

6. Usability Testing

Usability testing involves observing users as they interact with your software or web app to identify any usability issues or areas for improvement. Follow these steps to conduct usability testing:

• Step 1 – Identify a diverse group of participants who closely match your target audience. Aim for a mix of demographic characteristics, technical proficiency levels, and familiarity with similar software or web apps.
• Step 2 – Develop specific tasks that align with typical user workflows or actions within your software or web app. These tasks should be realistic and reflect the common actions users are likely to perform.
• Step 3 – Schedule individual sessions with each participant and provide clear instructions for the tasks they need to complete. Observe their interactions with the software or web app, paying attention to any difficulties, confusion, or frustrations they encounter. 
• Step 4 – Review the observations and feedback from each usability testing session. Look for common patterns or recurring issues that hinder the user experience. Identify both major and minor usability issues that need to be addressed.

7. A/B Testing

A/B testing, often referred to as split testing, is a method used to compare two versions of software, a web application, or a particular feature to identify which one delivers better results. This strategy is widely used in digital marketing and product development.

At its core, A/B testing involves showing two variants (A and B) of the same software element to different segments of users at the same time. The variant that achieves better performance on a specific metric or set of metrics is considered the winner. For example, you might test two different layouts of a sign-up form to see which one results in more completed registrations.

Conducting Successful A/B Testing

To conduct A/B testing, start by identifying what you want to test. This could be anything from a feature within the software, the color scheme of the user interface, the wording of a call-to-action, to the layout of a menu. From small to large, almost anything can be A/B tested.

Next, define your success metric. This is the metric you will use to determine which variant is more effective. It could be click rates, time spent on a page, conversion rates, or any other relevant metric.

After setting up the two variants and segmenting your users, let the test run for a predetermined period. It’s important to give the test enough time to gather meaningful data.

8. Test Marketing

Imagine test marketing as a “soft launch” of your software or web app. Instead of a wide-scale roll-out, you introduce your product to a smaller, controlled segment of your target market. This could be users in a particular region, members of your mailing list, or users on a specific platform. That is test marketing, and it helps gauge market reception and identify any operational or logistical issues.

Implementing Test Marketing

To implement test marketing, you need first to select the segment you want to target for this initial launch. This should be representative of your wider target market so that the insights you gather are applicable more broadly.

Once the test market is identified, roll out your software or web app to this group. It’s important to ensure that all necessary support is in place – just like you would for a full-scale launch. This includes things like customer support and any resources users might need to understand and use the product effectively.

Wrapping Up

Remember, market testing is not a one-time event but a continuous process. As market trends and consumer preferences evolve, so should your market testing strategies. 

If you are looking to take your business to the next level in other areas, consider Modern Launch. We are a software development and web development company with a team of talented developers and designers that can help you elevate your digital presence and drive exceptional growth. If you are interested, click here to visit and learn more !

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5 Steps to Validate Your Business Idea

• 18 Aug 2020

You’ve come up with an innovative business idea, raised initial funding , and believe you have what it takes to be an entrepreneur . What’s next?

It’s time to validate your offering’s market potential.

What Is Market Validation?

Market validation is the process of determining if there’s a need for your product in your target market. Validating your business idea can enable you to reasonably predict whether people will buy your product or service, and whether your business will be profitable.

It’s important to validate your idea early in the entrepreneurial process to ensure you don’t waste time and resources creating a product that isn’t a good fit. Securing market validation can also instill confidence among investors, crowdfunders, and banks that are considering funding your startup.

By going through the process of validating your business idea, you can gain a deeper understanding of how your product does or doesn’t meet your target customers’ pain points. The insights you gain can help you create an offering that not only addresses your market segment’s needs, but earns you your first paying customers.

Here are five steps to determine the market validity of your venture.

Access your free e-book today.

5 Steps to Determine Market Validation

1. write down goals, assumptions, and hypotheses.

Writing down the goals of your business is the first step in market validation. The process of articulating your vision can illuminate any assumptions you have and provide an end goal.

Ask yourself:

• What’s the value of my product ?
• Who’s the target audience, and what assumptions have I made about them?
• What differentiates my product from existing ones?
• What hypotheses do I have about my product, pricing, and business model?

Answering these questions can help you communicate the value and differentiating factors of your product, and illuminate assumptions and hypotheses you’ve made that are yet to be tested and verified.

Related: How to Come Up With an Innovative Business Idea

2. Assess Market Size and Share

Before moving forward with your venture, estimate the size of your target market and the share of it you could potentially capture. By doing so, you can gauge your business’s potential and justify its launch.

In the online course Entrepreneurship Essentials , Harvard Business School Professor William Sahlman uses mattress retailer Casper to illustrate this idea. In 2014, Casper’s founders assessed the market size for their product by comparing its differentiating factors against the larger market. For Casper, these differentiating factors included its online business model, 100-day return window, and the viscoelastic foam material used in its mattresses.

Based on statistics for the mattress market at the time—including units sold per year, the percentage of the market owned by foam mattresses, and the number of mattress retailers that were e-commerce brands—Casper’s founders narrowed down which segments they should target, and determined they could own a few percentage points of the total mattress market share.

Do this exercise for your target market. For products similar to yours, research sales data, the number and share of current manufacturers, and what percentage of the total market your segment holds. Determine where your product fits into the market and assess how much of it your business could own.

3. Research Search Volume of Related Terms

Another way to gauge the market validity of your business idea is to research the monthly search volume of terms related to your product or mission. When consumers need a product or service, they often use a search engine to see what the market has to offer.

You can use a host of resources to look up monthly search volumes, such as Moz . In the case of Casper, a related search term might be “foam mattress.” According to Moz, the term garners more than 11,500 monthly searches, indicating a demand for the product.

If there’s not a lot of search volume surrounding your product, use terms that express customer intent. For instance, if you design a mattress made from a new, extra supportive material, you could look up how many people search for “best mattress for lower back pain sufferers.” Moz data indicates that the query yields 240 monthly searches.

This type of search volume for a longer, specific query isn’t negligible. In fact, it can be used to bolster your hypothesis that there’s a need for your product.

4. Conduct Customer Validation Interviews

Conducting interviews with your target market segment can be an effective way to learn about your product’s potential. This initiative might include hiring a market research company to conduct focus groups, sending out an online survey, or simply requesting a conversation with someone.

Ask potential customers about their motivations, preferences, needs, and the products they currently use. Circle back to the list you created in the first step of the market validation process, and frame any assumptions or hypotheses you made as questions to your interviewees. Be open to the feedback you receive and record it for future use.

The feedback may reflect that your product doesn’t have strong market validity, in which case, you can use it to improve your offering and repeat the market validation process.

Related: 7 Questions to Ask for an Insightful User Interview

5. Test Your Product or Service

Once you’ve determined there’s space for your product in the market, ensure you’re putting the most useful, intuitive version of it into the world. You can achieve this through alpha and beta testing.

• Alpha testing is when internal employees test a product in a staged setting. The purpose of alpha testing is to eliminate any bugs, issues, or idiosyncrasies in the product before it’s available to outside users.
• Beta testing is when a product is tested by a limited group of real, external users who are specifically told to identify problems. In the case of a software or app, beta testing might be open to the public with a notice letting users know the version they’re testing is unfinished.

Testing your product with real users can prove invaluable when assessing market validity. If there’s a need in the market, but your product is faulty, complex, or difficult to use, customers may opt for a competitor’s offering. The feedback you get from beta testers can help you better leverage and meet customer needs .

Turning Feedback Into Action

In Entrepreneurship Essentials , entrepreneurship is described as a “process of discovery.” To determine whether your product is a market fit, you must seek feedback to validate the beliefs you hold about your product offering.

Entrepreneurship requires flexibility and hard work. If you put in the time to outline your goals and assumptions, assess the market, interview potential customers, and conduct tests, you can gather the information you need to build the best version of your product.

Are you looking to turn your idea into a viable venture? Explore our four-week online course Entrepreneurship Essentials and our other entrepreneurship and innovation courses to learn to speak the language of the startup world. If you aren't sure which course is the right fit, download our free course flowchart to determine which best aligns with your goals.

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Market Research for a Business Plan: How to Do It in a Day

Whether it’s your first time using market research for a business plan or this isn’t exactly your first rodeo: a quick refresh on the topic can do no harm.

If anything, it’s the smart route to take. Particularly when you consider modern-day market research data can be obtained quicker than ever – when the right tools are used.

Today, I’m going to explain exactly how to conduct market research for a business plan, and how to access that key data and juicy intel without hassle.

The importance of market research in business planning

They say knowledge is power, and where your rivals and your market are concerned, there’s nothing quite like it. By looking at things like consumer behavior, the competitive landscape , market size, and the digital strategies of others; companies at any stage in their lifecycle can stay relevant, maintain a competitive edge, set strategic direction, and experience growth. Doing periodic market research also helps businesses develop a deeper, more informed understanding of a market, its audience, and key players. If you’re seeking financial backing, doing market research is essential to show credibility and build confidence in your plans.

How to conduct market research for a business plan

Good market research for a business plan should be contextualized with information about your company, its goals, products, pricing, and financials. Sounds like a lot of work, right? Read on to learn how to conduct all the market research for a business plan you’re going to need – quickly, using the most up-to-date data there is. I’ll show you how to:

• Understand your audience
• Identify target personas
• Size your market 
• Research the competition 
• Discover your unique sales proposition
• Define marketing priorities 

Before you start, make sure your business planning document includes the following 10 headings:

This format is considered best practice, so I’ve indicated the specific sections that each element of your market research fits into.

Sound good? Then let’s get started.

1. Understand your audience

What it is – A target audience is a social segment of people who are likely to be interested in your products or services. It’s a snapshot of your target customer base, sorted by certain characteristics. It’s also known as audience demographics and can contain data like age, gender, location, values, attitudes, behaviors, and more.     

Where to use this market research in a business plan – Demographical data can help determine the size of your market, which slots into the executive summary, marketing plan, market sizing, and financial sections of the plan. What’s more, when you use it to identify groups of people to target, it can also be used in the products and services, competitive research tools , and SWOT analysis sections.

Bonus: Audience demographics can also help you develop stronger branding by choosing imagery that appeals most to your ideal customers.

How to do a quick audience analysis

Similarweb Research Intelligence gives you the ability to view almost any industry in a few seconds; you can also create a custom industry based on specific players in your market.  Here’s how to see relevant audience demographics in a market. For this example, I chose the airline industry.

View typical audience relevant to your sector with gender and age distribution, along with geographical data . You can see which companies are experiencing growth and at what rate. Audience loyalty is also key to understanding how people behave, if they tend to shop around and what search terms they use to discover sites in any niche.

Read more: Learn more about how to do a demographic analysis of your market’s audience .

2. Identify target personas

What it is – An audience or target persona is a typical customer profile. It starts with audience demographics, and then zooms into a much deeper level. Most organizations develop multiple target personas, based on things like pain points, location, gender, background, occupation, influential factors, decision-making, likes, dislikes, goals, ideals, and more. 

Pro Tip: If you’re in B2B, your target personas are based on the people who make purchasing decisions, not the business itself.

Where to use this market research in a business plan – Creating target personas for your business shows you know whom you’re targeting, and how to market to them. This information will help you complete market sizing, product or service overview, marketing plan, and could fit into the competitive research section too.

How to create a buyer persona in five steps

Guesswork does not equal less work – there’s no place for shortcuts here. Your success depends on developing the most accurate representation of who your customers are, and what they care about. 

1. Research: If you’re already in business, use market research surveys as a tool to collect information about your customers. If you’re a startup or pre-startup, you can use a platform like Similarweb to establish a typical customer profile for your market. Don’t forget to use mobile app intelligence and website analytics in tandem to build a complete picture of your audience. 

Pro Tip: Secondary market research is another good source of intel for startups. You might be able to find published surveys that relate to your products or market to learn more.

2. Analysis: Here, you’re looking to answer key questions to fill in the blanks and build a complete picture of your ideal customer. Tools like Similarweb Digital Research Intelligence, Google Analytics, and competitors’ social media channels can help you find this out. Typical questions include:

• Where is your audience coming from?
• What channels do they use to find your site?
• Do they favor access via mobile site, app, or desktop?
• What are their demographics? Think age, job, salary, location, and gender.

3. Competitive market research: This shows you what marketing channels, referral partners, and keywords are sending traffic to businesses similar to yours When you combine this data with what you learned in sections 1 + 2, you are ready to build your personas.

4. Fill in a buyer persona template: We’ve done the hard work for you. Download a pre-made template below .

Further reading: The complete guide to creating buyer personas

3. Size your market

What it is – Market sizing is a way to determine the potential size of a target market using informed estimation. This is how you find out the potential revenue and market volume applicable to your business . There are three key metrics: total addressable market (TAM), service addressable market (SAM), and service obtainable market (SOM).

Where to use this market research in a business plan – Knowing how big the slice of the pie you’re going after is crucial. It can inform any goal setting and help with forecasting too. This data can be used in your executive summary, marketing plan, competitive research, SWOT analysis, market sizing, operations, and financial sections.

