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  • I have an exciting investment opportunity only for Two Cents viewers: Beard Oil for dogs!

  • I call it Groomio, and it's a guaranteed success!

  • How do I know?

  • Trust me!

  • I just feel it in my gut!

  • No serious investor will trust their money to your gut.

  • And you shouldn't either.

  • No matter how good you think your idea is, before you mortgage your house or quit your

  • day-job, you owe it to yourself to thoroughly investigate its market viabilitythat is,

  • a realistic, data-driven prediction on whether it can succeed in this marketplace.

  • This applies to Fortune 500 companies and handmade soap sellers on Easy.

  • One way or another, the market will judge your productwouldn't you rather hear

  • the verdict before you sink your life savings into it?

  • Ruth here has been giving her homemade artisanal soaps to her friends and co-workers as gifts

  • for a while now, and getting a lot of positive feedbackenough that she's actually entertaining

  • the idea of starting a small business.

  • But before she retires from her office job, how can she know whether there's really

  • a market for this?

  • The answer is market research.

  • Marketing research companies generate exhaustive reports on pretty much any industry you can

  • think of, including the Handmade Global Soap Market.

  • They include findings like market size, growth rate, demographics, industry leaders, even

  • how facial scrubs perform vs. liquid body washes.

  • And it's all available to Ruth as a downloadable pdf for… $4,000.

  • Maybe Ruth can afford that, but I can't.

  • Fortunately, there are plenty of cheaper options.

  • I found this free report from the non-profit American Pet Products Association, which says

  • that U.S. spending on pet products and services grew at an average rate of about 5% annually,

  • comfortably above the GDP average, and that pet ownership is increasing, especially among

  • millennials, with dogs leading the way.

  • This is all good news for Groomio, because the bigger a market, the more potential customers,

  • and the faster it's growing, the more new customerswho are much easier to sell to

  • than older customers already stuck in their ways.

  • The report also tells me that the average dog owner spends $84 a year on grooming supplies

  • and servicesvery useful info as I decide on a price.

  • A major part of market research is analyzing competitors.

  • If Ruth wants to get into the homemade soap market, she needs to know what the successful

  • brands are, how much they cost, what are the most popular ingredients and scents.

  • She can even request credit reports on these companies for a fee (unlike personal credit

  • scores, business credit scores are publicly available) which will tell her whether they're

  • financially stable, and how much risk there is in the industry.

  • Search engines and social media have made collecting this type of information easier than ever.

  • A simple Google or Twitter search will often tell you who the major players in an industry are.

  • With a GoogleAd account you can see how much competition there is for your keywords.

  • And Google Trends is an easy, kinda fun way to find out what's hot and what's not.

  • (Seriously, you can burn of lot hours here.)

  • I can see that the search termsdog groomingandbeard oilhave both grown slightly

  • over the last 5 years.

  • I can tell what times of year they're most on people's minds, what geographic regions

  • they live in, even what related searches tend to overlap.

  • This can all be useful when designing my product and advertising strategy.

  • All of this is considered secondary market research, information that already exists

  • that you can purchase or find for free.

  • But if you're really serious about success, you need to do primary market research, which

  • means collecting data on your own.

  • It's often more expensive and time-consuming than secondary market research, but it always

  • saves you money in the long run, because you narrow down your audience and focus only on

  • the features that they're interested in.

  • For example, Martin wants to introduce a new sandwich at his popular food truck: a double-bacon

  • BLT with garlic aioli and truffle oil.

  • Before rolling it out, he asks his existing customers to fill out a survey, posts some

  • polls on his company's social media accounts, and just to be really thorough, pays a web

  • service to get survey responses from the types of people who frequent food trucks.

  • Lo and behold, he finds that people who tend to like bacon DON'T like truffle oil (because

  • it's disgusting).

  • He almost wasted a lot of money on an expensive ingredient that would've actually lowered sales.

  • Thanks, Primary Market Research!

  • Many experienced market researchers will tell you that when it comes to collecting data,

  • nothing beats face-to-face conversations.

  • That's because customers are humans with emotions, and the most successful products

  • are ones that solve a pain.

  • Market painsare anything that causes frustration or inconvenience in a consumer.

  • It's a problem that your product could potentially solve, and the best way to find it is talking

  • directly to people.

  • Big companies conduct interviews with lots of people of varying demographics and regions,

  • but just because you can't afford that doesn't mean you shouldn't talk to people when you can.

  • Butdon't bother asking your friends and family!

  • They're likely to be nice and encouraging when what you need is brutal honesty.

  • For instance, Ruth starts taking her handmade soaps to the local farmer's market, and

  • makes sure she strikes up a conversation with anyone who'll give her the time.

  • She notices a trend in people who say they wouldn't buy handmade soap online because

  • they're concerned about the packaging waste.

  • Aha, market pain!

  • She decides to make sure all her packaging is made from recyclable materialsand that

  • it's mentioned prominently in the advertising.

  • For the truly introverted entrepreneur, the internet does offer a sneaky shortcut to finding

  • market pain: the dreaded comments section.

  • If your competitor has one, you'll find people happy to complain about drawbacks or

  • features they wish the product had.

  • There's even a successful electronics company that has made its whole business model developing

  • products based on complaints in Amazon reviews.

  • “I love this nose hair trimmer but I wish it was waterproof!” Bam, market pain.

  • This is a very generalized overview of market research.

  • There's a lot more to it: industry lifecycle, market penetration, federal regulations

  • Oh shoot!

  • I forgot to check if animal cosmetics require FDA approval!

  • Thankfully, there are a lot of resources out there.

  • The Small Business Administration provides lists of organizations that offer free market

  • reports, and can help connect you with a counselor or advisor.

  • But be careful of business coaches who think their job is to just be your cheerleader.

  • While this encouragement is nice, you don't want to be encouraged off a cliff.

  • Ooh!

  • The results of my survey are in!

  • The percentage of dog owners who say they'd be interested in Groom is… 4%.

  • Maybe I shouldn't take out that loan just yet.

  • And that's the most important part of market research: objective honesty.

  • No matter how much you love your idea, if the research tells you otherwise, well

  • that can be a good thing!

  • It means you just saved yourself a lot of money and effort.

  • And freed up your time to develop an idea that will work.

  • And that's our two cents!

  • Thanks to out patrons for keeping Two Cents financially healthy.

  • Click the link in the description if you'd like to support us on Patreon.

  • If you've ever conducted market research, share your experience with us in the comments!

I have an exciting investment opportunity only for Two Cents viewers: Beard Oil for dogs!

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B1 US market market research research ruth handmade soap

How to Do Market Research!

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    Capalu Yang posted on 2020/08/13
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