In 2021, the global revenue of the market research industry exceeded $76.4 billion, a growth of more than twofold since 2008. The annual growth of global market research revenue is 0.3%. It is great to have an idea that expects to capture the hearts and minds of consumers everywhere. Perhaps stumbling upon a service not offered by anyone else, hopefully, a service or product that is desperately needed might be the opportunity to start a successful business.
However, before venturing into something, determine whether there is a need in the market for the product or service. Ascertain the needs and demands of the consumer by conducting market research and finding out if your business would be successful.
Spending on Market Research Services Worldwide as of 2020
Market research, a crucial step, is neglected by many business owners in product development. The sole reason to do so is to avoid any negative feedback regarding their business idea. Other entrepreneurs skip this process because they foresee it to be too expensive and time-consuming. However, you shouldn’t skip market research as it is an integral part of starting a business. To make it easier for all the entrepreneurs out there, here is a list of processes for doing market research.
In Primary research, we gather information directly from the source i.e. the potential customers. Secondary research is the gathering of statistics regarding things related to the business or reports, studies and other data from organizations such as government agencies, trade associations and the local chamber of commerce.
Secondary Research
The vast majority of research that is conducted is secondary research and the best way to look for that would be the following.
A local library or the Internet
Reference libraries at public disposal or university libraries
Industry trade Associations
New magazines and newsletters
Government Guidance
Maps
Community Organizations
Apart from this, an in-depth understanding is required of what’s essential to any business plan along with appropriate points for the venture to ensure the success of the startup.
Market research aims to understand the reasons how and why consumers will buy a given product. It studies such things as consumer behaviour and consumer’s decision-making process, including how cultural, societal and personal factors influence that behaviour while buying a product.
4 Questions to Ask For
Questions to Ask For While Conducting Market Research
The basic questions we would try to answer while conducting market research are:
Who are the customers of the business?
What do they generally prefer?
Why do they prefer a certain product instead of the new product or services being offered?
What will make them consider the product being offered?
Try to search for the closest match to the business for comparative analysis and consider these points:
Companies of relative size and budget
Companies serving the same geographic area as the proposed startup, which could be global if it’s a web-based business
Compare with the companies with a similar ownership structure. If your business has two partners, look for businesses run and managed by a couple of partners rather than an advisory board.
Companies which are relatively new and have started functioning recently because long-standing businesses are successful because of their 25-year business history and reputation.
How to Spend Your Money on Market Research?
Follow these steps to know how to spend your money on market research wisely:
Determine what is required in the target market before starting up. The more focused the research, the more valuable it will be for the business.
Prioritize the results carefully and closely for accurate data. It is obvious, you can’t research everything, so concentrate on the information that will give the best or quickest outcome for the business or startup.
Review less-expensive research alternatives to save money. Small Business Development Centers and the Small Business Administration can help develop customer surveys in a better way. The trade association will have good secondary research and try to be creative as well as innovative.
Estimate the cost of performing the research yourself to ensure accuracy and prevent overspending. Keep in mind that, while using the internet, spending a lot of money would not be necessary. Don’t pay for what you don’t need at all in the business.
You need to consider your target audience and figure out your marketing platforms. Also, you should be aware of the latest trends and updates in your industry. Keeping these points in mind will ensure thorough market research for starting a successful business. Share this post with your friends and drop comments.
FAQs
How to Do Market Research for a Startup?
Look at the Entire Industry and Potential Market.
Analyze the Market Audience.
Gain Insight into Top Companies’ Product and Digital Marketing Strategies and Tactics.
Every aspiring entrepreneur starts with a great idea, which can solve a burning problem. But many founders begin with launching a product without considering target marketing strategies. The target market represents a group of individuals who have similar needs, perceptions, and interests. If a significant number of users are not ready to pay for the problem they want to solve, this leads to a loss of money. Eventually, founders run out of resources and finally end up failing. So, here are some tips on target market selection.
Target market selection is a part of marketing activities and comprises deep inquiry and analysis up to the corporate level. Target market analysis involves a process to recast and build something innovative to differentiate your business from others.
An entrepreneur must ask himself, “ Istarget market segmentation big enough to meet my sales goals yet not so massive I can’t target it?” Research has shown that 42% of startups fail because they didn’t find the right target market for their startup.