Further reading: How to do market sizing shows you how to calculate the TAM, SAM, and SOM for your business.

4. Research the competition

What it is – Competitive landscaping shows who you’re up against and how your offering stacks up vs others in your space. By evaluating rivals in-depth and looking at things like features, pricing, support, content, and additional products, you can form a detailed picture of the competition.

Where to use this market research in a business plan – The information you gain from performing a competitive analysis can transform what you offer and how you go to market. In business planning, this market research supports the executive summary, product or service overview, marketing plan, competitive research, SWOT analysis, and operation sections.  

How to do competitive landscaping

Using the industry overview section of Similarweb Digital Research Intelligence, competitor research is made quick and easy. Access key metrics on an industry or specific players, then download raw data in a workable excel file or get a PNG image of charts in an instant. Most data can be downloaded via excel or as an image and included in the resource section of your plan.

Here, you can see a summary of a market, yearly growth, and top sites. A quick click to industry leaders shows you market leaders and rising stars. Select any name for a complete picture of their digital presence – use this to spot potential opportunities to gain a competitive advantage.

Read more: See how to do a competitive analysis and get a free template to help you get started.

5. Discover your unique sales proposition

What it is – Not all businesses have them, and that’s OK. A unique selling proposition (USP) is something distinctive your business offers but your rivals don’t . It can be anything that’s unique to a product, service, pricing model, or other.  

Why it’s useful – Having a compelling USP helps your company stand out in a market. It can make your business more valuable to a customer vs the competition, and ultimately help you win and retain more customers.

Where to use this market research in a business plan – Your USP should be highlighted in the executive summary, the product and service overview, and the SWOT analysis.

How to find your USP

Unless you’ve developed a unique product or service, or you’re planning to sell to the market at a lower-than-average price point, you’re going to have to look for some kind of service differentiator that’ll help you stand out. In my experience, the quickest way to discover this is through competitive benchmarking. Here, I’m talking about evaluating your closest rivals to uncover things they’re not doing, or looking for gaps that your business can capitalize on. 

A competitive review of their site should look at things like:

• Customer support: do they have live chat, email support, telephone support, etc.?
• Content: do they produce additional content that offers value, free resources, etc.?
• Offers: what promotions or offers do they run?
• Loyalty or referral programs: do they reward loyalty or referrals?
• Service level agreements: what commitments do they make to their customers?
• Operations: consider delivery methods, lead times, returns policy etc.
• Price promises: what satisfaction or price promises do they offer, if at all?

Go easy on yourself and create a basic template that details each point. Once complete, look for opportunities to provide something unique that nobody else currently offers.

6. Define marketing priorities

What it is – A detailed plan showing how you position and market your products or service. It should define realistic, clear, and measurable goals that articulate tactics, customer profiles, and the position of your products in the market.

Where to use this market research in a business plan – Relevant intel you uncover should inform the marketing plan first and foremost. However, it can also be used in the SWOT analysis, operation, and financial sections.

How to do it – with a market research example

Using the marketing channels within Similarweb Digital Research Intelligence, you can short-cut the lengthy (and often costly) process of trial and error when trying to decide which channels and activities work best.

Let me show you how.

Using Similarweb Digital Research Intelligence, I can hone in on any site I like, and look at key marketing intel to uncover the strategies they’re using, along with insights into what’s driving traffic, and traffic opportunities.

In less than 60 seconds, I can see easyJet’s complete online presence; its marketing and social channels, and a snapshot of every metric that matters, like referrals, organic and paid ads, keywords, and more. Expand any section to get granular data, and view insights that show exactly where key losses, gains, and opportunities exist.

You can take this a step further and add other sites into the mix. Compare sites side-by-side to see who is winning, and how they’re doing it. While this snapshot shows a comparison of a single competitor, you can compare five at any one time. What’s more, I can see industry leaders, rising players, and any relevant mobile app intelligence stats, should a company or its rivals have an app as part of their offering.

Best practice for market research data in business plans

When doing any type of market research , it’s important to use the most up-to-date data you can get your hands on. There are two key factors for data are timeliness and trustworthiness.

For any market, look for data that applies to any period over the last 12 months. With how fast markets evolve and how quickly consumer behaviors change, being able to view dynamic data is key. What’s more, the source of any data matters just as much as its age.

To emphasize the importance of using the right type of data in a business plan, here’s some timely advice from SBA commercial lending expert and VP of Commerce National Bank and Trust, Steve Fulmer. As someone who, in the past 15 years, has approved approximately $150 million in loans to SMBs; his advice is worth paying attention to.

“ For anybody doing market research for a business plan, they must cite sources. Most new or small businesses lack historical performance data, which removes substantial confidence in their plans. As a lender, we cannot support assumptions in their business plan or their projections if their data hasn’t come from a trustworthy source.”

Wrapping up…

Now you know the six ways to do market research for a business plan, it’s time to knuckle down and get started. With Similarweb, you’ve got access to all the market intel you’re going to need to conduct timely, accurate, and reliable market research. What’s more, you can return to the platform anytime to benchmark your performance , get fresh insights, and adapt your strategies to focus on growth – helping you build a sustainable business that can withstand the test of time.

How do I do market research for a business plan?

By using Digital Research Intelligence tools like Similarweb, you can quickly conduct audience research, company research, market analysis, and benchmarking from a single place. Another method is secondary market research, but this takes more time and data isn’t always up to date. 

Why does a business plan need market research?

Doing market research for a business plan is the quickest and easiest way to validate a business idea and establish a clear view of the market and competitive landscape. When done right, it can show you opportunities for growth, strategies to avoid, and effective ways to market your business. 

What is market research in a business plan?

Market research in business planning is one of the most powerful tools you can use to flesh out and validate your company or its products. It can tell you whether there’s a market for your product, and how big that market is – it also helps you discover industry trends, and examine the strategies of the rising stars and industry leaders in detail. 

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Test marketing helps pinpoint customer preferences and pain points, preventing customers from feeling alienated by product launches that don’t meet their expectations.

Consumer behaviors fluctuate and are constantly influenced by new trends, technologies, and evolving values. Successfully navigating these shifts requires accurate and timely insights, particularly when launching new products or altering your brand direction.

Test marketing serves as that crucial feedback mechanism so you can adapt and pivot your strategies in real time to ensure each strategic move resonates with your audience, drives brand loyalty, and maximizes your return on investment.

What is test marketing?

Test marketing evaluates a product or service’s real-world appeal and potential for success by introducing your product, service, or campaign to smaller focus groups before committing to a broader release. It encompasses launching in specific markets, gathering sales data, collecting direct user input, and using A/B testing tools to refine an offering and enable teams to make data-driven decisions instead of relying on assumptions.

Ultimately, the purpose of test marketing is to minimize risks associated with larger rollouts, such as wasted resources, negative brand impact, or missed revenue opportunities, and align the final product or service with audience needs and expectations for more successful launches.

Advantages of test marketing

Test marketing offers businesses a strategic approach to navigating fluctuating markets. By assessing real-world reactions and gauging product fit, it becomes an invaluable tool for refining your offerings. Here are more advantages to conducting test marketing:

Gauge market response

Test marketing serves as a litmus test for your offerings in a real-world setting. It provides a nuanced understanding of customer behaviors, interests, and pain points. As you unveil products to various consumer segments, you learn how different demographics interact with your offerings. This lets you cater to their genuine needs and desires so you can create a resonant product or service.

One way to drill down into user preferences is A/B testing. By presenting two distinct versions of a product or marketing campaign, you gather direct feedback from actual customers. These tests don’t just measure surface-level engagement but delve deeper into user interactions. For example, while version A might attract more clicks, version B could have a higher conversion rate, revealing hidden user preferences.

Reduce risks

Introducing a new product or service to the market is inherently risky. Market dynamics, competitor actions, and consumer behavior shifts can all jeopardize an offering’s success. Test marketing mitigates these risks by gathering real-world reactions to identify misalignments with market expectations, product flaws, and usability issues. For example, while your offering might have a technically impressive feature, if it doesn’t cater to the actual needs or habits of the target audience, it might be redundant — or even counterproductive.

Test marketing also offers controlled environments to trial your offerings, allowing you to understand its strengths and areas of improvement, which prevents costly post-launch modifications. Beta and alpha testing conducted in controlled environments ensure the product’s technical integrity and alignment with user needs and preferences. By identifying and rectifying potential pitfalls and mismatches early on, you’ll have smoother and more confident product launches.

Refine marketing strategies

Test marketing enables proactive adjustment and refinement to marketing approaches by anticipating market fluctuations. It helps guide content creation — such as blogs, videos, or social media campaigns — and identifies nuances such as pricing and advertising strategies. For example, customer reactions might reveal that a particular ad engages more during specific times of the day or that a price point, while competitive, doesn’t align with perceived value.

As you gather this input, you can also fine-tune promotional tactics. You might discover that a particular promotional offer is more appealing to specific demographics or that a loyalty program generates more engagement than sporadic discounts. This lets you make strategic and responsive adjustments so you can maximize your return on investment (ROI).

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Types of test marketing

Each test marketing type offers unique findings and helps you make decisions rooted in data and authentic customer input. Let’s explore each variety’s strengths and how to best leverage them:

Controlled test marketing

In controlled test marketing, you have a carefully chosen audience in a defined environment, giving you a secure space to trial your strategies and offerings before a full-scale rollout. This method closely mirrors your selected focus group with your intended broader market to optimize data collection and analysis accuracy. By monitoring this group’s reactions and gathering live feedback, you can see how your product or marketing campaign might fare in a broader market environment and maximize its impact.

Simulated test marketing

Simulated test marketing recreates market conditions in an artificial environment. It leverages sophisticated tools like choice modeling, conjoint analysis, and virtual store environments to simulate consumer behavior. This enables better prediction of market reactions to proactively refine your strategies.

For example, you can forecast how consumers will react to a new product or campaign or reveal potential purchase trends and preferences across different customer segments — all without the resource or time constraints of involving customers in real-world testing. It’s cost-effective and quick, providing timely insights without breaking the bank.

Standard test marketing

Standard test marketing essentially soft launches your product or service in a carefully chosen geographic area that reflects the characteristics of your larger target market. It’s a traditional approach that lets you introduce your product — complete with distribution, shelf placement, advertising, and promotional efforts — as if it were a full-blown launch. Keeping the area contained ensures that critiques, data, and observations are manageable and actionable.

In this type of testing, you’ll select cities or regions that best represent your target demographics, buying patterns, and other essential metrics. After introducing the product, your team dives into detailed monitoring — tracking sales, collecting customer evaluations, and evaluating key success indicators.

By immersing your product into consumers’ daily lives, you gain an unfiltered and comprehensive understanding of its potential challenges and opportunities. This hands-on method enables dynamic optimization of your product, pricing, or marketing approach. When it’s time for a bigger regional, nationwide, or global launch, you can support your product launch with real-world knowledge and fine-tuned strategies.

When should you use test marketing?

Timing can make or break a product launch, and test marketing pinpoints that optimal window by offering timely feedback to shape crucial product and campaign decisions. Here are some examples of when deploying test marketing becomes invaluable:

Product or service launches

Launching a new offering thrusts you into unknown territory. No matter how innovative or unique your offering might be, its success hinges on how well it resonates with your audience.

Through test marketing, you gain insight into your target groups’ perceptions and interactions with your product. Beyond first impressions, you also uncover their underlying needs, motivations, and potential pain points. This enables you to tweak your product’s features, enhance its user experience , and calibrate its brand positioning to ensure market alignment.

New demographic or geographic market expansions

Venturing into new markets presents both opportunities and challenges. While market and user research lay the groundwork, test marketing actively gauges how receptive new markets are to your existing products and services. Strategies like simulated test marketing let you simulate this new landscape’s conditions and help you discern nuances like purchasing behavior, brand loyalty shifts, and local competitor strengths. With this in-depth knowledge, you’re prepared to optimize your expansion strategy and tailor it to the unique requirements and desires of the new audience.

Major marketing changes

As your brand grows and evolves, you might consider significant changes like a website rebrand , a renewed marketing strategy, or pricing adjustments. These transitions pose risks — minor misalignments can either catapult your brand or alienate your core audience — underscoring test marketing’s importance.

By trialing these changes within a controlled environment, you measure direct (or simulated) reactions on how audiences perceive new branding visuals, react to new pricing structures, or engage with revamped ad campaigns. This lets you hone your approach and ensure that when you roll out these significant shifts, they align with your audience’s values so you can maximize your brand’s potential and improve its market position.

Unlock your business’s full potential

Business success demands agility and data-driven insights. Test marketing provides the clarity to make informed decisions that align with your audience’s desires, but the platform you use to present your offerings is equally crucial. In a digital-first world, your website is your brand’s primary touchpoint, and Webflow offers you the tools and flexibility to create responsive, user-friendly sites that not only showcase your products but amplify the insights from your test marketing.

Use Webflow’s visual web development platform to create a website from the ground up without writing a single line of code, or browse thousands of responsive templates from our talented design community and adapt them for your brand’s site needs. For a more hands-on approach, visit Webflow University for free design courses and resources to learn how to build and design at your own pace. Whether you’re marketing a small business or growing your enterprise , Webflow has everything you need to succeed online.

