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1
Market research and
spying on competition
Guide for startups and small businesses
2
Introduction
3
Market research can be divided into 3 main categories
Market
research
Consulting
methods
Off-line
research
On-line
research
4
The simplest methods are used by consultants and only require
a bit of imagination
Market
research
Consulting
methods
Top-down
Bottom-up
Off-line
research
On-line
research
5
Off-line research are a must not only in physical good
businesses
Market research
Consulting
methods
Off-line research
Interviews and discussion
with (potential) customers
Being where your (potential)
customer is
Work for your (potential)
customers
Store checks of competition
Mystery shopping at
competition
On-line research
6
The last group of on-line tools puts at your disposal numerous
solutions giving you in-depth knowledge of your competitors
and markets
Market
Research
Consulting
methods
Off-line
research
On-line
research
On-line interviews
Facebook Audience Insight
Customers profiles on
facebook/instagram/pinterest
Keyword Planner for Google AdWords
SimilarWeb
Branch sites and reports
Slideshare and Youtube
Markets for applications
7
Type of markets
Existing
Better
Product
Resegmented
Niche
Strategy
Low
cost
New Market
New
users
New
product
Some methods are more useful on a specific type of
markets…
 Mainly consulting methods
 Off-line and on-line research of
customers for proxy or similar
markets
 Off-line and on-line research of
customers for similar business
models
 Off-line and on-line research of
customers (chosen segments)
and competition
 Off-line and on-line research of
customers and companies on
similar / proxy markets
 Some usage of consulting
methods
 Off-line
research of
customers and
competition
 On-line
research of
customers and
competition
8
More developed version of the market research with examples
and helpful files you will find in our on-line course on Udemy
Click to check my course
9
Consulting
methods
10
The simplest methods are used by consultants and only
require a bit of imagination
Market
research
Consulting
methods
Top-down
Bottom-up
Off-line
research
On-line
research
11
…the one you will for sure use is bottom-up approach where
you go from single (typical) consumer to market research
 First you should
imagine the
typical users
 Then you should try to
guess his consumption
level
 By estimating the number of
typical users you and their
consumption level you get
the rough size of the market
12
…sometimes it makes sense to divide markets in segments and estimate
them separately (i.e. average and typical users, women and man, people
in different age groups or segmentation by lifestyle)
Segment A
Segment B
13
…lets do a simple example. Imagine that you want to make an
application for franchised restaurants
 You pick the sample
group / area you want
to estimate i.e. city
(here Warsaw)
 You count the number
of all restaurants in the
area
 For the chosen area
you count the
franchising restaurants
 You check the population of
the whole country – here
Poland
 Assuming similar density as in
Warsaw you scale up the number of
franchised restaurants
proportionally to the population
14
…to make you better at this method imagine you want to sell
home made dog food….. First you have to estimate how many
dogs they are…..
 First you should pick
your sample – can be
your friends or
neighbors
 Next step is to calculate
how many dogs they
have
 Once you have the number also
calculate how many households they
are in the sample
 It is now enough to know how
many households there are in the
country
 And assuming similar proportion as
in your sample you scale up the
number of dogs
+
15
…with the number of dogs you just have to estimate the
number of food eaten per year by average dog…..and you get
to the size of the food market
 We have the number of dogs in the
whole country. Now we have to get
from here to the dog food
 This requires us to estimate additionally how much
food would average dog eat per year
 In this way using annual average consumption per dog and the
estimated number of dogs we are able to estimate how much food is
eaten every year in the country
+
16
Lets sum up the bottom-up approach
Bottom-up approach enables you to estimate within
one minutes the indicative size of the market
It is very good for the B2C markets
For better estimation you should segment customers
and increase the sample size
17
When to use top-down approach?
You know the size of the whole market
You are interested in a specific segment of the
market
Segment is big enough
You are thinking about niche strategy or low cost
strategy (market re-segmenting)
18
For a change lets see how it would work with top-down
approach
 You use the total market size
to get to the size of the
segment in which you are
interested
 You have to use some
sort of sample
measure
 By applying the result from
the sample you can get to
the size of the segment in
which you are interested
19
… let’s use the top-down approach to estimate the market for
science fiction books sold in Poland….
 You use the total number of books sold in your
country
 Then you go to the bookstore that belongs to the biggest
chain of bookstore and check what percentage of the
shelves are take by science fiction books
 If you use this proportion to the whole market you should
get the rough estimation of the science fiction book
segment
20
Off-line research
21
Off-line research are a must not only in physical good
businesses
Market research
Consulting
methods
Off-line research
Interviews and discussion
with (potential) customers
Being where your (potential)
customer is
Work for your (potential)
customers
Store checks of competition
Mystery shopping at
competition
On-line research
22
Off-line
interviews
23
As a part of the market research you have to define what
characteristics should have in your MVP. Off-line interviews are
perfect for this purpose
Find a problem worth
SOLVING
Find a solution that
someone will WANT TO PAY
for
This will determine the features and
functionalities of the MVP
24
Conducting face-to-face interviews is very important because
it allows you to find or confirm the existence of the problem
25
There are a few rules of interviewing to keep in mind:
• Minimum of 15 respondents
• Talking face to face
• Neutral place
• Do not record - take notes
• Prepare script of the interview
with ready questions
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
26
While interviewing have in mind the following advices:
Set the stage
Identify the
segment
Introduce the
problem
Test the
problem
Verify the
solution
Ask for
something
• Highlight the aim of the meeting
• Explain what you will talk about and what you will ask him to do
• Check which segment he/she belongs to
• Collect the demographic data and specify the segment to which belongs the
respondent
• Explain the problem
• Explain how you came across the problem and why you believe it is important
• Sometimes not to lead the witness speak generally about problems in the
respondent field or skip this stage entirely /move it to the end of the interview
• Ask the respondent to rank problems from the most important to the least
important
• Ask about other related issues / problems they think are worth mentioning
• Try to understand respondent ‘s point of view
• Discuss problems in the order of importance and how the respondent solves
them what solution he is using
• If he does not show interest this it means that there is a discrepancy between
your business model and the reality
• Ask for another meeting to discuss the solution (in the future this may be one of
the first customers) once you have something that shows
• Ask for several contacts to his friends to also perform a conversation with them
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
27
Pay attention to the signs saying that your idea is a good one:
YES
Money
Did they already
try to solve the
problem?