So, finding your target market is one of the most important decisions that a business should take before actually starting its business.
I think the mistake a lot of people make is to identify a target audience and then work backwards into creating a product for them. – Ricky Van Veen
To find the target market you need to break it up into addressable market segments, this can help you to achieve your startup targets. The following ideas have helped entrepreneurs to find a target market for their startups.
A target market in general is people or a group of people who have the potential to buy your product or need your product. It is that segment of the market to which a business wants to sell its products. If a business knows what its target market is, it becomes easy for them to market its product.
With the help of this information, the marketing team can create campaigns that are only focused on that segment of the market. Moreover, it helps the production team to better their product according to their target market’s needs.
Types of Target Market
Some of the most common types of the target market that a business focuses on are:
Major Factors to Consider for Market Type
Gender-Based – Example: A cosmetic company would want to target females in their campaigns rather than include men and children.
Age-Based –Example: A toy company will focus to impress the kids with the products instead of impressing adults.
Location-Based – Example: A new local Pizza shop will advertise it in its town or city instead of promoting it all over the country.
Income-Based – Example: A luxury car brand always tries to promote its brand among people with high income whereas an economy car brand will come up with campaigns and offers focused on lower or middle-class people.
So following are target marketing strategies to grow your customer base.
1. Focus on the “Crucial Customers”
Put your efforts into focusing on the most crucial customers that have the highest probability of purchasing. Before launching a product you need to analyze your target market, if you are an entrepreneur who wants to build a business that will not only solve a problem but also be profitable then you will go a long way, you have to interact with your target market.
After choosing a target audience, talk to them, listen to them, and then observe those people to know if they are your potential customers. You are going to solve a problem that they are desperately looking for but you have to observe if they are willing to pay for the solution or not. Only after observing the target market, you should start working on solutions to their problems.
You, as a new company, cannot build trust in people if you provide them with revolutionary solutions. So, come up with a solution that is not too extraordinary for people. However, at the same time, you should be able to translate it into a profitable business.
“You just have to pay attention to what people need and what has not been done.”–Russell Simmons, founder of Def Jam
Before you start your business you have to ask some questions to yourself. These are:
“Whether the business can be scaled or not?”
“What is the size of your target market?”
“How many people can you possibly sell your product or How many people will probably buy your product?” And last but not the least
“At what price you should sell the product?”.
2. Find a segment for the early momentum of business
Focusing on a segment helps in building the early momentum of the business more easily. This involves awareness and word-of-mouth marketing that usually builds faster across like-minded groups, and success stories resonate well across a segment of similar prospects. This also requires complex and wide research on all aspects of the startups.
Market Segmentation
Some of the great ways where you can start your research
Public Forums/Facebook Groups
There are many online platforms are available now where people ask questions, share their problems, and share their ideas too. You can find insight into both your target market and also your competitors which can help to find a solution that people are looking for.
You can join some Facebook Groups where people from your target market are actively involved, observe them for a while, listen to their conversation, understand their pain points, and ask questions. This will help you to understand the problem they are facing and also look for a solution.
Networking/ Events
You can start building your network with the people from your target market and the people who are solving any burning problem for their target customers. This will help you not only to understand how you can find your target market but also you can learn a lot of things that will help you on your startup journey.
You can also attend some live events, especially for startups, where you can meet with new people and also people from your target market. You can directly ask them questions if they are facing any problem or anything they want to make their life better.
Talking to friends & family
This is not necessary that you have to find your target market from outside, there can be some problems your friends and family are facing which you can give them a solution for. There are many startups that started by solving a problem they faced by themselves.
This will help you not only build a profitable business but also you can build trust immediately and it may help you to come up with an idea that is unique and can differentiate your business from others.
3. Take a hard look at the value differentiation
Always take a hard look at the value differentiation that can bring prospects for you. In other words, try to initiate the feature that makes the business different and makes it stand out. Many aspiring entrepreneurs get it wrong, they think that an idea is already working, and if the business is doing well then it can bring a large number of customers for them also and they simply copy the business idea and try to modify the business model. It will be profitable for a short period but you will not be able to build a business in the long run.
