Without some solid research for your startup, you might be setting yourself up for failure from the get-go. And no, the process is about much more than boring spreadsheets or snooze-fest surveys these days. Market research for startups could be the element that turns your gut feelings into grand slams.
We’ll walk you through what market research for your small business means and how to wield it like a pro as soon as you start landing customers.
What Is Market Research?
Market research is a process that involves gathering, evaluating and interpreting data about your industry and target market. In other words, it is how businesses find information on their target crowd and piece it all together. Picture it like your company’s crystal ball—it’s how you peek into what your customers are craving, what’s swirling in their heads and where the market’s headed.
When you’re doing market research, you’re basically doing detective work. This includes looking for clues about what your potential customers need, determining what attracts them and finding out what trends are about to blow up—before anyone else does.
Here’s the kicker, though—market research is what makes those wild guesses in business a thing of the past. No more crossing your fingers and hoping for the best. Instead, you’re working with hard facts and real data. It’s the difference between chucking darts in the dark and nailing the bullseye with your eyes wide open.
For startups, this is pure gold. Figuring out what your people want before hitting “go” can steer you clear of those wallet-draining screw-ups. Plus, it’s your ticket to spotting those sneaky market gaps your competition’s too busy napping to notice.
Related: How to Spot a Business Opportunity
Why Is Market Research So Important?
Modern startups can’t afford to skip market research—it’s the difference between making smart moves and taking wild guesses. Smart startup founders know that understanding their market inside and out gives them a major edge when making key decisions.
Think of market research as your business’s safety net. It helps you spot potential problems before they become costly mistakes, and shows you hidden opportunities. When you’re armed with solid data about what customers want (not just what you think they want), you’re less likely to waste startup cash on the wrong products or services.
Market research helps you find your right audience, track what’s hot in your industry and keep tabs on what your competitors are up to. Ultimately, you can see where to position your business for maximum impact.
Plus, when you’re making decisions based on real data instead of hunches, you’re setting yourself up for stronger growth and better results in your startup.
How to Do Market Research for Startups
The following six steps should guide you on how to go about market research if you’re a small business or startup:
1. Set Clear Research Goals
Start by pinpointing exactly what you want to learn. Are you testing whether people will buy your product? Checking out what prices work best? Or maybe seeing how big your market could be? Get specific—it can make the whole process way more useful.
2. Find Your People
Define your target market based on factors like age, lifestyle, income and buying habits. If you’re building an app for remote workers, for example, you’re not just looking at “people who work from home” but maybe “freelancers who rely on productivity tools.” The more specific you get, the better your insights will be. Guessing won’t help you because a huge section of people will never be your customers anyway.
Start with people already using similar products or those frustrated by current options. Doing so will ensure you’re talking to the right audience instead of wasting time on people who will never do business with you.
3. Pick Your Research Tools
Mix it up with different ways to gather info. You could run online surveys (SurveyMonkey is great for this), chat with potential customers one-on-one or get a group together for feedback. Don’t forget about looking at industry reports and market stats too—sometimes the info you need is already out there. Sites like Statista and Pew Research Center offer data across various industries and consumer behavior stats, respectively.
4. Gather Your Data
Next, it’s time to roll up your sleeves and collect data. Run your surveys, do your interviews and keep an eye on trends using tools like Google Trends (which we’ll still mention later in this article). Additionally, make it easy for people to give you feedback, and you’ll get better results.
When framing questions to potential customers, avoid vague ones like “Would you use this product?” and focus on specific ones like “What would make you shy away from buying this product?” or “What would you like to change to make this product better?”
5. Make Sense of It All
Clean up your data, put it into charts or graphs that make sense and look for patterns in how people behave and what they want. This is where the magic happens—turning numbers and notes into actual insights.
6. Put It to Work
Good market research doesn’t just sit in a document—it should guide your next steps. If your findings show a gap in the market, tweak your product to fill it. If customers hesitate due to pricing, test different pricing models or highlight your product’s unique value. The best businesses adapt based on real data, not assumptions. Keep testing, refining and adjusting as you grow.
Related: Try This Brainstorming Exercise to Come Up with Better Business Ideas
Market Research Examples
Let’s look at some real-world examples of how startups nailed their market research. We can learn a thing or two from these examples.
1. Casper
Casper, the mattress-in-a-box crew, didn’t just guess why people hate mattress shopping—they dug in like sleep-deprived detectives. They ran surveys, stalked online forums, and even chatted up folks in stores to find out that buyers were fed up with pushy salespeople and confusing options. Armed with that, they built a direct-to-consumer model with a 100-night trial that hit the bullseye alongside free shipping of mattresses in surprisingly small boxes—$100 million in sales by year two.
2. Glossier
Glossier’s Emily Weiss started with her blog Into The Gloss, where she polled readers, dissected comments, and tracked trends to learn they craved simple, Instagram-worthy products over heavy-duty glam. The result was a $1.2 billion valuation for the brand by 2022, built on products that fans wanted.