How interested
is he?
Nonverbal
communication
 The responder wants
to pay for your
solution right away
 The respondent tried
himself to solve this
problem
 The respondent has a strong
interest and passion in
talking about the problem
 The respondent is
animated and leaning
forward (positive body
language)
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
28
Disturbing signs that may show that the idea is not entirely
good:
NO
Focus
Did they already
try to solve the
problem?
How interested
is he?
Nonverbal
communication
 Respondent is not
focused on the
conversation and
the topic; seems
distracted
 Respondent did not
undertake any
attempts to solve
the problem
 The respondent
talks a lot about
everything but not
about the problem
 The respondent is
slouching in his chair of his
shoulders are slumped;
shows a lack of any
interest (negative boy
language
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
29
Use interviews to answer 3 important questions:
Is the problem serious?
Does the
problem affect
a large number
of people?
How the
problem has
been solved so
far?
or
or
30
You need to assess all interviews according to
standardized scores
Design assessment
criteria
Define
responses
Assign
points
 4-10 criteria  3-4 closed replies  Fore example. use
scoring system form 0 to
10 points per answer
 Come up with at least 4
criteria for scoring
respondent's behavior
during the meeting
 Come up with 3 types of
answers, to which you can
assign your observations,
for example:
• Yes
• More or less,
• No,
 or
• Yes, by itself,
• Yes, at my request,
• No
 Assign scores to answers
for example:
• Yes-10 points ,
• More or less-5 points,
• No-0 points
 Set the threshold for
judging whether it makes
sense to solve the
problem or not – should
be around 75% of
Maximal Total Score
# options
Description
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
31
If the total score is below set threshold then
you should reconsider what to do next
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
Is the total score
above the threshold?
YES
Proceed with market
research
NO
Abandon the idea
Look for a subset of
interviewee for which
the total score was
much higher
32
Below you can find some examples of evaluation criteria
allowing you to check what is the attitude of the respondent
to the problem
 Did the respondent sort by importance the problems presented
by you?
 Has the respondent been undertaking any active steps to solve
his problem?
 Was the respondent focused during the interview and engaged
in the conversation?
 Did the respondent agree to another meeting related to the
presentation solution?
 Did the respondent refer you to other people with whom you
could talk?
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
33
Using the top-down and bottom-up analysis you can
calculate for how many people the problem is interesting
enough so they can spend some money on the solution
TOP-DOWN ANALYSIS OF AVERAGE
RESTAURANT REVENUES
• The total amount spend by people in the
USA on eating in restaurants
• The percentage of the amount spend in NY
• The number of restaurants
• The calculation of revenues per one
restaurant
BOTTOM-UP ANALYSIS OF AVERAGE RESTAURANT
REVENUES
• The average number of tables in a restaurant
• The percentage of reservation of tables and
average price per table
• Multiplying the number of days in the year
(including seasonal effects)
34
Suppose you want to design a new solution that helps
people lose weight…
35
…then you should check whether people are
trying solve the problem and if yes how do they
do it?
36
The fundamental question to yourself:
Do I want to deal with this problem over the next 5 years?
37
People say what they think the other person wants to hear, so use
the 4 measures to prevent "guiding the witness" (push polling)
Do not
show your
emotions
Ask
specific
questions
Dwell on a
subject
Watch for
signals
• Avoid biased expressions like: "Do you agree with that ..." – it may lead them to the
answer you expect; ask questions in reverse, so that he has to disagree with you to show
that he cares about the problem
• When the respondent knows something about you, i.e. you're a vegetarian, he will be
inclined to positively respond to questions about the protection of the environment
• Look neutral, do not send signals, and do not suggest any point of view
• We get an honest answer when we put the respondent in uncomfortable situations, for
example ask for prepayment of 100 EUR
• The more specific questions, the more realistic answer
• Ask about friends. Do not ask him if he "smokes pot", but "what percentage of your
friends are doing it" – reflects his approach
• Ask 5 times the question "why"
• You can interview accompanied by a partner who will follow body language of
respondents; maybe something causes nervous ticks and indicates a sense of discomfort
• Columbo-style question: unexpected question that asked after you had already said
goodbye to the respondent. In this way, you can surprise and confirm or deny something
important, what has been said earlier in an interview
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
38
Where you can find respondents?
