The Complete Guide to Market Research for Startups

The importance of doing market research for startups is often underrated by those who need it most. The number one reason most startups fail is a lack of market understanding; it’s easy to see how so many new businesses don’t succeed in the early stages.

Success becomes an uphill battle when going to market without fully understanding who a target audience is and how to meet their needs.

Before we show you why and how to do market research for your startup, look at these stats.

The benefits of doing market research for a startup

You’ve seen the stats, and likely, you’re going to want to do everything possible to ensure you don’t end up being one of the many businesses that don’t make it through the early years. As you’ve started learning how to do market research for your startup, you’re on the right track to future-proofing your business – giving it (and you) the best chance of success.

Here are seven things startup market research allows you to do:

1. Identify target market
2. Understand customer’s needs
3. Tailor marketing or a product launch
4. Choose the best channels to market your business
5. Understand the competitive landscape
6. Formulate an effective pricing strategy
7. Identify your Unique Selling Proposition (USP)

The information you need to succeed (in almost any market) is at your fingertips – ready and waiting to be discovered. With the right intel, you can refine your go-to-market strategy, remove the guesswork from your marketing, and plan activities based on what you know is working.

What’s more, with software like Similarweb Digital Research Intelligence, you can access instant insights that tell you where opportunities exist in your market.

How to do a market analysis for a startup

In this section, I’m going to show you six of the best ways to do market research for startups. Whether new to a market or a seasoned expert, these activities will give you the insights you need to formulate a successful plan.

If you’re still in the pre-planning stage, you can read more about how to do market research for a business plan here.

1. Size your market

Before entering a new market, it’s crucial to size up the opportunity. Market sizing allows you to see the potential share of your reachable market. The three metrics you need to work out are listed below, along with relevant formulas for each.

• Total Addressable Market (TAM)
• Serviceable Addressable Market (SAM)
• Serviceable Obtainable Market (SOM)

2. Research the competition

Startups can use market research to get a clear picture of the competitive landscape. With the right tools, you can analyze a market and evaluate industry leaders and emerging players in just a few hours. Any new business can use this information to shape its strategy and benchmark itself against competitors.

• Select between 2-4 competitors to analyze.
• Systematically collect data for each business that considers company, product, marketing, and customers, to build the ultimate competitive blueprint.
• Take advantage of our free market research templates to save time. Each is designed to help you better understand your market, customers, and competition. Use a template to record your findings to compare and benchmark easily.

To quickly get a handle on your nearest and dearest rivals, sign up for a free trial of Similarweb. Next, head to the industry overview tab of the Similarweb Digital Research Intelligence solution to start grabbing the data you need.

Industry Overview: The best place to begin any competitive research is here. View website traffic and engagement metrics for your industry to see industry-standard benchmarks. 

A quick click on Industry Leaders module (below) will immediately show you industry leaders and rising players. Here’s where things start to get interesting.

Use Industry Leaders to view your industry leaders and any rising stars that have been gaining traffic at pace. These rising stars are just as important to analyze as market leaders.

Further reading: This post covers seven types of Competitive Analysis Frameworks and includes a free template to help you record and compare findings.

3. Discover what marketing channels work

Whether you’re bootstrapping or have a healthy budget, managing your marketing spending is key. Market research helps you quickly see what channels work for others in your space and uncover competitors’ marketing strategies.

• Take or create a list of competitors.
• Evaluate their marketing channels, including direct, social, email, referrals, and ads.
• Determine if competitors are neglecting any high-value marketing channels.
• Document findings and analyze which channels offer the best ROI.

Use this intel to develop a marketing strategy tailored to today’s market. With Similarweb Digital Research Intelligence, you can do this element of startup market research in under an hour.

With a free trial of Similarweb, you can see granular insights about your rival’s most successful channels. This includes affiliates and referral partners, high-performing ads, upwards and downward turns, mobile app analysis, and more.

4. Identify best-performing pages and keywords

Discover which pages get the most traffic and conversions to find the keywords that drive traffic to competitors’ sites. This will help inform your keyword and content strategy. To create a list of relevant keywords (both long and short-tail), follow these pointers. The key to success is taking a broad view and not just going for the most obvious keywords everyone else is targeting.