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New Business Idea? How to Test It Before Launching

A strong business starts with a well-tested idea.

Table of Contents

Do you have an idea for the next big thing? You may think your idea is perfect already, but it’s wise to test it out before you spend too much time and money developing a business or product for which there’s no market. Ensuring your idea is something the world wants before you launch it is vital to business success.

How to test your business idea

Here are eight steps to test your business idea and determine its value proposition.

1. Contemplate your idea.

Although you’re no doubt excited about your new business idea, you might want to wait a while before fleshing out a potential company, said Greg Isenberg, CEO of product design agency Late Checkout. 

“After I’ve gone through the process of writing down a bunch of ideas, I don’t like to rush into building a business plan or recruiting the team,” Isenberg said. “I like to wait a few weeks [to] see which ideas really stick with me.”

Isenberg said he only moves forward if he has a burning feeling that the world genuinely needs his idea.

“Once I’m through that, the best way to test a business idea is to build some prototype and show it to people to get some honest and authentic feedback,” he said. 

2. Build a minimum viable product.

The lean startup model provides a great way to develop your business or a specific product before going to market. The most important part of that model is to build a minimum viable product (MVP).

An MVP is “the simplest form of your idea that you can actually sell as a product,” said Eric Ries, a Silicon Valley-based entrepreneur and the author of The Lean Startup . 

Using the principles of Lean Six Sigma, Ries’ book advocates having a version of your product to test and market early in the development process so that you can make any tweaks or changes in response to real feedback from your target audience.

3. Run it by a group of critics.

When your first prototype or test service is ready, present it to potential target customers.

“You should talk [to] and/or survey at least 50 potential customers to see if they identify with the problem the same way you do,” said Wayde Gilchrist, a senior technical manager at Amazon. “In other words, you need to find out if this is a real problem for a majority of your target market or just a few.”

However, to truly put your new business idea to the test, select your 50 potential customers or clients carefully.

“Identify people in that target [audience] you know to be skeptical and critical,” said Chip Bell, founder of business consultancy firm The Chip Bell Group. “These people could be irate customers from previous encounters or friends who always take the glass-half-empty perspective.”

Bell advised hand-picking your test group and then asking these people to pick your idea and minimum viable product apart. [Find out how to tell if you have a bad business idea and how to tell if you have a great business idea .]

4. Tweak it to suit your test market.

When Isenberg tested 5by, an internet video finder app he developed and has since sold, he and his team went to college campuses and showed mock-ups of what the product was going to look like. Feedback from students was invaluable in fine-tuning the original idea.

“We were able to quickly gauge that people … were frustrated that they couldn’t open an app and just be able to find the best internet videos in whatever they were interested in with just a tap of a button,” he said.

Isenberg realized that although his initial business idea and mock-up were a good start, they needed tweaking. Based on the feedback he received, his team made fruitful adjustments.

“We quickly knew we were on to something and then focused on building out the product, raising money, etc.,” he said.

5. Create a test website with social media tie-ins.

Once the word is out about your product or business, your target market needs a place to get more information about it or to show it to their friends. Building a simple website with a landing page specifically for the product and promoting it on social media are great ways to provide information and monitor how many people are interested in what you plan to sell.

Make sure your site features opportunities for interested people to join a mailing list to receive updates about the product launch date or to sign up for preorders.

“You’ll be able to tell if the idea will get traction from the number of click-throughs on the ads and the number of people who fill in your form,” Gilchrist said.

6. Create a marketing plan and use it.

All of your preparatory work means nothing if you can’t get a response from prospective customers. Once you have a viable product, you need to act on the interest in it. But while you may know your target audience at this point, you’re unlikely to know which marketing strategies have the best chance of converting their interest into future sales. For that reason, your initial marketing plan should cast a wide net.

Develop strategies to take advantage of different advertising, marketing and PR channels across mediums. As you execute the strategies and monitor the results over time, you’ll be able to sharpen your marketing plan based on what did and didn’t work. This is also another opportunity to gain feedback on what you’re planning to sell.

7. Adopt an experimentation mindset.

Too many businesses are afraid to fail, so they don’t put themselves in a position to succeed. Often, this manifests in either avoidance of pursuing new ideas or failure to properly test a product idea before launching it.

If you adopt an experimentation mindset, you’ll be more willing to make mistakes and test a variety of ideas. Your business model will unlock more long-term value, as you’ll give more ideas a chance to come to fruition. In this case, failure can also be a success, as it allows you to better understand what works and what doesn’t in the ever-changing business world.

8. Implement design thinking.

Design thinking involves the cognitive, strategic and practical processes of developing new ideas or products. It helps innovators redefine problems and create better, more creative solutions. In other words, it opens the door to more groundbreaking discoveries and inventions. [Read related article: Innovation Is Key to a Successful Business ]

To incorporate this strategy when developing your potential business, follow the five stages of design thinking: empathize (research/understand customers’ needs), define (state your customers’ problems and needs), ideate (brainstorm unique solutions to their problems), prototype (create the solutions) and, most importantly, test (try them out yourself).

The importance of testing your business idea

Testing a business idea is crucial to its success. If you blindly assume an idea will be a big hit, you’ll risk a great deal of time, money and other resources on a leap of faith. 

Entrepreneurs often skip testing because they’re in a rush to launch. The costs of doing so can be significant. Below are a few of the possible drawbacks of forgoing testing.

• Poor business plan: Entrepreneurs may struggle to create a solid business plan or a viable roadmap to reach profitability.
• No data: A lack of pre-launch feedback makes catering to your target audience’s needs far more difficult.
• Misguided marketing: Marketing efforts can fall on deaf ears if they’re misaimed, even if your idea has potential.
• Product defects: Product flaws may prevent initial customers from becoming repeat clients and spark bad buzz. 
• Damaged morale: Business partners may become doubtful and want to pull their investment if the product misses the mark.

What to do when your business idea tests poorly

Not every idea is going to wow your inner circle or initial focus groups. Don’t worry — that’s part of the process. Here are two options for what to do if your concept still needs work.

Iterate until you find an idea that tests well.

Business is a process of iteration. You figure out what works and then continually try to make it work better. It’s not supposed to be perfect at first, and it’s important you understand that from the beginning. The point of testing an idea is to make it as good as possible before committing substantial time and resources to it. 

Let’s say you want to start a gardening service that specializes in imported plants. Some of these plants need large amounts of water, while others thrive in dry climates. If you’re based in an area under the threat of drought, you might learn from initial testing and market research that your would-be customers are mainly interested in plants and grasses that don’t require much water. The imported plants that need a lot of water won’t serve your customer base.

By taking into account the feedback you received and adapting your business idea to existing conditions, you can pivot to a business that specializes in the plants sought after in your region. This will then inform your marketing and ordering efforts so you can focus on a specialty that will actually sell. 

This is a great example of taking an idea that won’t work in its original form and adjusting it so it will. In other words, follow the classic mantra: If at first you don’t succeed, try and try again.

Develop something new.

Of course, not every business idea is a winner no matter how much you tweak it. Ideas might not work for any number of reasons. A product or service might be too expensive, face too much competition or not solve a problem customers have. An idea that doesn’t work isn’t a bad reflection on you. Part of being a successful entrepreneur is recognizing what’s not going to work and moving on quickly to something better. It’s part of the process. 

Testing your ideas is the best way to ensure you don’t invest yourself in a concept that won’t succeed. With your newfound knowledge about what doesn’t work, you can use the data you’ve collected to generate a new idea. The time and effort you’ve spent needn’t go to waste if you know how to capitalize on what you’ve already accomplished.

Trial and error

A good idea is an essential part of starting a business, but it’s just the beginning. After that, you need to execute by turning your idea into an actual product . Testing and iterating on your idea is a critical step in the process of creating a viable company. If you’re ready to get started, check out our favorite low-cost business ideas and see if they could work in your market.

Alex Halperin and Marci Martin contributed to this article. Some source interviews were conducted for a previous version of this article.

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How to Market Test a New Idea

• Scott D. Anthony

Be prepared to work with imperfect information.

“So,” the executive sponsor of the new growth effort said. “What do we do now?”

• Scott D. Anthony is a clinical professor at Dartmouth College’s Tuck School of Business, a senior partner at Innosight , and the lead author of Eat, Sleep, Innovate (2020) and Dual Transformation (2017). ScottDAnthony

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A lot of preparation goes into starting a business before you can open your doors to the public or launch your online store. One of your first steps should be to write a business plan . A business plan will serve as your roadmap when building your business.

Within your business plan, there’s an important section you should pay careful attention to: your market analysis. Your market analysis helps you understand your target market and how you can thrive within it.

Simply put, your market analysis shows that you’ve done your research. It also contributes to your marketing strategy by defining your target customer and researching their buying habits. Overall, a market analysis will yield invaluable data if you have limited knowledge about your market, the market has fierce competition, and if you require a business loan. In this guide, we'll explore how to conduct your own market analysis.

How to conduct a market analysis: A step-by-step guide

In your market analysis, you can expect to cover the following:

Industry outlook

Target market

Market value

Competition

Barriers to entry

Let’s dive into an in-depth look into each section:

Step 1: Define your objective

Before you begin your market analysis, it’s important to define your objective for writing a market analysis. Are you writing it for internal purposes or for external purposes?

If you were doing a market analysis for internal purposes, you might be brainstorming new products to launch or adjusting your marketing tactics. An example of an external purpose might be that you need a market analysis to get approved for a business loan .

The comprehensiveness of your market analysis will depend on your objective. If you’re preparing for a new product launch, you might focus more heavily on researching the competition. A market analysis for a loan approval would require heavy data and research into market size and growth, share potential, and pricing.

Step 2: Provide an industry outlook

An industry outlook is a general direction of where your industry is heading. Lenders want to know whether you’re targeting a growing industry or declining industry. For example, if you’re looking to sell VCRs in 2020, it’s unlikely that your business will succeed.

Starting your market analysis with an industry outlook offers a preliminary view of the market and what to expect in your market analysis. When writing this section, you'll want to include:

Market size

Are you chasing big markets or are you targeting very niche markets? If you’re targeting a niche market, are there enough customers to support your business and buy your product?

Product life cycle

If you develop a product, what will its life cycle look like? Lenders want an overview of how your product will come into fruition after it’s developed and launched. In this section, you can discuss your product’s:

Research and development

Projected growth

How do you see your company performing over time? Calculating your year-over-year growth will help you and lenders see how your business has grown thus far. Calculating your projected growth shows how your business will fare in future projected market conditions.

Step 3: Determine your target market

This section of your market analysis is dedicated to your potential customer. Who is your ideal target customer? How can you cater your product to serve them specifically?

Don’t make the mistake of wanting to sell your product to everybody. Your target customer should be specific. For example, if you’re selling mittens, you wouldn’t want to market to warmer climates like Hawaii. You should target customers who live in colder regions. The more nuanced your target market is, the more information you’ll have to inform your business and marketing strategy.

With that in mind, your target market section should include the following points:

Demographics

This is where you leave nothing to mystery about your ideal customer. You want to know every aspect of your customer so you can best serve them. Dedicate time to researching the following demographics:

Income level

Create a customer persona

Creating a customer persona can help you better understand your customer. It can be easier to market to a person than data on paper. You can give this persona a name, background, and job. Mold this persona into your target customer.

What are your customer’s pain points? How do these pain points influence how they buy products? What matters most to them? Why do they choose one brand over another?

Research and supporting material

Information without data are just claims. To add credibility to your market analysis, you need to include data. Some methods for collecting data include:

Target group surveys

Focus groups

Reading reviews

Feedback surveys

You can also consult resources online. For example, the U.S. Census Bureau can help you find demographics in calculating your market share. The U.S. Department of Commerce and the U.S. Small Business Administration also offer general data that can help you research your target industry.

Step 4: Calculate market value

You can use either top-down analysis or bottom-up analysis to calculate an estimate of your market value.

A top-down analysis tends to be the easier option of the two. It requires for you to calculate the entire market and then estimate how much of a share you expect your business to get. For example, let’s assume your target market consists of 100,000 people. If you’re optimistic and manage to get 1% of that market, you can expect to make 1,000 sales.

A bottom-up analysis is more data-driven and requires more research. You calculate the individual factors of your business and then estimate how high you can scale them to arrive at a projected market share. Some factors to consider when doing a bottom-up analysis include:

Where products are sold

Who your competition is

The price per unit

How many consumers you expect to reach

The average amount a customer would buy over time

While a bottom-up analysis requires more data than a top-down analysis, you can usually arrive at a more accurate calculation.

Step 5: Get to know your competition

Before you start a business, you need to research the level of competition within your market. Are there certain companies getting the lion’s share of the market? How can you position yourself to stand out from the competition?

There are two types of competitors that you should be aware of: direct competitors and indirect competitors.

Direct competitors are other businesses who sell the same product as you. If you and the company across town both sell apples, you are direct competitors.

An indirect competitor sells a different but similar product to yours. If that company across town sells oranges instead, they are an indirect competitor. Apples and oranges are different but they still target a similar market: people who eat fruits.