• You can watch someone that does not necessarily
have to reply with the same;
• Do not spam these people, only when they
mentioned about an interesting question you can
speak to them;
• It allows you to reach a large demographic data;
• You do not have to have their in your contacts;
• There are specific groups you can join. They focus on
specific topics
• All contacts are mutual
• By searching you can specify the size of the market,
i.e. restaurants, because they have own pages
• You can also join groups and invite them to
participate in the tests or interview
Family, Friends, Neighbours
Where Type of business Comments
Twitter
Linkedin
Facebook
• Limited number of respondents;
• Small differences in demographics;
• The answers may be subjective;
• On the other hand, you can count on friends for
honest answers
• Mobile application
• Site media
• Retail
• B2C Products
• B2C Services
• UGC
• SaaS
• SaaS
• Site media
• B2B Services
• B2B Products
• B2B
• Mobile application
• SaaS
• Site media
• all
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
39
You will learn more on interviewing customers from the
books below. Click on the cover of the book to get to the
Kindle version
Click for more Click for moreClick for more Click for more
40
Being where
your customer is
41
Typical day
 6-7 AM
Home: wake up,
washing up, dressing
up, breakfast
 7-8 AM
Transport : going to the
university (by bus, train,
tram or subway)
 8 AM-2 PM
University: classes at
the university
 2-5 PM
Cafe: meeting with
friends from the
university;
determine what
needs to be done in
projects and dividing
responsibilities
 5-6 PM
Transport: homecoming
 6-8 PM
Home: free time,
relaxing at home
 8-11 PM
Home: doing
homework, projects
42
TT W S S
T F S S
T TM W F
TW F S S
T W FT S S
M
Additional activities
T
M W
T F S S
M
What When How long Why
Babysitter
Dance
Driving licence
Travel
Student group
Party
M
SS
T
F
TM W
2, 3 times a
month
once a week
10-12 times a
month
once a quarter
once a week
once every two
weeks
money
health and fun
Personal
development
relax
learn, experience, fun
fun
43
Perfect place for students advertising
fitness cafe billboard newspapers
subway bulletin board at the
university
club
44
Work for your
customers
45
Imagine that you want to open your own restaurant. What
could you learn by working for a well established restaurant?
• What does the consumer like, prefer, buy,
order?
• How old are they, what gender are they?
• To which social group do they belong?
• What is the customer segment?
• How many consumers visit the restaurant
daily?
• How many consumers stay inside and order
the food?
• How big is the conversion rate?
• How long does the restaurant prepare meals?
• How much do ingredients cost?
• How big is the restaurant?
• How many clients can fit in the restaurant /
What is the capacity of the restaurant?
46
Imagine that in order to prepare for your SaaS startup you
decided to do some consulting and learn more about your
clients
• How serious is the problem?
• How the problem has been solved so
far?
• How much does it cost him?
• Are there any competitors on the
market?
• What solutions do competitors offer?
• What about the infrastructure?
• Is there a need to install additional
equipment?
• How much can they spend on
investment?
• What is the payback period of the
proposed solution?
• What is the depreciation of the
proposed solution in time?
47
Store checks
48
5 10 15 5 35
Number of SKU
Location:
Number of salesmen:
Competition: Saturn, Karen Notebook, iSpot
Size:
Number of SKU
Presented products
Structure of the exposition (%)
=100
PC Laptop Printers Phones Monitors Photos Others
-
6
E
+
Knowledge of
the product
offer
Sales skills
How active
salesmen are
Behavior
Usage of
marketing
materials
Level of service
• Salesman was able to respond to the request placed by the customer and it seemed that he had
deep knowledge of the products
• Salesman did not try to figure out what price level I was interested in. Surprisingly was proposing
always the cheapest products
• Salesman did not show the full potential range of benefits coming from the purchase (price of the
software was for some models incl. in the price, possibility to buy in installment)
• Salesman was very enthusiastic during the talk
• Salesman did not try to convince that the price is good and did not try to understand why I leave
without the purchase
• Salesmen did not try to do some cross selling or up-selling to other customers who purchased the
base products
Shopping mall
70 sq m
2
Other observations
Here you can see an example of store check for B2C – a shop
selling computers
Laptops:
Pendrives: Firma No. of pieces
Cool drive
Kingston
Toshiba
6
1
1
Brand No. of pieces
HP
Toshiba
Asus
Sony
Samsung
Lenovo
Fujitsu
10
11
5
3
2
1
1
49
10 5 85 00000
Store profile
Location:
Rating of the location:
No. of salesmen
Competition level:
Size:
Number of SKU
Presented products
Structure of the exposition (%)
OSB Others
=100
-
6
E
+
Ability to adjust the product to the
customer
Technical knowledge and
knowledge on the application
of the products
Ocena pracowników składu
Center
1
500 m2
4
Service level
3
Plywood
Chipboard
MDF i HDF
OSB
Plank
Veneer
Countertops
Furniture fronts
Fittings
Other
0
0
0
2
0
0
0
0
1
1
Number of competitors in
radius of 3 km
3
Fittings
No. of SKU
Lead time
Home delivery
Other services offered
Shop with fittings
Limit on receivables
Payment terms
Other non standard products
immediate
n/a
no
Yes
n/a
n/a
Building materials
Here you can see an example of store check in B2B sector
for a company selling wooden semi-products
Sales skills
How active
salesmen are
Knowledge of
the product
offer
50
More developed version of the market research with examples
and helpful files you will find in our on-line course on Udemy
Click to check my course
51
Mystery shopping
52
Mystery shopping has 3 stages and concentrates more on the
customer experience
Preparation of the visit
an choice of channels
Visit
Data analysis
and conclusions
 Prepare the scenario of the
visit with written questions
 Chose recording tools (hidden
cameras, phone, pen and
pencil)
 Make a list of things you want
to collect (marketing
materials, offers, contact
details)
 Chose channels and the
sample
 Execute the visit according to
the plan and collect data
 Analyze gathered data
 Prepare summary
 Try to map the customer
service process from what
you have gathered
 Analyze the offers and
materials to understand the
legal construction
53
On-line research
54
The last group of on-line tools puts at your disposal numerous
