Why market research is critical for South African start-ups

by | May 23, 2023 | Market Research

Small fish, big pond

Starbucks, Seattle Coffee Company and Jim’s Corner Café walk into a bar. Jim’s Corner Café asks Starbucks, “Hey, how did you get so popular?” to which Starbucks replies, “I make good coffee, have tons of options and I write my customers’ names on their cups.”

Jim’s Corner Café says, “That’s cute. How ‘bout you, Seattle Coffee Company?” “Well, Jim’s Corner Café, I’m a relatively small family-owned business, but I purchase the top 1% of Direct Trade beans worldwide and hand-roast them in Cape Town. I also have over 200 stores conveniently located at garages and strip malls across South Africa.”

Jim’s Corner Café immediately orders a whiskey, thinking, “How am I supposed to compete with these guys?”

The answer is simple: The three brands don’t share the same consumer market.

(Apologies if you were expecting a funny punchline. This is just an example.)

Starbucks is a global brand with products considered a treat by South Africans. Seattle Coffee Company is a South African brand that people enjoy for its excellent quality coffee and convenient store locations. Jim’s Corner Café is a local spot for locals to enjoy good coffee, delicious toasted sandwiches and great specials.

Like it or not, you’re jumbled in with the big folk, the medium folk, the small folk and the micro folk. Your customers could just as easily go to a big fish or a direct competitor, so you need to obsess over who your competitors are, what they want from your products and what they don’t like about competitor products.

 

Why market research is important – especially for South African start-ups, SMEs and owner-run entities

It’s 6 pm and you haven’t had the courage to slice onions or roast a chicken. It’s staring at you, waiting to be released from its misery and munched by a hungry family. A power outage hits. “Let’s order in!”

You place the raw, sad bird in the fridge, fire up whichever food delivery app you normally use, and look for any specials (because this is South Africa) that can feed your family of four – with leftovers for packed lunches tomorrow.

After half an hour of tantrums about what to eat (with the kids noisily sharing their ten cents), you finally reach a fried chicken consensus and you order from a new place offering ridiculously low opening prices. It’s delicious.

Naturally, you want to order from them again. This time it’s Friday, so you don’t need leftovers for packed lunches. You want to try something else from the menu – but they don’t have much else to offer. Chicken burgers? Chicken wraps? Chicken sarmies? Anything other than fried chicken pieces and coleslaw? Nope.

Turns out, the start-up owners were so stoked about the chicken pieces they had zero stoke left to worry about market research. Now you, and all the other people who loved Round 1, must re-order the chicken and coleslaw or relive the hangry tantrums. And the worst part? The start-up has its first disgruntled customers.

“What do we want? Options! When do we want them? Now! How are you supposed to know which options we want? Ask us!”

 

The importance of market research in a nutshell

  1. Competition is rife: The more you learn about your customers and their love languages, the more likely it is they will develop loyalty toward your brand.
  2. Facts over assumptions: Leave the roulette to Fight Club and casinos. Market research offers more than enough information to make informed decisions about customer needs, likes and dislikes.
  3. Forget what you think: Even Rambo couldn’t read minds. Don’t make the mistake of thinking customers like your product just as much as you do.

 

Who knew you could actually ask customers what they want? Well, we did. Give us a call to start your market research journey.

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