Also, here are some questions you want to answer when writing this section of your market analysis:

What are your competitor’s strengths?

What are your competitor’s weaknesses?

How can you cover your competitor’s weaknesses in your own business?

How can you solve the same problems better or differently than your competitors?

How can you leverage technology to better serve your customers?

How big of a threat are your competitors if you open your business?

Step 6: Identify your barriers

Writing a market analysis can help you identify some glaring barriers to starting your business. Researching these barriers will help you avoid any costly legal or business mistakes down the line. Some entry barriers to address in your marketing analysis include:

Technology: How rapid is technology advancing and can it render your product obsolete within the next five years?

Branding: You need to establish your brand identity to stand out in a saturated market.

Cost of entry: Startup costs, like renting a space and hiring employees, are expensive. Also, specialty equipment often comes with hefty price tags. (Consider researching equipment financing to help finance these purchases.)

Location: You need to secure a prime location if you’re opening a physical store.

Competition: A market with fierce competition can be a steep uphill battle (like attempting to go toe-to-toe with Apple or Amazon).

Step 7: Know the regulations

When starting a business, it’s your responsibility to research governmental and state business regulations within your market. Some regulations to keep in mind include (but aren’t limited to):

Employment and labor laws

Advertising

Environmental regulations

If you’re a newer entrepreneur and this is your first business, this part can be daunting so you might want to consult with a business attorney. A legal professional will help you identify the legal requirements specific to your business. You can also check online legal help sites like LegalZoom or Rocket Lawyer.

Tips when writing your market analysis

We wouldn’t be surprised if you feel overwhelmed by the sheer volume of information needed in a market analysis. Keep in mind, though, this research is key to launching a successful business. You don’t want to cut corners, but here are a few tips to help you out when writing your market analysis:

Use visual aids

Nobody likes 30 pages of nothing but text. Using visual aids can break up those text blocks, making your market analysis more visually appealing. When discussing statistics and metrics, charts and graphs will help you better communicate your data.

Include a summary

If you’ve ever read an article from an academic journal, you’ll notice that writers include an abstract that offers the reader a preview.

Use this same tactic when writing your market analysis. It will prime the reader of your market highlights before they dive into the hard data.

Get to the point

It’s better to keep your market analysis concise than to stuff it with fluff and repetition. You’ll want to present your data, analyze it, and then tie it back into how your business can thrive within your target market.

Revisit your market analysis regularly

Markets are always changing and it's important that your business changes with your target market. Revisiting your market analysis ensures that your business operations align with changing market conditions. The best businesses are the ones that can adapt.

Why should you write a market analysis?

Your market analysis helps you look at factors within your market to determine if it’s a good fit for your business model. A market analysis will help you:

1. Learn how to analyze the market need

Markets are always shifting and it’s a good idea to identify current and projected market conditions. These trends will help you understand the size of your market and whether there are paying customers waiting for you. Doing a market analysis helps you confirm that your target market is a lucrative market.

2. Learn about your customers

The best way to serve your customer is to understand them. A market analysis will examine your customer’s buying habits, pain points, and desires. This information will aid you in developing a business that addresses those points.

3. Get approved for a business loan

Starting a business, especially if it’s your first one, requires startup funding. A good first step is to apply for a business loan with your bank or other financial institution.

A thorough market analysis shows that you’re professional, prepared, and worth the investment from lenders. This preparation inspires confidence within the lender that you can build a business and repay the loan.

4. Beat the competition

Your research will offer valuable insight and certain advantages that the competition might not have. For example, thoroughly understanding your customer’s pain points and desires will help you develop a superior product or service than your competitors. If your business is already up and running, an updated market analysis can upgrade your marketing strategy or help you launch a new product.

Final thoughts

There is a saying that the first step to cutting down a tree is to sharpen an axe. In other words, preparation is the key to success. In business, preparation increases the chances that your business will succeed, even in a competitive market.

The market analysis section of your business plan separates the entrepreneurs who have done their homework from those who haven’t. Now that you’ve learned how to write a market analysis, it’s time for you to sharpen your axe and grow a successful business. And keep in mind, if you need help crafting your business plan, you can always turn to business plan software or a free template to help you stay organized.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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Lean Market Validation: 10 Ways to Rapidly Test Your Startup Idea

Jim Semick Co-founder, Board Member at ProductPlan

This article outlines the advice I gave students and includes updates on some of the concepts to my current thinking on lean market validation. For many first-timers with great ideas, the process is exciting but also a bit intimidating. I believe that the tactics can help both entrepreneurs and product managers launch better products with a higher chance of succeeding in the market.

So, What is Lean Market Validation?

What is market validation? It’s a question I hear a lot, especially when mentoring newer entrepreneurs and product managers .

Market validation is the process of determining whether your product is of interest to a given target market. Market validation involves a series of customer interviews with people in your target market, and it almost always takes place before you’ve made a significant investment in your product/concept.

The goal for my talk at Startup Weekend was simple: To lay out a few practical tips for entrepreneurs to quickly validate their ideas. I also wanted to help them understand that even first-time entrepreneurs can launch successful products by taking a few easy (and often free) steps.

After using lean market validation to launch several software products, including ProductPlan , I’ve discovered that with the right process, even inexperienced entrepreneurs can bring exceptional products to market with excited buyers on the first day.

10 Ways to Rapidly Test Your Startup Idea

Here are my tips for using lean market validation to confirm whether you have a product/market fit with real customers. By simply engaging with real people and asking the right questions, you can confirm if your idea solves a problem, who your potential buyers are, and ultimately whether or not there’s a market for your product.

1. Write down your product concept.

Just the simple act of writing forces you to consider things you may have previously glossed over. I’m not talking about writing a “business plan.” (For startups, a business plan isn’t the best use of time and will change as soon as you start talking with prospective customers).

I’m talking about answering a few key questions that you can go out and test. These are your assumptions, and the sooner you can test them, the less risk you will have when launching your product.

Download the Anatomy of a Product Launch ➜

You can start with the questions below or use a tool such as the Business Model Canvas to guide your thinking.

Write down some basic assumptions that you can go out and test:

• Who is your customer? If you say “everyone,” you are already setting yourself up for a tough time. Be sure to get specific. For example, if your customer is a business, answer: What kind of business? How big or small is the typical business? In a particular market? What is the title of the buyer?
• What problems are you solving? Many entrepreneurs think about the product first — they fret about the features, launch the product, and then wonder why their product has trouble getting traction. My suggestion is to start with the problem first. What this means is being explicit about the problems your product solves. By writing down these problems, you can validate whether customers also see them as problems. And, more importantly, whether customers think they are problems worth solving.
• How does your product solve those problems? Only after writing down the problem do you move to the product. From here, you tie the value of your product directly back to customer problems. How does solving their problems make their life better? Does it make them more money? Look better?
• What are the key features of the product? The features need to be more than cool — they need to solve specific problems—the more quantitative (e.g., time saved, money made), the better. I encourage you to think Minimum Viable Product and limit the feature set as much as possible (you need to provide just enough value for some customers to buy).

At Startup Weekend, 54 hours go quickly. The same concept holds for startups and new products in the real world. Time and resources are scarce. There isn’t time to agonize over details that, in the end, may not matter.

For that reason, lean market validation helps successful teams get just enough information and data to make decisions. And then they make them. I like to adhere to the 80% rule — get just enough (valid) information from customer interviews and other data sources and then decide. In the end, you will never get to 100% certainty, and getting close will eat up an excessive amount of time.

3. Most of what you write down are assumptions.

This brings me to my third point: All the writing you do, the discussions (and debating) you have, are assumptions. Teams often take these discussions (and what’s in their heads) as facts when they are simply assumptions that need to be tested.

I like to think of the scientific method when reviewing ideas — how can they be tested?

I often see teams (at Startup Weekend and at startups) debate minor details, waste valuable time rather than make a guess (a temporary decision), and then get out into the real world to test whether it’s the right idea. It’s essential just to make a guess and get started because your assumptions may turn out to be wrong, and you’ll have spent valuable time (not to mention the toll on team dynamics) debating something that didn’t matter in the first place.

4. Find the truth by getting out to test your assumptions.

As soon as you’ve made some basic decisions, and written down your assumptions, get out to test them to see if they resonate with potential customers. I encouraged Startup Weekend attendees to get out on the street and save valuable time by getting on the phone if the customer type warrants.

Lean market validation relies on customer interviews with potential buyers of your product. You can also test your assumptions by interviewing experts (for example, analysts for the industry, people who have been employed by the industry, consultants, etc.). There are also some great ways to test digital ideas with landing pages and inexpensive ads.

Download the Product-Market Fit Book ➜

5. start with your network..

I’m often asked how teams can easily find prospects to speak with. I recommend working with your own network and the networks of friends, mentors, investors, and others to reach potential customers.

The downside of interviewing people in your network is they are friendly to your cause. This means that you are introducing some potential bias into your learning. But my attitude is that some bias is better than not interviewing and getting closer to the truth.

6. Interview your customers.

When I mention interviewing, I’m not talking about a cursory conversation (or worse, a survey). Start with a list of questions but deviate from the questions as you learn more information. Approach the conversation with a sense of curiosity about the customer’s problem and needs, and you’ll get some really valuable insight.

Download our Customer Interview Tool Box , including templates you can use to track your interviews.

7. Ask, “Why?”

“Why?” is by far the most important question you can ask. With it, you can get closer to the truth from customers. Unfortunately, this question isn’t used often enough — too many people ask a question and then take the answer at face value. It’s a missed opportunity to understand motivation and validate what someone would really do.

The Five Whys is a great technique for getting to the underlying reason — the real reason — behind a customer’s motivation.

8. Find the value proposition.

I encourage entrepreneurs to focus less on features and more on explaining the value proposition for their product. What does that mean? A value proposition is the expected gains that a customer would receive from using your product. Value can be quantitative, such as time saved or additional revenue earned. Measuring this is usually straightforward.

But value can also be qualitative, such as pain relief or lifestyle benefits your product provides. By thoroughly understanding and documenting this qualitative value through customer interviews, you can set your product apart from the competition.

For example, it could be time saved, more revenue, or maybe some social benefit (like looking good). Whatever it is, these value propositions are directly tied to the problems that you have previously discovered.

9. Liking your idea is not the same as buying your product.

Unfortunately, validating a product idea with prospective customers is subjective. There is no black and white answer. In fact, because people are generally nice and want to please you (especially the friendly university students at Startup Weekend), you need to be careful about accepting their answers at face value.

When someone tells you enthusiastically, “it sounds great,” or “that’s an interesting idea,” your first reaction should be to follow up with “why?” It’s important to understand that someone liking your idea is not the same as buying the product. Your challenge during your lean market validation process eliminates as much of these “false positives” as much as possible.

10. Jump off the cliff and have fun!

My advice to the group (and all entrepreneurs) is to take a risk, jump off the cliff, and have fun with the lean market validation experience. It’s taking chances that are the hallmark of successful entrepreneurs, and using these techniques helps you get closer to success.

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What Is Test Marketing & How It Can Help Your Business

Test marketing became an essential part of every successful business. According to Oracle, the average attention span of the consumer is 8 seconds and it’s forecasted to shorten over coming years. These days, one of the biggest marketers’ struggles is to create something eye-catching and engaging.

Aug 04 2021 ● 8 min read

Table of Contents

What is test marketing, types of test marketing, the advantages of test marketing, test marketing disadvantages, bottom line.

Jeff Bezos, the founder of Amazon, said that focus on customers is the key to a successful business because, in the end, they purchase the company’s product. And when the brand is presenting a new product or service to the market, test marketing allows generating positive and negative feedback to minimize the risk of failure at the initial launch.

Test marketing is defined as a strategy used by businesses to check the vitality of their new product, service or a marketing campaign before it is launched on a large scale. This strategy is widely used by businesses worldwide to determine the consumer’s needs and if the business’s product meets the demand .

The experimental campaign can be performed in a selected test market, such as real stores, online stores and social media platforms. In most cases, the experiment is conducted without the customers’ knowledge of their participation to gather non-bias feedback on the product or service.

After collecting the feedback from the test market, the data is then analyzed and the data-backed insights are used to improve the product, service or marketing strategy. For data collection, aggregation and analysis, businesses often use marketing analytics software , which automate the data processes and present the results in an easy-to-understand visual report.

There are three types of test marketing — consumer goods test marketing, industrial testing and marketing-effectiveness testing. All three types are used in different test markets with different audiences to gather the most accurate feedback data.

Consumer goods test marketing — all the goods used by consumers directly. The test is conducted to know the consumer’s behavior towards the product. The businesses aim customers to go through the entire testing flow: Trial → Repeat → Adoption → Purchase . To generate the feedback, there are four types of CG (consumer goods) test marketing:

• Sales wave research. This type of test marketing is performed to determine the product’s potential to be consumed every time it is offered to the consumer. The product’s samples are often distributed for free to analyze the consumer’s positivity about the product. A great example would be a perfume sample. When the existing customers purchase the products and receive the sample of the product.
• Simulated market tests are conducted to determine the preference of the customer’s choices. For example, a selected group of people are invited to the store and are given exclusive discounts for specific product categories. The new product is placed together with the old competitor’s products, and customers are observed closely to know if the new product has been picked up when offered jointly with the alternatives.