solutions giving you in-depth knowledge of your competitors and
markets
Market
Research
Consulting
methods
Off-line
research
On-line
research
On-line interviews
Facebook Audience Insight
Customers profiles on
facebook/instagram/pinterest
Keyword Planner for Google AdWords
SimilarWeb
Branch sites and reports
Slideshare and Youtube
Markets for applications
55
Facebook Audience
Insight
56
Facebook Audience Insight is a module available to Advertisors
but can be also used for market research
57
More developed version of the market research with examples
and helpful files you will find in our on-line course on Udemy
Click to check my course
58
What enables you Facebook Audience Insight
You can choose any segment on the basis of
demographics, income, behavior, interests and other
criteria
For the chosen segment you can see how active and
in what way do they act on facebook, how much do
they spend (relatively), what do they buy, what are
the household characteristics for the chosen
segment, status and what are their interest (what
pages do they like)
59
Customer profile on
facebook
60
You can learn a lot by looking at your potential customers
profiles
 Try to figure out what language use your target
group, how do they communicate and with
whom (family, friends from school, friends
sharing their passion etc.)
 Visual language (photos, images) are as
important
Language and
the way they
express
themselves
Description Where to look for it?
 You can check what people are interested in
and what kind of communication from brands
/companies they react toLikes
Activity
 Comments
 Staff put on the timeline
 Photos
 Pages liked
 Liked posts
 You can understand better what do they do in
real life
 Comments
 Staff put on the timeline
 Photos
 Events
61
Keyword Planner
62
You can learn a lot by having a look at the searches fed into
the google
 You can see for what people were searching
and how many searches there were
 Size of the market (in terms of people
interested or rough number of transaction) can
be estimated on the basis of it
Size of the
market
Description Tips
 Key word planner gives you estimate how much
you would have to pay per click for a given
keyword
 If you know how much paid traffic you want to
attract you can estimate the needed budget for
google AdWords (ads showing when people
search)
Potential
money you
would have to
spend on
marketing
 Use many different phrases
 Look what keywords pop-up
 Look how many clicks there were per
keyword
 Look at the price per click but also look for
the number of searches performed. Ideally
you would want to have a lot of searches
at lowest possible cost
 AdWords gives some estimation on the
level of competition
 Sometimes it is not that optimal (for
conversion purposes) to go for Page 1 in
searches. Those willing to go beyond Page
1 are more likely to convert
 Always when thinking about the marketing
budget have in mind how much you
benefit from a customer. CAC should be
much lower than LTV
63
…here you have an example of key words for t-shirts in USA
64
More developed version of the market research with examples
and helpful files you will find in our on-line course on Udemy
Click to check my course
65
SimilarWeb
66
SimilarWeb enables you to spy on your competitor and learn
where they get the traffic from as well as what is the
engagement of their customers
 Estimated Visits
 Time On Site
 Page Views per visit
 Bounce Rate
 Favorites subdomains
Customer
engagement
What you can learn Application
 Estimate how much attention you can get
and what level is achieved by competition
 Traffic source (direct, referral, mail, social, etc.)
 Countries where they come from
 Referring sites
 Top destinations
 Detailed analysis of search traffic, social and
advertising
Where
customers
come from
 Guess marketing and sales strategies used
by others
 Estimate their cost
 Audience interests
 Similar sites
 Connected / similar mobile ads
Audience
analysis
 Analyze specific group of people i.e.
customers of specific company
 Figure out where you customer gather and
how you can approach them
67
…here you have an example of results of www.wp.pl – Polish
media site
68
More developed version of the market research with examples
and helpful files you will find in our on-line course on Udemy
Click to check my course
69
Slideshare and Youtube
70
Extremely useful can prove Slideshare and Youtube. You can
find thanks to them many useful materials….
 B2B
 SaaS
 2-sided markets
 E-commerce
 Retail
 SMCG
 Media site
Type of
business for
which it is
useful
 Strategy summaries
 Case study analyses
 Annual reports
 Materials used in content marketing
 Sales pitch to customers (B2B)
 Comparison of competition
 Market reports (size of the market, main
players)
 Sales process
 Examples of marketing materials
What you can
find there
 SMCG / FMCG
 E-commerce
 Mobile applications
 Media site
 B2B
 Retail
 SaaS
 2-sided markets
 B2C Services
 Interviews with CEOs
 “How to use it” movies
 Movies done by users – praising,
comparing or using the product
 Materials from conferences where product
or strategy is discussed
 Marketing movies and commercials
 Sometimes mystery shopping movies
71
Markets for application
72
..if you are into mobile applications or B2C markets you
should have a look at mobile application markets
Which
markets you
should have a
look at
 How many users have the applications
 How the application is perceived by customers
 What is working well and what is not in the
application
 Is it still used to the same extent
What you can
learn from the
markets
 Nr of downloads
 Average rating
 Nr of comments (positive and negative –
calculated separately)
 Dates of comments – if you have a lot of
comments and the beginning and
afterwards nothing it may mean it is not
used to such extent anymore
Markets KPI
 Apps on the market:
 Amazon App Store: 330 K
 Google Play: 1 500 K
 Windows Phone Store: 300 K
 App Store (Apple): 1 400 K
73
More developed version of the market research with examples
and helpful files you will find in our on-line course on Udemy
Click to check my course
74
If you sign in to our newsletter you will get a package of 18
useful tools. Click on the picture below to go to our site
75
Check my extensive presentation on productivity hacks to see
how you can me 10x more productive
Management consultant
productivity hacks
How to be lazy and still get things done
presentation
76
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them properly
Business models
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How to conduct market research in startups and small firms?