If you want to be an entrepreneur and build an empire, then you have to use your creativity and come up with a solution that will differentiate your startup from the other companies and can bring you a large number of prospects.
4. Identify the Demographics
It’s very important to ask yourself whom should you market to and how you most efficiently reach them. This will include identifying the age, gender, geographic location, occupation, socioeconomic status, and other demographic and psychographic traits of the consumers who would be most interested in purchasing your product or service. The key is to identify a niche target market and go after market share aggressively.
5. Identify prospects that care about the key differentiation the most
When looking across the broader market, some prospects will say, “Yeah, the stuff is cool!!”, but others will jump out of their chair and yell “that’s amazing!! I need that right now.” In this case, always target the second group as they will be the easiest to sell to.
You are building a business not just to solve a problem but to make a profit too. So you have to identify whether the people are ready to pay for the solution or not. Many startups end up wasting their money on marketing and strategies without identifying the target audience first. So if you want to scale your business you have to find the right target customer who will care about your solution.
Now you may have this question in mind:
How do I recognize people that have a high affinity for my offering?
The target group that has a high affinity to the products being offered could be a certain company, in a certain vertical market, in a certain geography or they might be consumers that already own a particular product and also have some hobbies which are somehow related to your business.
This is where entrepreneurs need to get super specific about targeting these groups. Start asking questions like
“What is the smallest business that loves this stuff?”
“Do product businesses love it more than services businesses?”
“Which location (urban or rural) do they love most?”
“Is there a certain type of small business owner that loves it more? Why?”
The segmentation will depend on the entrepreneur’s ability to be able to identify the characteristics of an ideal, easy-to-close prospect. If you can find the right people that have a high affinity in your niche then definitely you will be able to close the sale.
These points would certainly help in bringing profit to the company and increasing your customer base. What strategies are you following to define your target market?
FAQs
What are the 5 steps in starting a target market business?
It helps you to determine and focus on a particular audience or type of product and service. It also helps with less spending on customer acquisitions.
What is the definition of target selection strategy?
It is a strategy applied by companies and startups to start their businesses with products or services for identified markets.
What is a target market example?
For example, a toy company for children, a make-up company for women, and any company that makes winter apparel.
How is the Purpose of a Target Market important for any business?
When companies identify a target market, then they can influence product or service design. Market strategy can also be enhanced.
A wise man once said – ‘Good Marketing makes the company look smart, whereas Great Marketing makes the customers feel smart’.
Yes, the customers are definitely going smarter by the day, and all of this is not just led by the technological advancements and innovations that we are seeing globally, today’s industries, entrepreneurs and marketers also play a significant hand in it.
One of the best examples is India itself, which is the next big thing in terms of startups and entrepreneurs, who are growing each day, and that too with the aim of gearing the country ahead in the global canvas.
Entrepreneurship in India today is no longer a myth. According to the Global Entrepreneurship Monitor (GEM) India Report (21-22) entrepreneurship in India has noticeably expanded in the past few years. The Total Entrepreneurial Activity rate, which is the percentage of the adults who are starting up with or running a new business has increased from 5.3% in 2020 to 14.4% in 2021.
The Growing Penetration in Tier 2 and Tier 3 Markets!
Though the Tier 1 cities of India have always been the regions to pilot for the entrepreneurs and startup founders from across the world, the entrepreneurs of India are not simply satisfied with the penetration in the first-class cities of the country. They are focusing largely on Tier 2, Tier 3 cities, and beyond.
As per the recent census, India has registered a total of 4000+ towns, and only 8 cities among them are classified as Tier 1. So, it can easily be realised that a considerable section of the Indian population resides in Tier 2, Tier 3 cities and more.
The IT industry was one of the first to realise the potential of Tier 2 and Tier 3 cities in India. This happened when they found that the Tier 1 cities have reached a saturation point. The startups of India have largely caught up with the changing trends. Besides, being geared up with the new-age Government of India schemes like Digital India, Startup India initiatives, and more, the Indian government has also joined forces with the status and entrepreneurs of today to gift India a golden future that the whole of India can enjoy!