After the store testing, the tested product is distributed to the group to collect their feedback through an enterprise feedback management software . The market test can also be performed without any selected testing group. Retail stores accept to place the products together with the alternatives and monitor the sales rate.

• A controlled market test is often conducted in the chain stores with the initial launch of the new product. The brand’s new products are often introduced with a testing presentation, sales pitch or an advertising banner to attract potential customers. The controlled market test is different from simulated testing as the product is not distributed for free. The controlled market test allows the brand to advertise the product without giving it away for free, cutting testing costs while at the same time increasing the product’s sales.
• Test markets. Usually, every brand running a test marketing campaign knows the demographics and geographics of their potential customers. A test market is a set of particularly selected areas or segments of the audience used for a small-scale product launch. The feedback collected from the test markets is later analyzed and being used company-wise for product improvement.

Industrial goods are usually used by manufacturers or advanced users. There are two types of testings that help businesses to collect feedback about their product or service:

• Alpha testing is a cost-effective way to gather initial thoughts about the product. The product’s manufacturers distribute their testing prototypes inside the company and ask for feedback from the employees.

Most big-name technology companies use alpha testing before running a beta test. Companies like Apple and Samsung allow employees to test the latest products or software to gather in-house feedback and improve the product before its initial release.

• Beta testing is performed outside the firm with real customers. The beta testing is often conducted in events and exhibitions where the potential product’s users are gathering. It allows the company to collect the thoughts about the product or service with the lowest testing cost.

The marketing-effectiveness test, also known as A/B testing , is commonly used in digital marketing to determine the effectiveness of particular marketing efforts. Marketers run similar campaigns on Google Ads, Facebook Ads or other advertising tools, with different CTA (call to action), visuals or audience targeting to see which advertisements work the best and bring the most value at the lowest ROI (return on investment). A/B tests do not involve consumers directly. They are exposed to only one advertisement. The feedback analysis can be done by collecting the testing data, including click-through, engagement and purchase rates.

The product or service testing could require an initial investment. However, the data collected will allow businesses to improve and stay on top of the competition. Here are some of the key advantages which companies can benefit from running test marketing:

• It allows getting real insights into how the product would perform in a natural marketing environment. Many things cannot be predicted or anticipated. However, test marketing can highlight the potential issues with a real test in a real-life setting.
• The brand can get an idea of how well the product will be received in the market. Test marketing allows to make more accurate predictions of the wider market, build more realistic advertising budgets and make any improvements needed.
• Determining the most effective marketing channels. A small-scale test can provide an insight on which marketing channels a business’s target customers interact most, helping to set the resources and marketing efforts more wisely when the product initially launches.
• Identifying the best distribution channels and building a data-backed distribution strategy for when the product launches.
• Any weaknesses in the product or service will be exposed without any disastrous outcomes as it was a test-run. The product or service can be improved so that it can be well-received in the market.
• Lastly, the business will get a heads-up if the product or service is going to fail at the initial launch. If the product fails in the test, for example — not well-received by the testing group or lacks interest in it, it is likely that the market will receive the product the same. Sometimes it needs some time to get polished, or the product is simply not powerful enough to compete with the competitors’ alternatives.

Although test marketing is one of the most accurate ways to see how well the market will receive the product before launching it publicly, some major disadvantages need to be considered:

• Expensive. Testing is a large-scale project, at the same time measuring different aspects of the business and product. It requires a dedicated budget, which small and average companies might not have.
• Time-consuming. It takes time to set up the campaign and run it to get the feedback.
• The results can be misleading. Even after collecting the results, they can be biased or inaccurate. If the testing group is too small or narrow, the business ends up with a one-dimensional view of the market, which doesn’t reflect reality.

A marketing test allows businesses to see whether the product or service will be well-received in the market and avoid any potential risks the brand may face. Many methods of testing can be implemented in the business strategy based on marketing principles . However, what matters the most, are the insights made from the collected feedback.

Using the right reporting tools allows businesses to make data-backed decisions easier and cut time on routine data collection and visualization tasks. The reporting tool can provide the test run data for marketers in an easy-to-digest, visual report, so they can determine what marketing efforts work best.

Published on Aug 04 2021

Benediktas is a detail-oriented writer with a passion for marketing and technology. Using his vast experience in Business Management and Sales, he approaches every blog with the same idea: How to make readers come back for more?

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Why and How to Market Test Your Product or Service

Immediately wanting to share your new product or service with the world can be tempting. After all, the thrill of creating something no one has ever seen is part of the reason you decided to get into business yourself. But to make all your hard work worthwhile, you should first want to perfect your idea with market testing.

Why is Market Testing Important?

Testing is crucial to discovering what works before jumping into an idea. Whether planning a postcard printing campaign, a business idea, or the launch of your new product, all decisions should be tested before being exposed to your target audience. The testing process will save you from extra expenses and even bad PR, should it not be an initial hit.

Market Test on a Small Scale

Market testing involves taking a small-scale version of your business idea and getting customer feedback. Take the Mythbusters , Adam Savage and Jamie Hyneman, for example. They constantly build crazy, new projects to prove or disprove their ideas. But they rarely build a complicated, full-scale product right out of the gate. Instead, they begin with a scaled-down version that demonstrates their idea and costs little time and money. From there, they fine-tune the concept before preparing for the large, and often explosive, finale.

You should market test for the same reason Adam and Jamie build small-scale models. It’s a huge risk starting work on a large scale.

Objective Practice Makes Perfect

As an entrepreneur, it’s easy to become protective of your idea. It’s a good idea, and the world needs to hear about it. But there’s something about the incubation process that can distort reality and negatively affect a perfectly good project. 

You’ve been exposed to this project for so long that you’ve lost the ability to be objective. Every small business owner thinks their idea is perfect. The reality is that it won’t be perfect from the very beginning. If you rush your developing idea to the market, surviving the time it takes to perfect things may be a struggle.

Ideas for Market Testing

Work on a small scale. Figure out blemishes that need to be corrected, and then you can confidently ramp up production. Remember, not every market test needs to be the same. Be creative and do what’s best for you and your business.  Here are a few suggestions to spark your creativity:

• Cater an event for a local organization to market-test your new restaurant menu.
• Give away prototypes of your product in exchange for users responding to a questionnaire.
• Use social media to solicit ideas from your friends online.
• Set up a website with the product or service described and have a survey at the end asking for feedback.
• Run a beta test for your services and offer a discount in exchange for feedback.
• Send postcards to a select area and link to an online survey about your business idea.

However you choose to market test for your small business, take criticism constructively. Even when people have negative things to say about your idea, it’s because you created something that forced them to respond. Take the concepts you can use, dismiss the ones you can’t, and make your idea the best it can be.

How Small Business BC Can Help Your Business

SBBC is a non-profit resource centre for BC-based small businesses. Whatever your idea of success is, we’re here to provide holistic support and resources at every step of the journey. Check out our range of business webinars , on-demand E-Learning Education , our Talk to an Expert Advisories , or browse our business articles .

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6 ways to test out your business idea before spending money to officially start it

• Having a business idea is easy, but putting that idea to the test is where the real work comes in.
• Entrepreneur Jen Glantz says aspiring founders should test ideas thoroughly to vet their viability.
• Write out a business plan, research competitors, and ask your target audience for feedback.

When I first had the thought seven years ago of starting a business where strangers could hire me to be their bridesmaid , I wasn't sure if it was a good idea. So before putting any money down, I decided to figure out if people would actually hire a stranger for their wedding day.

I did competitor analysis and couldn't find any similar businesses online, so I took it a step further and asked my potential audience. After posting an ad on Craigslist, I received hundreds of messages from people all over the world who wanted to hire a professional bridesmaid. 

I decided to invest in making a website, build a business plan, and create a list of different services I offered. Fast-forward, I'm now running a successful business that works with hundreds of clients every single year. Here are six ways I recommend fellow aspiring entrepreneurs test out new business ideas. 

1. Write out a business plan

Map out a business plan that includes details about your target audience, industry analysis and research, how you could scale the business in six months or a year, and what your competitive advantage would be. 

As you go through this process, your idea might pivot as you find out about similar companies or emerging industry trends.If you're not sure where to start, download a free business plan template and brainstorm how you'd fill in each section.

2. Figure out the problem

Ask yourself two questions: What problems does this business idea solve, and do people actually care enough to spend money to solve these problems?

This a brainstorming gut-check to see how urgent of a business idea you have.

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For example, I was thinking about starting a business around a glove for carrying a cup of hot coffee, rather than a cardboard sleeve or a cup that traps the heat that may burn your hand. But after writing down my answers to the two questions, I realized it was unlikely people would buy something new like this when other solutions out there fixed the problem well enough.

3. Research industry trends 

As you're building your business idea, keep a pulse on what's going on with the industry. What new technology is being introduced? What does customer behavior look like this quarter? What new companies are emerging?

Read industry blogs or publications weekly, subscribe to podcasts from industry experts, and set free Google Alerts to get a daily recap of what's happening.

4. Eyeball potential competitors 

When I was thinking about my coffee glove business, I made a list of competitors who were also solving the problem of coffee cups being too hot to hold. 

I researched each company, noting things like their branding, marketing efforts and social media, user design flow on their website, and customer experience. I made a list of what each company did well, what they did that wasn't so great, what my company could do that was better, and any other competitive advantages.

5. Ask questions to your audience

Getting feedback, suggestions, and even hearing excitement from your potential audience is a great way to gain perspective on your business idea.

Find where your potential audience is having conversations online and join in. For example, I use Quora , Reddit , and Facebook groups to locate my audience, browse the questions they're asking, and use that insight as a way to enhance my business.

6. Find beta testers to test out your idea

This step requires that you have something for people to test, whether it's a sample of the product or a soft-launch of the website or mobile app you're creating. 

Set up a way for them to give real-time feedback during every step of the experience. This information will help you fix any holes in your process and get your business ready for more consumers to enjoy. 

Having an idea for a business is a powerful and exciting moment. Before you put money behind the idea and launch it, spend time experimenting to see if it's a viable business that will be as successful as you want it to be.

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How to Write the Market Analysis Section of a Business Plan

Alyssa Gregory is an entrepreneur, writer, and marketer with 20 years of experience in the business world. She is the founder of the Small Business Bonfire, a community for entrepreneurs, and has authored more than 2,500 articles for The Balance and other popular small business websites.

The market analysis section of your business plan comes after the products or services section and should provide a detailed overview of the industry you intend to sell your product or service in, including statistics to support your claims.

In general, the market analysis section should include information about the industry, your target market, your competition, and how you intend to make a place for your own product and service. Extensive data for this section should be added to the end of the business plan as appendices, with only the most important statistics included in the market analysis section itself.

What Should a Market Analysis Include?

The market analysis section of your small business plan should include the following:

• Industry Description and Outlook : Describe your industry both qualitatively and quantitatively by laying out the factors that make your industry an attractive place to start and grow a business. Be sure to include detailed statistics that define the industry including size, growth rate , trends, and outlook.
• Target Market : Who is your ideal client/customer? This data should include demographics on the group you are targeting including age, gender, income level, and lifestyle preferences. This section should also include data on the size of the target market, the purchase potential and motivations of the audience, and how you intend to reach the market.
• Market Test Results : This is where you include the results of the market research you conducted as part of your initial investigation into the market. Details about your testing process and supporting statistics should be included in the appendix.
• Lead Time : Lead time is the amount of time it takes for an order to be fulfilled once a customer makes a purchase. This is where you provide information on the research you've completed on how long it will take to handle individual orders and large volume purchases, if applicable.
• Competitive Analysis : Who is your competition? What are the strengths and weaknesses of the competition? What are the potential roadblocks preventing you from entering the market?

7 Tips for Writing a Market Analysis

Here is a collection of tips to help you write an effective and well-rounded market analysis for your small business plan.

• Use the Internet : Since much of the market analysis section relies on raw data, the Internet is a great place to start. Demographic data can be gathered from the U.S. Census Bureau. A series of searches can uncover information on your competition, and you can conduct a portion of your market research online.
• Be the Customer : One of the most effective ways to gauge opportunity among your target market is to look at your products and services through the eyes of a purchaser. What is the problem that needs to be solved? How does the competition solve that problem? How will you solve the problem better or differently?
• Cut to the Chase : It can be helpful to your business plan audience if you include a summary of the market analysis section before diving into the details. This gives the reader an idea about what's to come and helps them zero in on the most important details quickly.
• Conduct Thorough Market Research : Put in the necessary time during the initial exploration phase to research the market and gather as much information as you can. Send out surveys, conduct focus groups, and ask for feedback when you have an opportunity. Then use the data gathered as supporting materials for your market analysis.
• Use Visual Aids : Information that is highly number-driven, such as statistics and metrics included in the market analysis, is typically easier to grasp when it's presented visually. Use charts and graphs to illustrate the most important numbers.
• Be Concise : In most cases, those reading your business plan already have some understanding of the market. Include the most important data and results in the market analysis section and move the support documentation and statistics to the appendix.
• Relate Back to Your Business : All of the statistics and data you incorporate in your market analysis should be related back to your company and your products and services. When you outline the target market's needs, put the focus on how you are uniquely positioned to fulfill those needs.