  • 1. 1 Market research and spying on competition Guide for startups and small businesses
  • 3. 3 Market research can be divided into 3 main categories Market research Consulting methods Off-line research On-line research
  • 4. 4 The simplest methods are used by consultants and only require a bit of imagination Market research Consulting methods Top-down Bottom-up Off-line research On-line research
  • 5. 5 Off-line research are a must not only in physical good businesses Market research Consulting methods Off-line research Interviews and discussion with (potential) customers Being where your (potential) customer is Work for your (potential) customers Store checks of competition Mystery shopping at competition On-line research
  • 6. 6 The last group of on-line tools puts at your disposal numerous solutions giving you in-depth knowledge of your competitors and markets Market Research Consulting methods Off-line research On-line research On-line interviews Facebook Audience Insight Customers profiles on facebook/instagram/pinterest Keyword Planner for Google AdWords SimilarWeb Branch sites and reports Slideshare and Youtube Markets for applications
  • 7. 7 Type of markets Existing Better Product Resegmented Niche Strategy Low cost New Market New users New product Some methods are more useful on a specific type of markets…  Mainly consulting methods  Off-line and on-line research of customers for proxy or similar markets  Off-line and on-line research of customers for similar business models  Off-line and on-line research of customers (chosen segments) and competition  Off-line and on-line research of customers and companies on similar / proxy markets  Some usage of consulting methods  Off-line research of customers and competition  On-line research of customers and competition
  • 8. 8 More developed version of the market research with examples and helpful files you will find in our on-line course on Udemy Click to check my course
  • 10. 10 The simplest methods are used by consultants and only require a bit of imagination Market research Consulting methods Top-down Bottom-up Off-line research On-line research
  • 11. 11 …the one you will for sure use is bottom-up approach where you go from single (typical) consumer to market research  First you should imagine the typical users  Then you should try to guess his consumption level  By estimating the number of typical users you and their consumption level you get the rough size of the market
  • 12. 12 …sometimes it makes sense to divide markets in segments and estimate them separately (i.e. average and typical users, women and man, people in different age groups or segmentation by lifestyle) Segment A Segment B
  • 13. 13 …lets do a simple example. Imagine that you want to make an application for franchised restaurants  You pick the sample group / area you want to estimate i.e. city (here Warsaw)  You count the number of all restaurants in the area  For the chosen area you count the franchising restaurants  You check the population of the whole country – here Poland  Assuming similar density as in Warsaw you scale up the number of franchised restaurants proportionally to the population
  • 14. 14 …to make you better at this method imagine you want to sell home made dog food….. First you have to estimate how many dogs they are…..  First you should pick your sample – can be your friends or neighbors  Next step is to calculate how many dogs they have  Once you have the number also calculate how many households they are in the sample  It is now enough to know how many households there are in the country  And assuming similar proportion as in your sample you scale up the number of dogs +
  • 15. 15 …with the number of dogs you just have to estimate the number of food eaten per year by average dog…..and you get to the size of the food market  We have the number of dogs in the whole country. Now we have to get from here to the dog food  This requires us to estimate additionally how much food would average dog eat per year  In this way using annual average consumption per dog and the estimated number of dogs we are able to estimate how much food is eaten every year in the country +
  • 16. 16 Lets sum up the bottom-up approach Bottom-up approach enables you to estimate within one minutes the indicative size of the market It is very good for the B2C markets For better estimation you should segment customers and increase the sample size
  • 17. 17 When to use top-down approach? You know the size of the whole market You are interested in a specific segment of the market Segment is big enough You are thinking about niche strategy or low cost strategy (market re-segmenting)
  • 18. 18 For a change lets see how it would work with top-down approach  You use the total market size to get to the size of the segment in which you are interested  You have to use some sort of sample measure  By applying the result from the sample you can get to the size of the segment in which you are interested
  • 19. 19 … let’s use the top-down approach to estimate the market for science fiction books sold in Poland….  You use the total number of books sold in your country  Then you go to the bookstore that belongs to the biggest chain of bookstore and check what percentage of the shelves are take by science fiction books  If you use this proportion to the whole market you should get the rough estimation of the science fiction book segment
  • 21. 21 Off-line research are a must not only in physical good businesses Market research Consulting methods Off-line research Interviews and discussion with (potential) customers Being where your (potential) customer is Work for your (potential) customers Store checks of competition Mystery shopping at competition On-line research