3. Allbirds
Allbirds, the eco-sneaker startup surveyed potential buyers, prototyped with wool obsessively, and leaned on focus groups to confirm people wanted sustainable shoes that didn’t suck to wear. Launched in 2016, they hit a valuation of $1.4 billion by 2019 and over $219 million in revenue by 2021— proving green can mean gold.
4. Duolingo
Duolingo sniffed out the demand for learning languages. Founders Luis von Ahn and Severin Hacker ran early tests, surveyed users and watched how people ditched pricey software like Rosetta Stone for bite-sized, gamified lessons. The result was a free app that hooked 500 million users by 2023, with 83 million monthly actives—all because they made learning feel like Candy Crush.
5. Warby Parker
Warby Parker’s founders proved that everyone hated overpriced glasses. They hit college campuses, ran surveys, and tested home try-ons to learn folks wanted cheap, stylish specs without the LensCrafters markup. Launched in 2010 with $2,500, they hit an estimated $100 million in sales by 2015, disrupting optometry in record time.
6. Away
In 2015, Away co-founders Steph Korey and Jen Rubio scoured social media, spotting complaints about suitcases that weren’t stylish or practical. Taking that feedback, they designed a sleek, carry-on with a built-in charger. The idea originally stemmed from their frustrations with luggage. Their pre-order launch sold out fast, proving they had created exactly what travelers were looking for.
7. Beauty Insider
Sephora’s Beauty Insider program shows what happens when you listen to your customers. Their research showed that makeup fans wanted more than just points—they wanted a community. The result? A loyalty program that now has 34 million members who can’t get enough of their personalized recommendations and exclusive events.
Market Research Vs. Idea Validation
Market research and idea validation might sound similar, but they serve different purposes in your startup journey. The former is more about getting to know your audience—their needs, wants, and pain points. On the other hand, idea validation is more like a test drive or trial for your business concept.
While market research tells you what people want, business idea validation checks if your specific solution hits the mark. For example, you might know people want healthy snacks through market research, but you’ll need to validate whether they’d actually buy your cricket-based protein bars.
The two work hand in hand. Your market research lays the groundwork by showing what problems need solving, while idea validation confirms whether your solution makes sense. Smart startup founders use both—they study their market first, then test their ideas against what they’ve learned.
Skipping either step is like cooking without tasting your food—you might get lucky, but why risk it? By combining thorough market research with solid business idea validation, you’ll spot potential issues before they become expensive mistakes.
You don’t need a PhD in data science to figure out what’s cooking in your market. These tools are the heavy hitters that’ll give you the edge. Before delving any further, remember that you don’t need all these tools—just the ones that fit your hustle. A freebie like Google Trends might be all you need to spot a goldmine, while Semrush could be your splurge for crushing the competition. Let’s break them down.
1. Semrush: Your Digital Marketing Wingman
Semrush is like that one friend who somehow knows everyone’s secrets and isn’t afraid to dish them out. This Swiss Army knife of digital tools lets you peek at your competitors’ search engine optimization (SEO) moves, track keyword trends and spot gaps you can swoop in to fill.
You can use it to see what’s driving traffic to rival sites and to find untapped keywords to dominate. It’s not cheap (plans start at $139.95/month), but for the intel you get, it could be worth it.
2. SurveyMonkey: Clear Customer Feedback
SurveyMonkey is a tool that can have your back if you need to know what your people think. It’s easy to use—put together a survey, send it out and get real-deal responses from actual humans.
You can leverage this to test product ideas like, “Would you buy a glow-in-the-dark dog collar?” or figure out why folks bounce from your site. SurveyMonkey has paid plans, but there’s a free tier if you’re just dipping your toes.
3. Google Trends: The Free Crystal Ball
Google Trends is your zero-cost ticket to seeing what’s trending. It tracks search interest over time, by region, and even throws in related queries.
Your startup can use it to time launches (think seasonal spikes) or spot fading fads before you waste cash. It’s not fancy, but it’s clutch for quick, actionable research—a good option when you’re bootstrapping and every penny counts.
4. Statista: Data Nerd’s Dream Date
Statista is basically like your personal librarian who’s obsessed with numbers. Need to know the size of the pet food market or how many Gen Z-ers shop online? They’ve got stats from thousands of sources, all polished up in charts you can understand.
You can grab these to beef up pitches to investors or nail down buyer personas. It’s free for basic access—which is worth it if you want hard facts without the research hangover.
5. Crunchbase: Who’s Who In Your Zoo
Crunchbase tracks companies, funding rounds and big players, so you can see who’s succeeding or failing in your niche. Startups can scope out competitors’ growth, like if that rival just snagged $10 million, or find investors who might be interested in what you want to do.
The free tier should suffice, but pro plans unlock more capabilities.
Master Market Research and Win the Startup Game
Market research isn’t just about playing it safe—it’s about playing it smart. In the current hyper-competitive startup scene, going in blind is like trying to win a fistfight with one hand tied behind your back. The tools and techniques we’ve covered are more than nice-to-haves; they’re valuable tools to help your startup hit the mark when it comes to market research.
Every successful startup starts with a question: “What do customers want?” Market research helps you answer that question before you burn through your runway. Grab those tools, dive into the data and start building something people want.
Photo by Meeko Media/iStock.com
