Why Startups Need to Utilize AI for Market Research

The unique challenges faced by startups in conducting market research require resourcefulness. Due to limited resources and small teams, it may seem overwhelming to gather comprehensive insights on customers, competition, and product-market fit. However, the emergence of AI tools has made advanced market research achievable for early-stage ventures. These tools have made it possible for startups to efficiently conduct various types of advanced analysis and research that were previously only accessible to larger companies. From branding studies to customer segmentation, AI can assist in all these areas and provide founders with actionable strategic recommendations in a timely and cost-effective manner. As a result, startups can now gain a thorough understanding of the market, identify unmet needs, and refine their product positioning to successfully launch their high-potential ventures within tight timelines and budgets.

This article will examine how startups are being empowered by AI, as it transforms their ability to access valuable market research. By utilizing appropriate AI tools, startups can gain a better understanding of various customer viewpoints, identify gaps in the market, improve their products, gauge brand perception, and enhance user experience – all at a significantly reduced cost and time compared to traditional methods. We will discuss the key types of market research that are essential for startups, highlight some of the top AI tools in each category, and make predictions about the future of this trend.

 

The field of market research is constantly advancing, now incorporating artificial intelligence (AI)

In the past, startups and SMBs have not had access to comprehensive market research. This type of research typically involves extensive surveys, complex data analysis, and qualitative interviews, all of which require specific expertise, a significant budget, and several weeks or months of work. Unfortunately, these are resources that are often lacking in early-stage ventures. As a result, startups have been at a disadvantage, being forced to rely on guesswork for identifying target customers, positioning, prioritizing features, and developing growth strategies without proper validation. This is one of the main reasons why numerous startups have faced difficulties in recent years, with an estimated 3.2k private venture-backed companies in the US going out of business in 2023.

Recently, the traditional research methods have been challenged by AI companies, as they utilize automated tools to analyze massive amounts of data, eliminating the need for costly and time-consuming manual research. The implementation of AI has made it possible for companies of all sizes, including startups, to access reliable market research at a lower cost and with increased efficiency, regardless of their financial constraints and time limitations.

 

Important Market Research Projects for Startups

Before beginning any market research with AI, it is crucial to take into account the advantages and limitations of the technology. I have previously discussed this topic here, but it is essential to review this information before commencing.

It is important to keep in mind the following caveat as I discuss the areas of market research that are beneficial for entrepreneurs. Through my experiences consulting with various startups in the past year, I have observed the significant impact that the following types of market research can have during the initial validation and growth phases of a new business.

 

Competitive Intelligence

It is vital to monitor the offerings and overall market landscape of competitors in order to identify any unmet needs and potential areas for disruption. This is crucial not only in the early stages of developing a venture, but also for staying ahead as competition continues to progress. There are various reliable platforms that aid in this process, including one that I have previously discussed in depth, Crayon, and another popular tool used by startups, Klue, which has received high praise from the startups I am currently working with.

 

Positioning

Another crucial element for a startup to master is positioning, and thorough research is essential in order to stand out in today's competitive markets. This typically involves evaluating the startup's desired image compared to the perceptions of current customers, and finding a unique positioning strategy for the business. So, who can provide assistance? Brandwatch is definitely a reputable option to consider. They specialize in monitoring brand reputation, identifying and understanding industry trends, and optimizing positioning and messaging. With years of experience, they remain a dependable partner for many. Mindspeller is another company that I've heard a lot about, but I personally cannot endorse. However, their promise is intriguing, as they combine AI and neuroscience to assist in developing and refining positioning strategies. If you have experience working with them, I would appreciate hearing your thoughts.

 

Target Customer Identification

Startups often discuss their target customer segments or ideal customer profile (ICP) which are crucial to know, however, these profiles are often based on intuition rather than data. Traditional methods of segmentation can be expensive for startups, making it unrealistic to obtain. Conducting segmentation research can greatly benefit a researcher, and fortunately, there are a few AI companies that are focused on providing essential insights to assist startups in determining their ideal segment(s) to focus and market to. One of these companies is Remesh, which not only offers fundamental audience research, but also offers a range of market research studies that can be utilized throughout the entrepreneurial journey. Peak is another exceptional company for audience segmentation (and more) that works with top companies around the world.

 

Product Research

To successfully optimize the fit between a product and its market, it is important to continuously gather feedback from both current and potential users throughout the product's lifecycle. This ongoing feedback loop is essential in ensuring that the products being developed have the appropriate features for the intended audience. While startups often prioritize speed to market, it is crucial not to overlook important steps such as prototype testing, feature preferences, usability studies, and pain point analysis. There are numerous companies in this field, but two that stand out are Dovetail and Sprig. Dovetail offers a simplified process and even provides templates for tasks such as usability testing and utilizing the Jobs To Be Done framework. Another highly regarded platform is Sprig, which is excellent for prototype testing and identifying pain points.

In the end, a startup that has conducted such research will have a greater chance of success compared to one that has not. Although I have mentioned a few companies that I am fond of, I am open to hearing about your personal experiences working with them or any other recommendations that you may have.