  • 23. 23 As a part of the market research you have to define what characteristics should have in your MVP. Off-line interviews are perfect for this purpose Find a problem worth SOLVING Find a solution that someone will WANT TO PAY for This will determine the features and functionalities of the MVP
  • 24. 24 Conducting face-to-face interviews is very important because it allows you to find or confirm the existence of the problem
  • 25. 25 There are a few rules of interviewing to keep in mind: • Minimum of 15 respondents • Talking face to face • Neutral place • Do not record - take notes • Prepare script of the interview with ready questions Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  • 26. 26 While interviewing have in mind the following advices: Set the stage Identify the segment Introduce the problem Test the problem Verify the solution Ask for something • Highlight the aim of the meeting • Explain what you will talk about and what you will ask him to do • Check which segment he/she belongs to • Collect the demographic data and specify the segment to which belongs the respondent • Explain the problem • Explain how you came across the problem and why you believe it is important • Sometimes not to lead the witness speak generally about problems in the respondent field or skip this stage entirely /move it to the end of the interview • Ask the respondent to rank problems from the most important to the least important • Ask about other related issues / problems they think are worth mentioning • Try to understand respondent ‘s point of view • Discuss problems in the order of importance and how the respondent solves them what solution he is using • If he does not show interest this it means that there is a discrepancy between your business model and the reality • Ask for another meeting to discuss the solution (in the future this may be one of the first customers) once you have something that shows • Ask for several contacts to his friends to also perform a conversation with them Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  • 27. 27 Pay attention to the signs saying that your idea is a good one: YES Money Did they already try to solve the problem? How interested is he? Nonverbal communication  The responder wants to pay for your solution right away  The respondent tried himself to solve this problem  The respondent has a strong interest and passion in talking about the problem  The respondent is animated and leaning forward (positive body language) Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  • 28. 28 Disturbing signs that may show that the idea is not entirely good: NO Focus Did they already try to solve the problem? How interested is he? Nonverbal communication  Respondent is not focused on the conversation and the topic; seems distracted  Respondent did not undertake any attempts to solve the problem  The respondent talks a lot about everything but not about the problem  The respondent is slouching in his chair of his shoulders are slumped; shows a lack of any interest (negative boy language Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  • 29. 29 Use interviews to answer 3 important questions: Is the problem serious? Does the problem affect a large number of people? How the problem has been solved so far? or or
  • 30. 30 You need to assess all interviews according to standardized scores Design assessment criteria Define responses Assign points  4-10 criteria  3-4 closed replies  Fore example. use scoring system form 0 to 10 points per answer  Come up with at least 4 criteria for scoring respondent's behavior during the meeting  Come up with 3 types of answers, to which you can assign your observations, for example: • Yes • More or less, • No,  or • Yes, by itself, • Yes, at my request, • No  Assign scores to answers for example: • Yes-10 points , • More or less-5 points, • No-0 points  Set the threshold for judging whether it makes sense to solve the problem or not – should be around 75% of Maximal Total Score # options Description Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  • 31. 31 If the total score is below set threshold then you should reconsider what to do next Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya Is the total score above the threshold? YES Proceed with market research NO Abandon the idea Look for a subset of interviewee for which the total score was much higher
  • 32. 32 Below you can find some examples of evaluation criteria allowing you to check what is the attitude of the respondent to the problem  Did the respondent sort by importance the problems presented by you?  Has the respondent been undertaking any active steps to solve his problem?  Was the respondent focused during the interview and engaged in the conversation?  Did the respondent agree to another meeting related to the presentation solution?  Did the respondent refer you to other people with whom you could talk? Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  • 33. 33 Using the top-down and bottom-up analysis you can calculate for how many people the problem is interesting enough so they can spend some money on the solution TOP-DOWN ANALYSIS OF AVERAGE RESTAURANT REVENUES • The total amount spend by people in the USA on eating in restaurants • The percentage of the amount spend in NY • The number of restaurants • The calculation of revenues per one restaurant BOTTOM-UP ANALYSIS OF AVERAGE RESTAURANT REVENUES • The average number of tables in a restaurant • The percentage of reservation of tables and average price per table • Multiplying the number of days in the year (including seasonal effects)
  • 34. 34 Suppose you want to design a new solution that helps people lose weight…
  • 35. 35 …then you should check whether people are trying solve the problem and if yes how do they do it?
  • 36. 36 The fundamental question to yourself: Do I want to deal with this problem over the next 5 years?
