How to Market Research 101

You’re quite dedicated, huh? That’s good to hear. This article will talk about how to conduct qualitative market research on a specific niche that your business is targeting. 

Let’s use my first ever e-commerce company as an example of how to conduct market research. In 2022, I launched an e-commerce company around the LED lights niche. My company sold the same products as many name-brand LED light products, but at 10-25% of the price (huge discount). I sold these products from overseas to customers in the United States, and I made money, but I lost a lot in the process. I attribute many of my losses to my lack of commitment, incorrect mindset, and fear of failure.

I conducted my bare-bones market research by using some pretty obvious, but generally unspoken principles:

1. Define your niche
   1. This seems pretty self-explanatory, but it’s good to say/write clearly who you’re targeting.
      1. My niche market was LED lights and decorations for avid video-game players.
2. Research your customer base
   1. Make a “profile” of your ideal type of consumer—list their characteristics, demographics (age, race, sex, employment, income), and psychographics (values, beliefs, interests, social status, habits). As a quick side note, it’s crucial to utilize the psychology of colors to your advantage and recognize how you want your customer to feel when viewing your store.
      1. My ideal customer was an eighteen-year-old, male gamer, who was unemployed or making little income. They were also very driven to lights (tying into gaming),  and would make impulsive purchases. Sadly, I didn’t use the gift of colors to my advantage until I did further market research.
3. Analyze your competitors
   1. Do a quick Google search and write down a list of similarities and differences between many of your biggest competitors. Don’t look at the small companies, look at the large ones.
      1. I looked at many of these companies’ websites and I noticed a few interesting similarities. I saw that all of them had white backgrounds, while I had a black one. I saw that most of them used purple as their “main” color, and it honestly makes sense. When most people think of an “LED” color, purple is the first thing that comes to mind. Utilizing color psychology, purple relates to royalty and wealth. Finally, I noticed that all of my competitors utilized high-quality pictures with accurate and enticing descriptions of their products (make sure to channel your creativity through ChatGPT, but do not copy directly from ChatGPT as your SEO score is influenced by whether or not your text is AI generated.)
4. Evaluate market size and saturation
   1. Do a quick estimation of how many target customers you’re able to reach, and see how many similar businesses are in the same niche as you.
      1. In my industry, it was pretty simple to find out how many target customers I was able to reach and how many businesses were interacting with them. I went on my biggest competitors’ sites and used tools online to estimate how much volume they were processing every year. Using this volume, I divided the average cost of the product and had a rough estimation of how many customers these companies engaged with yearly. 

And that’s really it. You don’t want to overcomplicate your market research, but you definitely need to do it. Trust me, it’s not that bad. I would recommend making an entire business plan that involves your market research, as it’s concise and organizes your information effectively. There are definitely free ones available online, but most are paid.