20% of Indian startups belonged to Tier 2 and Tier 3 cities of India in 2017
Only 20% of the startups came from the tier 2 and tier 3 cities of India when reported in 2017. This was a growth from 16% of the startups of India, which came from the tier 2 and tier 3 cities of India. These numbers rapidly rose up to become 50%, as per April 2022 reports.
The penetration of the Tier 2 and Tier 3 markets today is on a rise holding the hands of the unicorn startups of India and all other budding startups and promising ideators of the country.
Research conducted in 2019 pointed out that out of over 16,000 startups registered in India then, nearly half of them have their business centres in smaller Indian cities.
Why are the Startups and Entrepreneurs choosing Tier 2 and Tier 3 Markets of India?
Numerous industries and startup founders are looking to penetrate the Tier 2 and Tier 3 markets of India because of more than one reason. Some prominent ones are:
Growing competition in the Tier 1 cities
Lack of employment in Tier 2 and Tier 3 cities
Gaining more audiences/customers in these cities
Improving the Tier 2 and Tier 3 cities
Expand their businesses
Affordability in Tier 2 and Tier 3 cities
Support of the Indian government to start up in these cities
The growth of startups and startup initiatives in these smaller towns in India are not only proving to be effective for the startup founders and entrepreneurs. The Tier 2 and Tier 3 cities are also reaping significant benefits due to the advancements taking place there.
Advantages of Tier 2 and Tier 3 Cities with Growing Startups and Entrepreneurs’ Focus on Them:
Some of the major benefits that the Tier 2 and Tier cities of India are enjoying with the improvement of industries and markets for startups and other companies in India are:
Upliftment of the standards of living in Tier 2 and Tier 3 cities
More income to the people living there
Access to quality goods and services
Improvement of facilities
A reduced movement to the Tier 1 cities
A reduced dependency on imports
It ultimately boils down to the marketers and entrepreneurs of the country, who would actually be there and advance the growth of the industries in Tier 2 and Tier 3 markets of India.
Here are some of the glimpses of some major companies that includes the Indian unicorns, who have actually proved that the Tier 2, Tier 3 and Tier 4 cities are marketable enough in these modern times:
DailyHunt
The business model of DailyHunt largely banks on the sharing of vernacular language content, a majority of which is spoken in tier 2, tier 3 cities, and beyond in India. So, though Dailyhunt is headquartered in a Tier 1 city, Bengaluru, the company focused on the other cities right from the start. Besides, its acquisition of companies like LocalPlay, a hyperlocal platform for video and news content, is also in line with its objective of boosting its hyperlocal presence in Tier 2, Tier 3 and Tier 4 geographies of India along with cementing its present position as a leading local language content discovery platform.
Moj
Owned by Mohall Tech and headquartered in Bengaluru, Moj is an Indian video-sharing social networking platform that supports 15+ languages. Much like Dailyhunt, Moj’s business model also revolved around video content sharing in vernacular languages, which itself targetted the cities beyond the Tier 1 cities of India. Furthermore, the banning of the viral Chinese video sharing platform TikTok on June 29, 2020, also played an angel’s hand is lifting the platform up to help India emerge as an Aatmanirbhar country.
Did you know the downloads of the Moj app crossed 50K in Google Play Store in just 2 days?
Paytm
The Vijay Shekhar Sharma-founded fintech company that focuses on UPI payments and other services including banking, eCommerce services and more, is not only known to the Tier 1 cities but is famous beyond them as well.
Speaking on its penetration in tier 2 and 3 cities of India, Paytm revealed that around 50% of its userbase is from the smaller cities of India – Panipat, Rohtak, Pondicherry, Surat, Ranchi and more. This remarkable feedback that Paytm has pulled up is largely attributable to its multilingual app and the growing demand for easy UPI transactions, which are conveniently done via our phones, irrespective of their types.
Flipkart
Walmart-backed Flipkart is a leading ecommerce company, which not only cares for their customers in the Tier 1 cities of India. When last reported on June 17, 2021, Flipkart revealed that over 52% of its customers come from the tier II and beyond cities. This increase in penetration in Tier II, Tier III cities, and beyond has been a combined result of the promising opportunities that these cities have and the zeal to expand the reach of the company.