  • 37. 37 People say what they think the other person wants to hear, so use the 4 measures to prevent "guiding the witness" (push polling) Do not show your emotions Ask specific questions Dwell on a subject Watch for signals • Avoid biased expressions like: "Do you agree with that ..." – it may lead them to the answer you expect; ask questions in reverse, so that he has to disagree with you to show that he cares about the problem • When the respondent knows something about you, i.e. you're a vegetarian, he will be inclined to positively respond to questions about the protection of the environment • Look neutral, do not send signals, and do not suggest any point of view • We get an honest answer when we put the respondent in uncomfortable situations, for example ask for prepayment of 100 EUR • The more specific questions, the more realistic answer • Ask about friends. Do not ask him if he "smokes pot", but "what percentage of your friends are doing it" – reflects his approach • Ask 5 times the question "why" • You can interview accompanied by a partner who will follow body language of respondents; maybe something causes nervous ticks and indicates a sense of discomfort • Columbo-style question: unexpected question that asked after you had already said goodbye to the respondent. In this way, you can surprise and confirm or deny something important, what has been said earlier in an interview Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  • 38. 38 Where you can find respondents? • You can watch someone that does not necessarily have to reply with the same; • Do not spam these people, only when they mentioned about an interesting question you can speak to them; • It allows you to reach a large demographic data; • You do not have to have their in your contacts; • There are specific groups you can join. They focus on specific topics • All contacts are mutual • By searching you can specify the size of the market, i.e. restaurants, because they have own pages • You can also join groups and invite them to participate in the tests or interview Family, Friends, Neighbours Where Type of business Comments Twitter Linkedin Facebook • Limited number of respondents; • Small differences in demographics; • The answers may be subjective; • On the other hand, you can count on friends for honest answers • Mobile application • Site media • Retail • B2C Products • B2C Services • UGC • SaaS • SaaS • Site media • B2B Services • B2B Products • B2B • Mobile application • SaaS • Site media • all Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  • 39. 39 You will learn more on interviewing customers from the books below. Click on the cover of the book to get to the Kindle version Click for more Click for moreClick for more Click for more
  • 41. 41 Typical day  6-7 AM Home: wake up, washing up, dressing up, breakfast  7-8 AM Transport : going to the university (by bus, train, tram or subway)  8 AM-2 PM University: classes at the university  2-5 PM Cafe: meeting with friends from the university; determine what needs to be done in projects and dividing responsibilities  5-6 PM Transport: homecoming  6-8 PM Home: free time, relaxing at home  8-11 PM Home: doing homework, projects
  • 42. 42 TT W S S T F S S T TM W F TW F S S T W FT S S M Additional activities T M W T F S S M What When How long Why Babysitter Dance Driving licence Travel Student group Party M SS T F TM W 2, 3 times a month once a week 10-12 times a month once a quarter once a week once every two weeks money health and fun Personal development relax learn, experience, fun fun
  • 43. 43 Perfect place for students advertising fitness cafe billboard newspapers subway bulletin board at the university club
  • 45. 45 Imagine that you want to open your own restaurant. What could you learn by working for a well established restaurant? • What does the consumer like, prefer, buy, order? • How old are they, what gender are they? • To which social group do they belong? • What is the customer segment? • How many consumers visit the restaurant daily? • How many consumers stay inside and order the food? • How big is the conversion rate? • How long does the restaurant prepare meals? • How much do ingredients cost? • How big is the restaurant? • How many clients can fit in the restaurant / What is the capacity of the restaurant?
  • 46. 46 Imagine that in order to prepare for your SaaS startup you decided to do some consulting and learn more about your clients • How serious is the problem? • How the problem has been solved so far? • How much does it cost him? • Are there any competitors on the market? • What solutions do competitors offer? • What about the infrastructure? • Is there a need to install additional equipment? • How much can they spend on investment? • What is the payback period of the proposed solution? • What is the depreciation of the proposed solution in time?
  • 48. 48 5 10 15 5 35 Number of SKU Location: Number of salesmen: Competition: Saturn, Karen Notebook, iSpot Size: Number of SKU Presented products Structure of the exposition (%) =100 PC Laptop Printers Phones Monitors Photos Others - 6 E + Knowledge of the product offer Sales skills How active salesmen are Behavior Usage of marketing materials Level of service • Salesman was able to respond to the request placed by the customer and it seemed that he had deep knowledge of the products • Salesman did not try to figure out what price level I was interested in. Surprisingly was proposing always the cheapest products • Salesman did not show the full potential range of benefits coming from the purchase (price of the software was for some models incl. in the price, possibility to buy in installment) • Salesman was very enthusiastic during the talk • Salesman did not try to convince that the price is good and did not try to understand why I leave without the purchase • Salesmen did not try to do some cross selling or up-selling to other customers who purchased the base products Shopping mall 70 sq m 2 Other observations Here you can see an example of store check for B2C – a shop selling computers Laptops: Pendrives: Firma No. of pieces Cool drive Kingston Toshiba 6 1 1 Brand No. of pieces HP Toshiba Asus Sony Samsung Lenovo Fujitsu 10 11 5 3 2 1 1
  • 49. 49 10 5 85 00000 Store profile Location: Rating of the location: No. of salesmen Competition level: Size: Number of SKU Presented products Structure of the exposition (%) OSB Others =100 - 6 E + Ability to adjust the product to the customer Technical knowledge and knowledge on the application of the products Ocena pracowników składu Center 1 500 m2 4 Service level 3 Plywood Chipboard MDF i HDF OSB Plank Veneer Countertops Furniture fronts Fittings Other 0 0 0 2 0 0 0 0 1 1 Number of competitors in radius of 3 km 3 Fittings No. of SKU Lead time Home delivery Other services offered Shop with fittings Limit on receivables Payment terms Other non standard products immediate n/a no Yes n/a n/a Building materials Here you can see an example of store check in B2B sector for a company selling wooden semi-products Sales skills How active salesmen are Knowledge of the product offer
  • 50. 50 More developed version of the market research with examples and helpful files you will find in our on-line course on Udemy Click to check my course