How to Write a Competitive Analysis for Your Business Plan

11 min. read

Updated January 3, 2024

Do you know who your competitors are? If you do, have you taken the time to conduct a thorough competitor analysis?

Knowing your competitors, how they operate, and the necessary benchmarks you need to hit are crucial to positioning your business for success. Investors will also want to see an analysis of the competition in your business plan.

In this guide, we’ll explore the significance of competitive analysis and guide you through the essential steps to conduct and write your own. 

You’ll learn how to identify and evaluate competitors to better understand the opportunities and threats to your business. And you’ll be given a four-step process to describe and visualize how your business fits within the competitive landscape.

• What is a competitive analysis?

A competitive analysis is the process of gathering information about your competitors and using it to identify their strengths and weaknesses. This information can then be used to develop strategies to improve your own business and gain a competitive advantage.

• How to conduct a competitive analysis

Before you start writing about the competition, you need to conduct your analysis. Here are the steps you need to take:

1. Identify your competitors

The first step in conducting a comprehensive competitive analysis is to identify your competitors. 

Start by creating a list of both direct and indirect competitors within your industry or market segment. Direct competitors offer similar products or services, while indirect competitors solve the same problems your company does, but with different products or services.

Keep in mind that this list may change over time. It’s crucial to revisit it regularly to keep track of any new entrants or changes to your current competitors. For instance, a new competitor may enter the market, or an existing competitor may change their product offerings.

2. Analyze the market

Once you’ve identified your competitors, you need to study the overall market. 

This includes the market size , growth rate, trends, and customer preferences. Be sure that you understand the key drivers of demand, demographic and psychographic profiles of your target audience , and any potential market gaps or opportunities.

Conducting a market analysis can require a significant amount of research and data collection. Luckily, if you’re writing a business plan you’ll follow this process to complete the market analysis section . So, doing this research has value for multiple parts of your plan.

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3. Create a competitive framework

You’ll need to establish criteria for comparing your business with competitors. You want the metrics and information you choose to provide answers to specific questions. (“Do we have the same customers?” “What features are offered?” “How many customers are being served?”)

Here are some common factors to consider including: 

• Market share
• Product/service offerings or features
• Distribution channels
• Target markets
• Marketing strategies
• Customer service

4. Research your competitors

You can now begin gathering information about your competitors. Because you spent the time to explore the market and set up a comparison framework—your research will be far more focused and easier to complete.

There’s no perfect research process, so start by exploring sources such as competitor websites, social media, customer reviews, industry reports, press releases, and public financial statements. You may also want to conduct primary research by interviewing customers, suppliers, or industry experts.

You can check out our full guide on conducting market research for more specific steps.

5. Assess their strengths and weaknesses

Evaluate each competitor based on the criteria you’ve established in the competitive framework. Identify their key strengths (competitive advantages) and weaknesses (areas where they underperform).

6. Identify opportunities and threats

Based on the strengths and weaknesses of your competitors, identify opportunities (areas where you can outperform them) and threats (areas where they may outperform you) for your business. 

You can check out our full guide to conducting a SWOT analysis for more specific questions that you should ask as part of each step. 

• How to write your competitive analysis

Once you’ve done your research, it’s time to present your findings in your business plan. Here are the steps you need to take:

1. Determine who your audience is

Who you are writing a business plan for (investors, partners, employees, etc.) may require you to format your competitive analysis differently. 

For an internal business plan you’ll use with your team, the competition section should help them better understand the competition. You and your team will use it to look at comparative strengths and weaknesses to help you develop strategies to gain a competitive advantage.

For fundraising, your plan will be shared with potential investors or as part of a bank loan. In this case, you’re describing the competition to reassure your target reader. You are showing awareness and a firm understanding of the competition, and are positioned to take advantage of opportunities while avoiding the pitfalls.

2. Describe your competitive position

You need to know how your business stacks up, based on the values it offers to your chosen target market. To run this comparison, you’ll be using the same criteria from the competitive framework you completed earlier. You need to identify your competitive advantages and weaknesses, and any areas where you can improve.

The goal is positioning (setting your business up against the background of other offerings), and making that position clear to the target market. Here are a few questions to ask yourself in order to define your competitive position:

• How are you going to take advantage of your distinctive differences, in your customers’ eyes? 
• What are you doing better? 
• How do you work toward strengths and away from weaknesses?
• What do you want the world to think and say about you and how you compare to others?

3. Visualize your competitive position

There are a few different ways to present your competitive framework in your business plan. The first is a “positioning map” and the second is a “competitive matrix”. Depending on your needs, you can use one or both of these to communicate the information that you gathered during your competitive analysis:

Positioning map

The positioning map plots two product or business benefits across a horizontal and vertical axis. The furthest points of each represent opposite extremes (Hot and cold for example) that intersect in the middle. With this simple chart, you can drop your own business and the competition into the zone that best represents the combination of both factors.

I often refer to marketing expert Philip Kohler’s simple strategic positioning map of breakfast, shown here. You can easily draw your own map with any two factors of competition to see how a market stacks up.

It’s quite common to see the price on one axis and some important qualitative factor on the other, with the assumption that there should be a rough relationship between price and quality.

Competitive matrix

It’s pretty common for most business plans to also include a competitive matrix. It shows how different competitors stack up according to the factors identified in your competitive framework. 

How do you stack up against the others? Here’s what a typical competitive matrix looks like:

For the record, I’ve seen dozens of competitive matrices in plans and pitches. I’ve never seen a single one that didn’t show that this company does more of what the market wants than all others. So maybe that tells you something about credibility and how to increase it. Still, the ones I see are all in the context of seeking investment, so maybe that’s the nature of the game.

4. Explain your strategies for gaining a competitive edge

Your business plan should also explain the strategies your business will use to capitalize on the opportunities you’ve identified while mitigating any threats from competition. This may involve improving your product/service offerings, targeting underserved market segments, offering more attractive price points, focusing on better customer service, or developing innovative marketing strategies.

While you should cover these strategies in the competition section, this information should be expanded on further in other areas of your business plan. 

For example, based on your competitive analysis you show that most competitors have the same feature set. As part of your strategy, you see a few obvious ways to better serve your target market with additional product features. This information should be referenced within your products and services section to back up your problem and solution statement. 

• Why competition is a good thing

Business owners often wish that they had no competition. They think that with no competition, the entire market for their product or service will be theirs. That is simply not the case—especially for new startups that have truly innovative products and services. Here’s why:

Competition validates your idea

You know you have a good idea when other people are coming up with similar products or services. Competition validates the market and the fact that there are most likely customers for your new product. This also means that the costs of marketing and educating your market go down (see my next point).

Competition helps educate your target market

Being first-to-market can be a huge advantage. It also means that you will have to spend way more than the next player to educate customers about your new widget, your new solution to a problem, and your new approach to services. 

This is especially true for businesses that are extremely innovative. These first-to-market businesses will be facing customers that didn’t know that there was a solution to their problem . These potential customers might not even know that they have a problem that can be solved in a better way. 

If you’re a first-to-market company, you will have an uphill battle to educate consumers—an often expensive and time-consuming process. The 2nd-to-market will enjoy all the benefits of an educated marketplace without the large marketing expense.

Competition pushes you

Businesses that have little or no competition become stagnant. Customers have few alternatives to choose from, so there is no incentive to innovate. Constant competition ensures that your marketplace continues to evolve and that your product offering continues to evolve with it.

Competition forces focus & differentiation

Without competition, it’s easy to lose focus on your core business and your core customers and start expanding into areas that don’t serve your best customers. Competition forces you and your business to figure out how to be different than your competition while focusing on your customers. In the long term, competition will help you build a better business.

• What if there is no competition?

One mistake many new businesses make is thinking that just because nobody else is doing exactly what they’re doing, their business is a sure thing. If you’re struggling to find competitors, ask yourself these questions.

Is there a good reason why no one else is doing it?

The smart thing to do is ask yourself,  “Why isn’t anyone else doing it?”

It’s possible that nobody’s selling cod-liver frozen yogurt in your area because there’s simply no market for it. Ask around, talk to people, and do your market research. If you determine that you’ve got customers out there, you’re in good shape.

But that still doesn’t mean there’s no competition.

How are customers getting their needs met?

There may not be another cod-liver frozen yogurt shop within 500 miles. But maybe an online distributor sells cod-liver oil to do-it-yourselfers who make their own fro-yo at home. Or maybe your potential customers are eating frozen salmon pops right now. 

Are there any businesses that are indirect competitors?

Don’t think of competition as only other businesses that do exactly what you do. Think about what currently exists on the market that your product would displace.

It’s the difference between direct competition and indirect competition. When Henry Ford started successfully mass-producing automobiles in the U.S., he didn’t have other automakers to compete with. His competition was horse-and-buggy makers, bicycles, and railroads.

Do a competitive analysis, but don’t let it derail your planning

While it’s important that you know the competition, don’t get too caught up in the research. 

If all you do is track your competition and do endless competitive analyses, you won’t be able to come up with original ideas. You will end up looking and acting just like your competition. Instead, make a habit of NOT visiting your competition’s website, NOT going into their store, and NOT calling their sales office. 

Focus instead on how you can provide the best service possible and spend your time talking to your customers. Figure out how you can better serve the next person that walks in the door so that they become a lifetime customer, a reference, or a referral source.

If you focus too much on the competition, you will become a copycat. When that happens, it won’t matter to a customer if they walk into your store or the competition’s because you will both be the same.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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10 Reasons Why Test Marketing Helps Business Growth

Companies employ test marketing as a strategic approach to assess the viability of their new product or marketing campaign, such as a test marketing campaign, before they launch it on a large scale. It is used across the business world to discover what consumers want and need daily. Test marketing resembles a real-world experiment conducted within the test market, encompassing actual stores and genuine shopping scenarios. It is performed without the customers’ awareness of their participation in an assessment exercise.

Test marketing serves as a controlled market test, allowing companies to gather crucial test market results and insights before committing to a full-scale launch. It helps businesses align their offerings with consumer preferences and market trends, reducing the risks associated with large-scale initiatives. Test marketing is akin to a rehearsal that refines a company’s approach and enhances the chances of success in a competitive market.

What is Test Marketing?

Businesses employ test marketing as a strategic method to assess the potential and feasibility of the success of a new product, service, or marketing campaign, such as a product launch. It involves introducing the offering to a limited and specific audience in a real-market setting before a full-scale launch. The primary purpose of test marketing, a form of market research, is to collect valuable feedback and data to make informed decisions about refining and optimizing the product or service, thus reducing the risks associated with a broader launch. By assessing consumer reactions and performance metrics in a controlled environment, companies can fine-tune their marketing plan and enhance the chances of a successful market introduction. This approach can help identify consumer preferences, market trends, and potential issues that may be absent during the product development or planning stages.

Test marketing comes in various forms, including standard test markets, where a product is launched in a few representative markets; simulated test markets using simulated environments or online platforms; and controlled test markets, where specific variables are controlled. However, it’s important to note that test marketing, a form of market testing, can be resource-intensive and time-consuming. As market conditions and consumer behavior change, it may only sometimes guarantee success. Nonetheless, it remains a valuable tool for businesses seeking to reduce risks and improve their new offerings’ chances of successful market entry, especially among existing customers.

What is the Purpose of Test Marketing?

Test marketing is used to ascertain various product uses, the class or category of users, and the motives that prompt the users or buyers. This helps organizations gauge the nature of general competitive situations, the latest trend in demand, etc. This test is conducted to know consumer behavior in terms of:

• Trial: If the potential customer will try out the product at least once.
• Repeat: Whether the consumer will repurchase it after the trial.
• Adoption: Whether the customer positively receives the own product and repurchases it.
• Frequency: How frequently will the customer purchase the product.

Types of Test Marketing for Marketing Strategy

Test marketing plays a pivotal role for businesses aiming to grow through the successful launch of new products or marketing campaigns. Diverse types of test marketing serve as invaluable tools for companies to gather credible data, refine their marketing strategies, reduce risks, and make informed decisions supporting a successful marketing strategy. Here are various types of test marketing that contribute to marketing effectiveness tests and, ultimately, lead to thriving businesses:

Standard Test Markets:

This involves introducing a new product in select representative markets to evaluate its potential success and gather data on customer preferences. This approach allows businesses to refine their offerings before a broader rollout, increasing the chances of marketing effectiveness tests and overall growth.

Controlled Test Markets:

Testing specific variables like pricing, distribution, or promotional strategies in controlled markets to understand their impact on consumer behavior and optimize them for a more comprehensive marketing strategy.

Simulated Test Markets:

Using simulated environments, online platforms, or focus groups to mimic real-market conditions and gather initial feedback on a product or campaign concept can save time and resources in the early stages of market test.

Stratified Test Markets:

This approach involves segmenting the target market into different groups and conducting test marketing in each segment. It helps identify the most promising customer segments for a marketing strategy and business growth.