• Analyze high-traffic keywords of your rivals, looking at both high and low keyword difficulty (KD).
• Avoid the apparent wins, and do a quick keyword gap analysis to reveal hidden gems.
• Evaluate search trends relevant to the industry you want to enter. Consider keyword seasonality too.
• Review rival sites and dig into their highest-performing pages. This will show you what keywords to use and provide a more informed view of what good content looks like in your market.

Pro Tip: When looking at top-performing pages, visit them and note the different calls to action your rivals use, as this will help you decide which to implement on your site.

With the pages element of Similarweb Digital Research Intelligence, you can analyze up to 10,000 pages per site. In an instant, you can unpack and track their highest-hitting pages as well as those growing or declining over time.

5. Analyze audience demographics

Knowing your target audience is critical for any startup market research.  Establish the following factors to build a picture of your potential audience.

• Use geographical data to see relevant gender and age distribution
• Review audience loyalty metrics to understand how people behave – e.g., do they shop around
• See what search terms they use to discover sites in your niche
• Do they view sites like yours on a mobile device or desktop?

As you can see, you can learn many things about your target audience before starting a business. With this data, you can refine your marketing activities like advertising, outreach, strategy, positioning, and more.

Further reading: Read our guide on how to identify your ideal niche audience

6. Monitor social media engagement and presence

Establishing a social media presence takes a lot of work, and you must evaluate how useful it is at the beginning before deciding how to allocate your resources.

• Review both industry leaders and new players in your industry
• List what channels they have a presence on.
• Look at the number of followers vs. the level of engagement.
• Record how many posts they make daily and weekly.

You can create a spreadsheet to track this or add this to your competitive framework. Don’t try to overdo things. Choose the best channels based on what you already see working for others.

Market research questions for startups

When doing any type of market research for a new business, you need to ask the right questions. There’s no point delving into company research and competitive analysis in a market without first considering what you’re trying to learn from the research.

Here’s a list of market research questions that you might want to consider:

1. Do you know who your direct and indirect competitors are?
2. Have you sized your market – and do you know your total addressable market (tam), serviceable available market (sam), and share of market (som)?
3. What is your Unique Selling Proposition (USP)?
4. How much are people willing to pay for your product or service?
5. Will you go to market with a promotion, such as a free trial or discounted offering?
6. How much do your competitors charge, and do they offer a like-for-like service?
7. What trends are currently emerging or impacting your market?
8. Do seasonal trends impact your business?
9. How do your rivals onboard new customers? Will you do this in the same way or not?
10. Do your competitors offer any loyalty or new-customer discounts?
11. What are the most effective marketing channels in your industry?
12. Are your rivals active on social media? If yes, which channels are the most successful?
13. What type of customer support channels will you offer? Consider what your competition offers at present.
14. What are your trading hours going to be? Consider the competition here too.
15. What keywords are the most successful for your market?

Doing Startup research with Similarweb

Conducting thorough market research and analysis as a startup will help you direct your resources and sharpen your business plan to ensure you take advantage of market opportunities.

With Similarweb Digital Research Intelligence, you’ll access comprehensive industry data in real-time. This way, you’ll be able to track industry trends and the demographic makeup of your target audience to reach them better.

Because we provide real-time data, you get to see emerging market trends as they open. When you’re ready to launch your startup, you can use all that knowledge to your advantage.

Because we provide real-time data, you see emerging market trends as they happen. When you’re ready to launch your startup, you can use all that knowledge to your advantage and ensure your business is prime for the market you’re about to enter.

Don’t delay – start your market research strategy today. Try Similarweb’s Research Intelligence tool for free!

FAQ

How do you do market research for a startup?

First, measure your market share, then identify best-performing pages and keywords, investigate marketing channels, analyze your audience demographics, compare metrics, and monitor social media.

What is the best type of market research for a startup?

When time and money are key considerations, the best type of research for any startup is secondary market research, AKA desk research. It’s low-cost, can be done with little-to-no market research experience, and the data is readily available online.

What are the 4 types of market research?

The four core types of market research are primary research, secondary research, quantitative research, and qualitative research.

by Liz March

Digital Research Specialist

Liz March has 15 years of experience in content creation. She enjoys the outdoors, F1, and reading, and is pursuing a BSc in Environmental Science.