Cosmetics and Beauty Products Companies like Sugar Cosmetics, Nykaa and more
Gone are the days when cosmetics and beauty products and services were restricted to the Tier 1 cities of India. Beauty regimes are now a significant part of the daily routine and vocabulary of millennial women, regardless of where they hail from. With the rapid penetration of smartphones in the smaller cities today, the women in tier 2, tier 3, tier 4 cities, and beyond are not behind even by a step from their Tier 1 counterparts.
Reports revealed that over 15% of the occasional cosmetic users who belong to the secondary and tertiary cities have tried their first face primers, foundations, BB creams, and more in the past 2-3 years. The online beauty marketplaces like Sugar Cosmetics, Nykaa, and more have a large hand in it though, who have actually made shopping for cosmetics and beauty products, availing of beauty services, and more, easier by bringing them online. The Covid-19 pandemic breakout, along with bringing the great resignation, major recessions, economic breakdowns, layoffs, and more such calamities, has also helped industries and individuals grow in many ways. One of such benevolent effects of the coronavirus pandemic is that it ushered in a new period of work from home where the countries and the working professionals living in them learned about the potential of the internet and were more close to the things happening online. An inclination to purchase cosmetic products also increased this way.
To know how businesses market to their audience in Tier 2 and Tier 3 cities, StartupTalky reached out to entrepreneurs from diverse fields. Here’s what we got to know about how they market to people in Tier 2 and Tier 3 cities:
Amit Nigam – COO & Executive Director, BANKIT
Amit Nigam – COO & Executive Director, BANKIT
BANKIT tries to reach the tier 2 and tier 3 segment of the audience through retailers who are already familiar with the customer and can reach them more effectively. This helps in overcoming the most common challenge that companies face while reaching consumers in Tier 2/3 areas: Gaining their trust.
Shalabh Upadhyay – Founder & CEO, NEWJ (New Emerging World of Journalism)
Shalabh Upadhyay – Founder & CEO, NEWJ
The future of online media will be defined by those who create content, produce stories in the language which the masses understand. And that’s what we precisely do at NEWJ. Within a short period of two years since inception, we have grown our regional network base to 12 languages (including English and Hindi). Our in-house data capabilities help us build predictive models on the content consumption patterns across social media. Our state-of-the-art tech architecture collates user consumption & computer vision data to derive insights and patterns on how a content piece will perform. This enables us to connect with and market our content effectively.
These cities are seeing increasing attention and fast infrastructural growth. You now have state-of-the-art warehouses coming up on what used to be farmland. When we create content for these audiences, we use our expertise to explain the process, i.e., what has to be done, along with why it has to be done-why keeping something chilled matters or why a bar code matters, why it’s important to be able to trace something. So you have to explain much more of the context.
Then there is language to consider that requires a constant feedback loop and intelligent design to ensure that the platform’s UI is flawless and simple without being simplistic.
Building presence in these markets requires a different approach as growth in awareness may be slow. As mentioned above we’re doing that via distribution partners which may include certain tech companies soon. CSR initiatives on behalf of certain trusted names in the logistics space have also allowed for our outreach to increase in these locations.
Sudha Anand – Founder, Swaas
Sudha Anand – Founder, Swaas
Social media like Facebook and Instagram are the best modes to reach to tier 2 & 3 customers, said Sudha Anand, Founder of Swaas.
Here are some of the points highlighted by the Founder of Teach My Lesson:
Clearly articulate the value offered in plain terms
Price solutions aptly. Price is often the proxy for quality, and solutions priced considerably lower than the benchmark are seen as not trust worthy
Leverage locally accomplished individuals to endorse the brand and build credibility. Related to this, use local micro-influencers and not mega influencers.
Make customer ratings and review visible and vocal; everyone relies on reviews
Deliver on the promise – the customer journey need an enjoyable yet straightforward. Under promising and overdelivering is better than vice versa
India is progressing, and customer expectations are high across tiers, ‘Chalta hai’ ab nahi ‘Chalta hai’
Thankfully, with the advancement of technology, Tier 2 and Tier 3 cities have proper access to the Internet today. With the campaigns that we run and the marketing we perform, it is easier to spread the word to our target audience regardless of their City-tiers.