  • 52. 52 Mystery shopping has 3 stages and concentrates more on the customer experience Preparation of the visit an choice of channels Visit Data analysis and conclusions  Prepare the scenario of the visit with written questions  Chose recording tools (hidden cameras, phone, pen and pencil)  Make a list of things you want to collect (marketing materials, offers, contact details)  Chose channels and the sample  Execute the visit according to the plan and collect data  Analyze gathered data  Prepare summary  Try to map the customer service process from what you have gathered  Analyze the offers and materials to understand the legal construction
  • 54. 54 The last group of on-line tools puts at your disposal numerous solutions giving you in-depth knowledge of your competitors and markets Market Research Consulting methods Off-line research On-line research On-line interviews Facebook Audience Insight Customers profiles on facebook/instagram/pinterest Keyword Planner for Google AdWords SimilarWeb Branch sites and reports Slideshare and Youtube Markets for applications
  • 56. 56 Facebook Audience Insight is a module available to Advertisors but can be also used for market research
  • 57. 57 More developed version of the market research with examples and helpful files you will find in our on-line course on Udemy Click to check my course
  • 58. 58 What enables you Facebook Audience Insight You can choose any segment on the basis of demographics, income, behavior, interests and other criteria For the chosen segment you can see how active and in what way do they act on facebook, how much do they spend (relatively), what do they buy, what are the household characteristics for the chosen segment, status and what are their interest (what pages do they like)
  • 60. 60 You can learn a lot by looking at your potential customers profiles  Try to figure out what language use your target group, how do they communicate and with whom (family, friends from school, friends sharing their passion etc.)  Visual language (photos, images) are as important Language and the way they express themselves Description Where to look for it?  You can check what people are interested in and what kind of communication from brands /companies they react toLikes Activity  Comments  Staff put on the timeline  Photos  Pages liked  Liked posts  You can understand better what do they do in real life  Comments  Staff put on the timeline  Photos  Events
  • 62. 62 You can learn a lot by having a look at the searches fed into the google  You can see for what people were searching and how many searches there were  Size of the market (in terms of people interested or rough number of transaction) can be estimated on the basis of it Size of the market Description Tips  Key word planner gives you estimate how much you would have to pay per click for a given keyword  If you know how much paid traffic you want to attract you can estimate the needed budget for google AdWords (ads showing when people search) Potential money you would have to spend on marketing  Use many different phrases  Look what keywords pop-up  Look how many clicks there were per keyword  Look at the price per click but also look for the number of searches performed. Ideally you would want to have a lot of searches at lowest possible cost  AdWords gives some estimation on the level of competition  Sometimes it is not that optimal (for conversion purposes) to go for Page 1 in searches. Those willing to go beyond Page 1 are more likely to convert  Always when thinking about the marketing budget have in mind how much you benefit from a customer. CAC should be much lower than LTV
  • 63. 63 …here you have an example of key words for t-shirts in USA
  • 64. 64 More developed version of the market research with examples and helpful files you will find in our on-line course on Udemy Click to check my course
  • 66. 66 SimilarWeb enables you to spy on your competitor and learn where they get the traffic from as well as what is the engagement of their customers  Estimated Visits  Time On Site  Page Views per visit  Bounce Rate  Favorites subdomains Customer engagement What you can learn Application  Estimate how much attention you can get and what level is achieved by competition  Traffic source (direct, referral, mail, social, etc.)  Countries where they come from  Referring sites  Top destinations  Detailed analysis of search traffic, social and advertising Where customers come from  Guess marketing and sales strategies used by others  Estimate their cost  Audience interests  Similar sites  Connected / similar mobile ads Audience analysis  Analyze specific group of people i.e. customers of specific company  Figure out where you customer gather and how you can approach them
  • 67. 67 …here you have an example of results of www.wp.pl – Polish media site
  • 68. 68 More developed version of the market research with examples and helpful files you will find in our on-line course on Udemy Click to check my course
  • 70. 70 Extremely useful can prove Slideshare and Youtube. You can find thanks to them many useful materials….  B2B  SaaS  2-sided markets  E-commerce  Retail  SMCG  Media site Type of business for which it is useful  Strategy summaries  Case study analyses  Annual reports  Materials used in content marketing  Sales pitch to customers (B2B)  Comparison of competition  Market reports (size of the market, main players)  Sales process  Examples of marketing materials What you can find there  SMCG / FMCG  E-commerce  Mobile applications  Media site  B2B  Retail  SaaS  2-sided markets  B2C Services  Interviews with CEOs  “How to use it” movies  Movies done by users – praising, comparing or using the product  Materials from conferences where product or strategy is discussed  Marketing movies and commercials  Sometimes mystery shopping movies
  • 72. 72 ..if you are into mobile applications or B2C markets you should have a look at mobile application markets Which markets you should have a look at  How many users have the applications  How the application is perceived by customers  What is working well and what is not in the application  Is it still used to the same extent What you can learn from the markets  Nr of downloads  Average rating  Nr of comments (positive and negative – calculated separately)  Dates of comments – if you have a lot of comments and the beginning and afterwards nothing it may mean it is not used to such extent anymore Markets KPI  Apps on the market:  Amazon App Store: 330 K  Google Play: 1 500 K  Windows Phone Store: 300 K  App Store (Apple): 1 400 K
  • 73. 73 More developed version of the market research with examples and helpful files you will find in our on-line course on Udemy Click to check my course
  • 74. 74 If you sign in to our newsletter you will get a package of 18 useful tools. Click on the picture below to go to our site
  • 75. 75 Check my extensive presentation on productivity hacks to see how you can me 10x more productive Management consultant productivity hacks How to be lazy and still get things done presentation
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