Sequential Test Markets:

Businesses gradually roll out a product to different markets over time, using insights and data from initial markets to make improvements before launching in subsequent markets. This approach often leads to more successful marketing effectiveness tests and expansions.

Online Test Marketing:

Leveraging digital platforms to reach specific online audiences and gather data on consumer behavior is particularly valuable in today’s digital age, especially for businesses seeking online growth.

Limited Geographic Test Markets:

Selecting specific geographic regions or cities for test marketing is especially beneficial when regional variations in demand exist. It allows companies to target areas with the highest potential for successful business growth.

Differential Test Markets:

Testing multiple product versions or variations helps determine which resonates best with consumers and offers the most significant potential for a successful business.

Selecting the most suitable form of test marketing in alignment with their specific marketing strategy and business objectives empowers companies to mitigate the risks associated with introducing new products or marketing campaigns while optimizing their potential for a marketing effectiveness test and successful business expansion.

8 Steps to Implement A Test Market

Implementing a test market involves a structured process to assess the viability of a new product, service, or marketing campaign and create effective marketing plans. Here’s a step-by-step guide to eight key stages, including the use of free samples and strategies to create awareness:

Define Objectives:

Clearly outline the objectives of the test market, including creating marketing plans. What specific insights are you seeking? What are your goals for this test, including assessing customer satisfaction?

Identify the Target Market:

Determine the characteristics of the audience you want to test the product or campaign on. Consider demographics, location, preferences, and behaviors to guide data collection.

Select the Test Market Type:

Choose the test market that aligns with your goals and business plans. Options include standard test markets, controlled test markets, simulated test markets, or others, as discussed earlier.

Develop a Test Market Plan:

Create a detailed plan that includes the test market’s scope, duration, budget, and specific areas you want to test, such as pricing, distribution, or marketing strategies, to generate customer feedback.

Choose Test Market Locations:

Select the geographic regions or areas where you’ll conduct the test. Consider factors like representative demographics and market conditions, aiming to create awareness.

Design and Launch the Test:

Create the product, campaign, or offer according to the insights from earlier stages, including free samples to gather product test data. Implement the test in the chosen markets and closely monitor the product’s performance.

Collect Data and Feedback:

Gather data on sales, consumer feedback, market trends, and other relevant information. Use surveys, focus groups, and online analytics to collect positive and negative feedback to assess customer satisfaction.

Analyze and Make Decisions:

Evaluate the data and feedback to determine the success and areas for improvement. Use this information to make informed decisions about the full-scale launch and business plans. Decide whether to refine the product, adjust marketing strategies, or proceed with the launch as planned.

Throughout the test market process, maintain open lines of communication with your target audience to gather their opinions and experiences, ensuring customer feedback is a central element. Adjust your strategies based on the collected data and feedback, including positive and negative feedback, to maximize the chances of a successful full-scale launch.

Here are 10 Ways How Businesses Benefit from Test Marketing

Let’s look at the benefits of test marketing in detail:

Product Excellence:

Having a great product can serve as a marketing tool. It gives the product the chance to sell itself. Great products sell themselves. Over time, customers will rely on the product they are using and decide to stick to it. When that happens, the company will have converted a free trial into a paying customer who loves the product and will come back for even more.

Competitive edge over similar competitor products:

For some industries, providing a free product trial may not be considered the standard practice. Offering the product would shift expectations within the targeted demographics, giving companies a chance to expose their product to interested consumers. Using a free, robust product will help create a want in the customers’ minds. But, it works in the other way too. If consumers in the industry expect a free product trial because that’s what everyone else is doing, then not offering one may hurt the company’s reputation. Much of this depends on how the company can showcase the features.  Learn more about Competitive Intelligence and how to do competitor research

People can invest time into the brand:

Money is valued more than time. But, from a marketing perspective, time with the test products and brand message is more valuable than cash inflow. People naturally build a relationship with the brand when they use the products and invest time in the company. Relationships create loyalty. Loyalty makes customers keep coming back for more great products.

Critical feedback is received about the product:

The idea of test marketing is that a product trial allows the brand to see how the product will react in natural consumer environments. Tests and simulations will only get you a limited amount of data. Consumers can be unpredictable, using the product in ways that brands may have never imagined. Having each trialist upload pictures, send reports, or share how they use their product can tap the brand into information resources that may allow them to refine or improve the product over time. This is one of the benefits of test marketing.

Offer incentives:

Product trials generate opportunities for the brand to better the deal if their customers are on the fence. Once customers try a product and think of purchasing it, offering a discount or an incentive may help gain the customer. Referral discounts are another way to help close a deal and find new prospects that might be interested in what the brand is offering.

It gives consumers a sense of urgency:

One of the benefits of test marketing is when prospective consumers are faced with a sense of urgency, they quickly evaluate the pros and cons of keeping the product. Urgency is important because it forces decisions. The end of a free trial creates a sense of urgency, while the perception of missing out on the product creates feelings of inadequacy. This combination will typically result in a sale if the consumer feels the value promises live up to reality. 

It aligns customer interests with company values:

Once a trial is offered on the product, it helps the company set expectations on its offerings. Brands can communicate clearly to prospective customers, letting them know what to expect from the product and how to use it properly. In doing so, brands can align the customer’s interests with the company’s values, which helps to further reinforce the relationships they’re trying to form with exposure to their products.

Brands can see the seriousness of their customers:

If a prospect has no interest in the product, then offering a trial to them will confirm that the lead has grown cold. Brands will always come across people who take a product trial without intending to buy the product. But many people try products when they have an interest in the results. This process allows brands to score leads better, create stronger follow-ups, and grow their inbound marketing opportunities. 

Data provided is from actual customer spending:

Replicating the sample selected for test marketing helps the brand understand the trends that may arise once the product is put up for sale. The buying patterns can help the brand tweak the price, size, packaging, etc. of the product. All these decisions to position the product rightly are made based on data captured from the actual customer spending.

Risk of a full-scale launch eliminated:

Huge costs can be saved on branding, manufacturing, and marketing if the product doesn’t pass the test. The pitfalls found during the test launch can be rectified by the brand. Changes can be made based on the feedback and data collected from the test sample. If there is a defect or a problem in the product, immediate recalls can be done from the test. Recalling the product from the test audience is much better than launching a product to the whole market and then recalling it or understanding what is wrong with it. This also saves the brand’s reputation, along with saving money.

Examples of Test Marketing Campaigns

Test marketing campaigns are vital in helping businesses achieve growth by introducing new products or marketing initiatives. They provide a crucial opportunity to test the waters and gather essential insights before making broader market moves. Here are some real-world examples of test marketing campaigns that have significantly contributed to business growth:

McDonald’s All-Day Breakfast:

McDonald’s decision to test an all-day breakfast menu in select locations was a game-changer. The positive response from customers during the test led to a nationwide rollout. This initiative met customer demand and significantly boosted McDonald’s sales and market share, underscoring the value of catering to customer preferences.

Amazon Prime Free Trial:

Amazon’s test marketing campaign offering a free trial of its Prime service proved to be a strategic move. It allowed potential customers to experience the benefits of Prime, including fast shipping and access to streaming content. The campaign’s success lies in converting trial users into long-term paying subscribers, a key driver of Amazon’s substantial growth.

Netflix Pilot Episodes:

Netflix uses test marketing effectively by releasing pilot episodes of potential new series. This approach enables Netflix to gauge viewer engagement and collect valuable feedback. Based on the response, Netflix decides which shows to produce and invest in. This dynamic strategy has been pivotal in attracting and retaining subscribers, fueling Netflix’s remarkable growth as a leading streaming platform.

Tesla Model 3 Pre-Orders:

Tesla’s approach to test marketing involved opening pre-orders for the Model 3 electric car before mass production. The enthusiastic response from customers provided invaluable data on demand. Tesla leveraged this data to scale production and meet orders efficiently, leading to the company’s remarkable growth in the competitive electric vehicle market.

These real-world examples highlight how marketing, when executed thoughtfully, can mitigate risks, uncover consumer preferences, and inform strategic decisions that drive business growth. Whether expanding product offerings, attracting and retaining subscribers, or efficiently scaling production, test marketing is critical to successful business strategies. It allows companies to fine-tune their approaches, increase competitive advantage, and ensure a higher likelihood of success in the larger market.

Use QuestionPro Audience to Generate Better Insights!

The research based on the test market is crucial for obtaining a fuller picture of the marketing campaign’s effectiveness. However, it is equally important to know where to find this information. Using this information correctly is imperative and should not be extracted directly from the journal. It is up to the individual writer to identify how best to use the information that they uncover, ensuring accurate testing group feedback.

In today’s fast-paced digital marketing landscape, consumers expect businesses to offer an exceptional customer experience and conduct thorough marketing tests. These high-quality interactions are essential in driving revenue, engagement, and loyalty. The ability to truly listen to and understand your customers means providing proactive, personalized service that speaks directly to the needs and wants of your most critical stakeholders. Credibility, in terms of marketing test results and customer feedback, separates your business from the competition. So, understanding the market test duration and how to collect feedback is pivotal in digital marketing.

The insights gained from market test results and the subsequent actions taken based on testing group feedback are invaluable in shaping a successful marketing strategy. With the right approach to digital marketing and test marketing, businesses can enhance their market test, test marketed products or services, and ultimately provide a more tailored and satisfying customer experience.

Have you got a research project coming up, or have a backlog of unanswered questions? You need your answers FAST, and you need to pick the proper sample ?

Let QuestionPro Audience do the hard work for you!

Let QuestionPro Audience do the hard work for you!We make it easy to pull from crowds that match your target audience , adapt to any location, and understand how online research fits into existing workflows.

Test marketing is an invaluable asset for businesses seeking to navigate the ever-evolving marketplace. By strategically assessing the feasibility of new products and marketing campaigns, companies can mitigate risks, align offerings with customer preferences, and set themselves on a path to growth and profitability. Beyond product development, test marketing fosters brand loyalty, creates a sense of urgency and equips organizations with the insights required to make data-driven decisions. It’s a compass guiding businesses toward success and a powerful tool in their quest to provide exceptional customer experiences.

In a world where consumers expect nothing less than excellence, test marketing empowers companies to refine their strategies, engage effectively with their target audience, and emerge as market leaders. So, embrace the insights from test marketing and harness its potential to elevate your business above the competition. As companies navigate the complexities of the national market, the test marketing phase remains essential in their journey toward sustained success.

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78 marketing questions to ask (and how to test them)

UserTesting

Spectacular marketers are the ones who are always asking the right marketing questions. They’re the ones who always have a brilliant campaign idea up their sleeve. The ones who are constantly looking for new and exciting ways to create great experiences for their customers. The ones who use human insights to make sure their messaging hits the mark. So what’s their secret sauce? What separates a spectacular marketer from an average one? At UserTesting, our experience has shown that:

The most successful marketers are the ones who question and test everything.

Great marketers are the ones who ask questions and they talk to their customers to find the answers. They invest in optimization and care about the experiences they leave their customers with. According to VentureBeat , the top 20% of marketers are more likely to base their decisions on test results and data. If you’re ready to make a real impact with your marketing efforts, ask these 78 marketing questions —and then test them.

Marketing questions to ask to:

Improve your customer experience, measure overall brand impression, compare your company to a competitor, get a complete understanding of your analytics data, track performance over time, evaluate the omnichannel customer experience, improve your social media marketing, find out if your copy is effective.

• Learn what customers think of your ads

Optimize your email marketing

• Build high-converting landing pages

Optimize your forms

Find out how users discover your company through organic search, improve your content marketing, run better a/b tests.

• Improve customer retention
• How can you measure your customer experience ?
• Are your customers aware of all of the features, products, and services that you offer?
• How likely would they be to recommend your company to a friend?
• What, if anything, would make them stop doing business with you?
• If they had a magic wand, what would your customers change about their experiences with your product?
• How can you gather human insight quickly?
• How can you bridge the empathy gap with your customers?
• How do users perceive your company?
• What words would they use to describe you?
• Do those words match the way you want to be perceived?
• Does your brand appear trustworthy?
• Would they recommend you?
• What do they like and dislike about the way you present your product or service?
• If users are already familiar with both companies, which do they prefer?
• Why do they prefer one company over the other?
• Who does a better job of explaining the product or offering clearly?
• Who does a better job of convincing the customer to convert?
• What do people like and dislike about your top competitor’s newest feature or product?
• What would convince them to switch to your company?
• What might convince your current customers to switch to one of your competitors?
• Why do certain pages have high bounce and exit rates?
• What’s really causing users to leave your site at those points?
• Why are conversions lower on mobile than desktop (or vice versa)?
• Why do certain demographics behave differently than other demographics on your site?
• Why does one webpage have such a high average time on page?
• How has your customer experience changed since your last test?
• Are you improving compared to the competition?
• Are the changes because of something you changed on your site, something different about your product, or something in the market?
• How do users interact with your company on their smartphone, desktop, tablet, and in person?
• Is the experience consistent across all channels ?
• If they need to complete a process that spans multiple devices, can they do it smoothly?
• What do your users consider their primary channel of choice?
• What are your users talking about on social media?
• What types of support requests or complaints are coming in?
• How are you utilizing the feedback you receive on social media to shape the product?
• What type of content performs best on each social channel?
• How can you continue to replicate your best performing content?
• Does your target market understand what you’re offering when they land on your homepage for the first time?
• Is your language clear and free of jargon?
• Do you speak like your audience speaks?
• Are you catching their attention with your CTAs?
• Could a first-time visitor describe your unique value proposition using their own words?