Amit Agarwal – Founder & CEO, OckyPocky
Amit Agarwal – Founder & CEO, OckyPocky
With regards to the marketing approach in Tier 2 and Tier 3 cities, building local partnerships helps majorly to gain trust but we also focus on digital marketing and content marketing with a vernacular approach to find paying audience.
Raj N – Founder, Zaggle
Raj N – Founder, Zaggle
Brands need to innovate exclusively for rural consumers because the values and sensitivities of the rural audiences are a stark contrast to that of their urban counterparts.
Tanul Mishra – CEO, Afthonia Lab
Tanul Mishra – CEO, Afthonia Lab
The pandemic has resulted in a lot of changes on the ground. One of the most prominent of these is reverse migration and increased online buying in Tier 2 and 3 cities. On one hand, several kirana stores across cities and towns pivoted online, while on the other, many young professionals and graduates moved back to their towns driving rural consumption and demand. Established players like Flipkart and Amazon, through Samarth and Flipkart Wholesale and Prione respectively, are betting heavily on the rural entrepreneurship story.
The tier III environment is immensely different from tier I and II and therefore, communication to potential customers requires a specialized and integrated approach. Indian market is very diverse and demands regional connectivity. OTT (Over the top) players like Netflix, Amazon Prime Video, ZEE5, etc., are expected to spend Rs. 150 crore this year. We can see the push that is given by global companies towards local languages to enter the market of Bharat. Similarly, fintech industry is also expected to provide local language support and focus on user interface which is seamless and intuitive to expand its user base.
Mahadev Srivatsa – VP of Marketing & Brand Strategy, Practically
Mahadev Srivatsa – VP of Marketing & Brand Strategy, Practically
Marketing is always audience-led and the strategy has to involve a mix of the best mediums through which one can reach relevant audiences. Considering the emphasis that Indians place on education, keeping respective market nuances aside, the core TG for Practically i.e parents of kids aged 11 to 17 and the kids themselves, exhibit the same need across markets, and that is ‘a need for innovative learning’. To reach out to them, in the COVID era, the most impactful mediums of marketing have been TV and Digital. In pre covid era, BTL activations in such markets have acted as a crucial support to the main campaign. Radio & Print (regional) can also be looked at to effectively drive awareness among these audiences & build credibility. The key is to understand the touch points of your product, study customer journey and effectively strategize marketing for this segment. The correct choice of medium matters the most.
Conclusion
From leveraging locally accomplished individuals to personalizing linguistic features, entrepreneurs are leaping well above their grounds to rightly market in Tier 2 and Tier 3 cities. Hope their views gave you an insight into how to market in Tier 2 and Tier 3 cities.
FAQs
What are tier 2 and tier 3 cities in India?
The Tier 1, Tier 2, Tier 3 cities and beyond are simply the classifications of the cities of the country on the basis of development. Hence, the most developed cities in India are the Tier 1 cities, then comes the Tier 2 cities, and so on.
What are some of the business ideas in tier 2 and tier 3 cities?
The tier 2 and tier 3 cities are growing with the increased absorption of the internet and the modern initiatives and schemes by the Government of India to improve the cities beyond the first-class cities in India. Here are some of the most promising business ideas for growth in tier 2, tier 3, and more cities of India:
Financial firm
Advertising company
Beauty salon
Grocery store
Consulting company
Real estate business
Food delivery company
Farms
Nurseries
Manufacturing units
Clothes business
Consultation company
Logistics company
What are some of the Indian companies that are focusing on the Tier 2 and Tier 3 cities of India?
Most of the companies today are focusing on the Tier 2, Tier 3 cities and beyond in India. Some of the most prominent companies that are encouraging customers from Tier 2 and tier 3 cities are Paytm, Moj, Flipkart, Dailyhunt, Nykaa, Sugar Cosmetics, and more.
Which industries are foraying into tier 2 and tier 3 cities in India?
There has been an increasing foray into the tier 2 and tier cities in India in the past few years. Some of the major industries that have already entered the tier 2, tier 3, and tier 4 markets in India are:
Gaming
Fintech
Real estate
UPI
Edtech
Entertainment
News
Fashion
Food delivery
Logistics
Crypto
How many startups have their reach to the cities beyond the tier 1 cities of India?
