BEYOND MARKET RESEARCH- Why you Need to Enter with Caution.
- osaghae osamuyi
- Aug 20, 2020
- 3 min read
Updated: Aug 24, 2020
You can be Floored by the Market without Caution
The market is the best reality checker for every startup. It brings you back to reality. With all the fanfare and razzmatazz you can lose sight of the intricacies that come with running a startup.
The mistake most small business owners make is to think that the market is large and they can fix their prices high. The saying “those who can afford it will be able to pay” is an illusion. A careful study of your business environment will help you realise that the purchasing power of most Nigerians is very low. The latest statistics puts the unemployment figure around 50 million persons.
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This small fraction of persons with the purchasing that have been overstretched. Every business wants to sell to this small group of people. You have to be competitive enough for them to buy from you. Being competitive involves quality of product, quality of packaging, pricing, ease of purchase (distribution) and having proper relational skills.
This establishes the fact that your competitors include the established brands as well as the small businesses according Ayo Bankole. You are competing against super brands that have created a niche for themselves. Therefore you must up your game.
Understand What the Market Wants
Having a grasp of the market environment will help you a lot. I don’t mean theoretical analyses that are based on simulations. I mean a real time data that can help you make informed decisions.
Many startups begin with so much fanfare like the video above but get knocked down by the reality of the market. This is why it is important to be cautious when venturing into the market.
You don’t enter into the market with all that you have. Do what the scientists call "controlled experimentation". Start with a small sample group, make all the mistakes and then learn through the curve. The data gotten from this experimentation can be analysed to rejig your marketing strategies.
The saying that you do not enter into a river with both foot is very valid when starting out. You enter with one foot so you can determine the depth of the river. In business you do not enter the market with all your arsenals blazing. You will be knocked back to reality by the brutish market.
Telcos started with post-paid services they ended up having customers who were indebted to them. They were running at a loss until they started the option of prepaid. The prepaid option increased their customer base significantly.
Another lesson from the Telcos in Nigeria was the model used in the sale of recharge cards. Their initial options were limited and expensive. MTN Nigeria had options for 1500 and 750 Naira while Econet had 500 and !000 Naira options. This was not so effective until the options were widened to include 100 and 200 Naira. Their understanding of the market allowed them to designed products that could create value for the users and based on the purchasing power of the consumers.
A number of recent empirical studies of technical change at the level of the individual firm have concluded that market demand is the dominant influence upon the innovation process, “calling forth” innovations in market economies.
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Understand Distribution
Apart from understanding your marketing you must also do a proper research on the best way to get your products or services distributed. According to Asemota Osaretin the experiences of Telcos like MTN and Econet when they launched into the market taught them to reevaluate their strategies.
MTN Nigeria used existing distributors in Nigeria to distribute their recharge cards. This approach ensured MTN leveraged on existing structures created by the distributors and reduced the cost of building new structures. He went on to say using the commodity approach to sell your products is the fastest way to markup. These are excerpts from @asemota on Twitter.
To avoid these pitfalls it is important that you enter with caution and also seek mentoring. Experience is the best teacher but it is best to learn from other people’s experiences rather than repeating the cycle of mistakes.
Conclusion
As a startup or one in business already, to remain relevant you must allow the market to determine innovations. Design products and services that serve the need of the market.
You must design products and services that will create real value for the users and not what you think will create value. Allowing the market to drive innovations will ensure you will always have a great share of the market.
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References
Asemota Osaretin @asemota
Ayo Bankole @AyoBankole
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