Learn what users think of your ads

• What’s the mindset of someone who’s encountering your ads for the first time?
• What do people notice, like, and dislike about your ads?
• Do they seem helpful, or do they seem spammy?
• What phrases or design elements catch users’ eyes?
• What entices your target user to click a Google Ads (formerly AdWords) ad?
• Why are users opening some of your emails more than others?
• Will your target market understand and engage with your next email campaign?
• What would users change about your emails if they could?
• Do your users receive emails from other companies in your industry?
• If so, which companies?
• What do the users like and dislike about those emails?

Build higher-converting landing pages

• Can your target customer understand what’s being offered?
• Does it meet their expectations?
• Can they easily sign up for it using the forms you’ve provided?
• Do they become distracted by anything?
• Do they think your offer has value, and are they willing to pay money or enter their contact information in exchange for it?
• Is there any other information they would need to see before clicking on that CTA?
• Do you have the right number of fields on your form?
• Are all of your forms fully accessible to people who use a keyboard or switch input device rather than a mouse?
• Do the forms work correctly and smoothly on all devices and all screen sizes?
• If a user makes a mistake when filling out a form, do your error messages help them correct the mistake right away?
• Is there anything about your forms that would make a user give up?
• What do users notice first when they search for your keywords: your website, your competitors, or your ads?
• What words stand out to them on the Google search results page?
• If and when they click on your link, what are they expecting to find?
• Does your landing page meet those expectations?
• Do users find your blog/whitepapers/infographics/webinars helpful and relevant?
• When a user lands on your blog or resource center, what do they want to read first?
• Why did that piece of content catch their eye first?
• Do your users enjoy reading similar content from other companies? (If so, which ones?)
• What topics would they like to see you cover next?
• Where do users generally go to discover content related to their interests, their job, and their industry?
• How can you come up with an A/B test idea that will actually move the needle?
• Why do you think your last A/B test result turned out the way it did?
• What did users prefer about the winning version?
• What, if anything, did they prefer about the losing version?

Now, it’s time to run tests and get your answers

To get the answers to your digital marketing questions, you’re going to need to go to the source: your customers. By gathering human insight, you can find out what’s working so you create great experiences across all your channels.

In this Article

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15+ SAMPLE Market Research Business Plan in PDF

Market Research Business Plan

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What is  a market research, 1. determine the study’s objective, 2. consider the outlook for your industry., 3. identify prospective customers, 4. contrast yourself to your competitors, 5. compile extra data and analyze your findings, 6. implement your analysis, share this post on your network, file formats, word templates, google docs templates, excel templates, powerpoint templates, google sheets templates, google slides templates, pdf templates, publisher templates, psd templates, indesign templates, illustrator templates, pages templates, keynote templates, numbers templates, outlook templates, you may also like these articles, 5+ sample investment company business plan in pdf.

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Original text

WASHINGTON, May 21, 2024 – For entrepreneurs, creating a comprehensive marketing plan can seem like a daunting and overwhelming task. However, a solid marketing plan is crucial to reach your target audience, increase brand awareness, and ultimately drive sales and revenue. As mentors to America’s small business owners, SCORE understands the importance of a well-crafted marketing plan and is committed to helping business owners create one that will put your business on the path to success.

Instead of trying to conquer your corner of the business world by marketing everywhere all the time, it’s important to plan your marketing thoughtfully. Your plan doesn’t have to be overly ambitious. But it does need to help set you up for success, rather than leaving you feeling frazzled or overwhelmed.

Represent your brand

You might already have a logo and branding materials, but it’s time to take that branding to the next level. Envision your logo in various advertising and marketing forms - on community bulletin boards, in newspaper ads, on bus shelters. Where do you want to see your logo? Where do you want to hear people talking about your brand?

Consider asking a mentor for assistance with this process. Luke Jian, founder of Agora Coworking in Grayslake, Ill., turned to SCORE mentors Alan Blitz and Paul Rosenstrock for help with starting his business. “They were always available to answer my questions and provide guidance, even outside of our scheduled meetings,” explained Jian. “Their input helped me to develop a comprehensive business plan and marketing strategy that has set my coworking space up for success in the long run.”

Raise awareness

Once you’ve thought about your brand aesthetic, it’s time to figure out how to reach your target customer. Define who your potential customers are and where they are already consuming information. Try to get a sense of their lifestyle and set your marketing efforts to match.

Not sure where your customers learn about products and services like yours? Ask them. Hearing their preferences can guide where you invest your marketing dollars as you work to raise awareness of your business.

Reward loyal customers

“Communicate often and effectively with your customers,” recommends SCORE mentor Rex Winter. “Repeat customers are a critical asset to a small business. Work at building loyalty through effective communication and programs that reward repeat business.”

A discount after a certain number of visits might be the perfect incentive to keep a customer coming back, but be sure you are incorporating sales, promotions and rewards programs into your overall marketing  plan. Consider in advance your resources and cash flow if you plan to offer flash sales, discount programs or seasonal events or specials so you don’t get overwhelmed.

If you’re looking for individualized support in creating your marketing plan, contact SCORE for free business mentoring . Touright Bicycle Shop owners David and Susan Sperstad in Little Falls, Minn. explain why they sought the expertise of a mentor: “We knew experience is the best teacher, so we couldn’t go wrong in reaching out to a SCORE mentor who had successfully run a small business,” said David.

Interested in more information on marketing strategies and best practices? SCORE is hosting a webinar, How To Create A Marketing Plan For Your Small Business, on May 30 at 1 PM ET. Registration is free and available here .

About SCORE:

Since 1964, SCORE has helped more than 17 million entrepreneurs start, grow or successfully exit a business. SCORE's 10,000 volunteers provide free, expert mentoring, resources and education in all 50 U.S. states and territories. Visit SCORE at www.score.org .

Funded [in part] through a Cooperative Agreement with the U.S. Small Business Administration.

202-968-6428

[email protected]

Looking for a small business expert or owner for an upcoming media story? Email  [email protected]  to request an interview source. 

Copyright © 2024 SCORE Association, SCORE.org

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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Business Plan Questionnaire

• May 29, 2024

Feeling overwhelmed with all the information needed to include in a business plan or not getting where exactly to start? Not a problem, you’re not alone! It is where a well-designed business plan questionnaire can be a lifesaver!

A business plan questionnaire is a list of questions designed to support you in the business planning process so that you organize the plan properly and do not miss out on any essential points.

It also helps you in identifying the gaps in your plan. The only thing you need to do is answer all the questions practically, and Voila you will have all the things you need in a plan.

So, let’s proceed without any further delay!

Questions your business plan should answer

The business plan questionnaire helps you with writing your plan. It will give you directions for the future and allow you to analyze each aspect of the firm. Be sure to provide practical answers to every question. Here are the questions you need to consider:

1. Executive Summary

An executive summary is a brief of the whole plan and is responsible for grabbing the reader’s attention to get further interested in your firm. Some questions your executive summary should answer are:

• What is the business and what does it do?
• What is the problem here and how is it being solved by your business?
• What product or service are you providing?
• What is the Return on Investment (ROI)?
• Why will your business succeed?

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2. Company Overview

Now that readers have gone through the overview, they would want to know your business in detail. Some of the questions this section should include:

• What is the business name, and what is its legal structure?
• What is the business’s mission and vision statement?
• When was the firm founded, and what is its history?
• Where is the business located?
• Who are the founders of the business, and what is their educational background & experience?
• Why did you start this particular business?
• What are the future growth goals of your business?

3. Market and Industry Analysis

A good market & industry analysis shows that you know your competitive landscape and understand your competitor’s strengths & weaknesses, along with their market positioning. Some of the questions this section should solve are:

• What is the current market size for your product or service?
• What are the recent trends?
• Who is your target audience & prospective customers?
• What is the growth potential?
• What are the entry barriers in the industry?
• What are some rules and regulations that impact your firm?

4. Competitive Analysis

Once you know the market, it is important to understand your competitors to know how well your products or services will perform against theirs. Here are a few questions to consider for this section:

• Who are your direct and indirect competitors?
• What is their target market?
• What are their strengths and weaknesses?
• What is their market share & position?
• What is your competitive advantage?
• What is their pricing strategy?
• What is their marketing strategy?
• What are some opportunities or threats posed by competitors?

5. Products and Services

The product or services section is where you showcase your product or services in detail along with their descriptions. Below are the questions for this section:

• What products or services are being offered by your business?
• What makes your product or services unique from competitors?
• What is the current stage of development of your product or services?
• What are the quality measures that you will incorporate to maintain the quality of your product or services?
• Are there any additional services you provide?
• How are your products or services delivered?

6. Sales and Marketing Plan

The sales and marketing plan section outlines the strategies that you will include to promote your product or services, attract new customers & retain old ones.

Here are certain questions that this section should answer:

• Who are your target customers?
• What are your competitive advantages?
• Are there any existing customers?
• What is your sales volume target?
• What is your budget for marketing activities?
• How will you convert leads into customers?
• How will you enhance the overall customer satisfaction?

7. Operations Plan

An operation plan compels you to know all the hows of your business like how you will meet the goals or how much time you will need to complete the tasks. In short, it outlines the specific strategies to turn your goals into reality.

Some of the common questions it should solve are:

• How will you deliver your product or service?
• What equipment and resources will you need?
• How will you manage your inventory?
• How will you check the quality of your product or service?
• How will you handle customer inquiries and complaints?
• How much and what training do your employees need to work efficiently?

8. Management Team

A strong business is the result of the shared expertise of all people working for it. So, this is the section where you showcase the management team of your business and what they bring to the table. Here are some questions for this section:

• Who are the key management members of the firm?
• What experience and educational background do they have?
• Who is the founder/CEO of the business?
• How will the management team make decisions?
• Do you have an advisory board in place?
• How many employees does your business need?
• Do any team members have specific market knowledge?

9. Financial Plan

The financial plan is where you outline your forecasted revenues, expenses, and profits, giving insight into the business’s financial health. Here are certain questions this section should address:

• What are the startup costs of your company?
• What is your current financial planning & situation?
• What is the projected profitability of the business?
• How much funding are you seeking?
• What is the expected return on investment (ROI) for investors?
• What is the revenue model?
• What is the break-even point?

10. Appendix

The appendix is the last section of the plan. Here, you can provide all the supporting documentation that validates the other contents of the plan. Some of the things to include in your appendix are:

• Resumes of the key management team members
• Copies of any agreement with the suppliers or anyone else
• Copies of legal documentation
• Organizational charts
• Marketing materials

These were some of the business plan questions to ask while writing the plan. Let us move ahead and learn more about the questionnaire!

How to use this questionnaire?

When you use the business plan questionnaire correctly, you won’t miss any important details, and your answers will be clear and organized. Thus, this section walks you through the usage of the questionnaire. Follow the below steps:

• Review questions: Read the entire questionnaire first, and try to understand its scope and try to understand the information needed to answer those questions.
• Gather information: Gather data and other relevant documents, like financial statements, market research, and other relevant operational details.
• Answer honestly: Be very honest while replying to all the questions, because one lie and your readers will take zero interest in your business.
• Develop the plan: Use the answers as a foundation to draft a comprehensive plan.
• Review & edit: Review the draft, fill in any gaps, and make adjustments for clarity. You can even ask someone else to review it and give you feedback.

Prepare a detailed business plan using Upmetrics

So, that’s it! The above sample survey questionnaire for a plan will guide you in writing your plan.

But for constant guidance, while writing the whole business plan, you can consider using Upmetrics .

It has 400+ customizable business plan templates , which means every business has a suitable sample for them. Apart from that, it provides you with AI assistant that helps you auto-write your plan, answer your business-related queries, and guide you at each step.

So, if you are someone looking to write a business plan, create a pitch deck, or prepare financial projections, then Upmetrics is the best stop.

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Frequently Asked Questions

Can i use a business plan questionnaire to create a complete business strategy.

Yes, you can use a business plan questionnaire to create the entire plan. A questionnaire forces you to go through every different aspect of the business. Thus, a questionnaire can be a helpful tool for organizing and outlining the key elements of a plan.

Who should use a business plan questionnaire?

A questionnaire is a helpful tool for all people related to the business planning process. Like advisors & consultants, small business owners, existing businesses, individuals, non-profit organizations, and anyone who is creating a business plan.

What are the benefits of completing a business plan questionnaire?

Completing a plan offers various advantages like:

• Clarifies business goals, strategies, and market positioning
• Recognizes potential challenges, allowing for risk management
• Ensures that all the essential components are addressed in your plan
• Increases the chances of funding by encouraging to prepare a well-prepared and data-backed plan

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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