As per the recent survey results, out of all the startups thriving in the country at present, around 50% of them have their reach, their business centres, in the tier 2 cities and beyond in India.
The world is witnessing a huge rise in the number of startups in recent years. Many youngsters are showing interest in developing innovative ideas and starting their own businesses. Thanks to affordable technology for feeding ideas and options to those young entrepreneurs to shape their dreams.
The first and foremost thing that a startup requires is a fund. However creative the idea is and however talented the founder is, the startup will never take a step further without funds. So, how can a startup raise funds? There are various investors and venture capitalists who are ready to fund startups with excellent business ideas and a knowledgeable team.
The primary thing that the founders should do is impress the investors with the pitch. The pitch deck should contain such things that should convince the funders to release money from their pockets. Let us know more about the pitch deck and the elements it should carry most importantly in it.
A Pitch Deck is a presentation that gives an overview of the startup to the investors. It should contain all important information about our business like its nature, demand in the market, future plans, strategies, etc. Informative and short pitches are the ones that gain the interest of investors.
Initially, Pitch Deck serves to be the face of a startup and it is how we introduce our company to the financial backers. The first impression it creates stands out to be crucial. So certain things that cultivate trust in the survival, success and future of your startup have to be considered and included while getting the pitch ready.
Important elements to be included in your Pitch Deck
The following article covers the important requirements for a pitch deck:
Product
If yours is a product-based startup, then take your product to the investors. Get them to know your product personally. Sometimes, your product might speak more than your words. Let them use your product and know it well. Even if your product is in the development or underdeveloped stage, create some samples or models to present to the investors. The visual presentation would give you an added advantage during the pitching.
Problems
Give a brief explanation of the problems you are facing as a business. Explain where the problem exists, the reason for its existence, where future issues can arise and so on. A simple narration with a relatable example could help investors understand the problems better. This might gain you a positive note on your in-depth business knowledge and a solution to the problem. Even if the investors fail to invest in your startup, their experienced advice could be of great help in the future.
Solution
Moz Solutions in Pitch Deck
Providing solutions to the problems can cause you some good during the pitch. If identifying the problem shows your understanding of the business then solutions show the knowledge you possess over it. Explain to them how you are going to solve the problem, how it is going to impact the business, the reason for choosing this particular solution, etc. If the solution or the strategy is adopted from a predecessor, then explain how they made it happen. Also, be prepared to counter any questions to be shot against you by the investors.
Funding and Financials
Investors won’t grant funds without you asking for it. You need to quote the required funding amount, its purpose and how it will be utilized, and the return the investors would get from it. If you are an existing startup, then you need to provide your past financials in a simple chart or graph along with the above-said details. It should contain spending, areas of your spending, profits, revenue, etc.
How do you make your revenue? An investor would be most interested to know your revenue model. You can use the information from the target market slide to assist you in briefing the revenue model. Explain the demand for your product or service in the market and how it would pay you back. Dissect the cost and profit from your sales and give brief reasoning for your pricing strategy. This is the other most important element to be included in your pitch deck.
Traction
Moz Ptchdeck
Project your company’s growth with the current market situation for a foreseeing future. If you are an already existing startup then elaborate your growth trajectory in the pitch deck. You can also mention the benchmarks you have created or the milestones achieved in the past. It can be anything in terms of profit, revenue, sales, awards, etc. This is done to incite confidence in the investors and reduce the fear of risking their finances.
Target Market
Sickweather Pitch Deck showing Target Market
Every company, product or service-based, has a target market or customers. That particular targeted area should form part of your pitch deck. When describing this segment, you can include the nature or category of your market, the current and future demand, the impact of your competitors, and so forth. Investors would like to know where the major focus of your startup would be. They might judge your company’s long-term stability with the market you are about to target.
Competitors
One of the most important elements to be included in a pitch deck is the competition. Knowing the competition helps you to know about your business well. Since every action of the competitor might have a direct impact on your success and survival, understand your competition well. Not knowing them is a result of ignorance and improper market study. No investor would be ready to invest even a dime in such a startup. So, include a detailed study on your competitors in your pitch deck.
Team
Buffer Team in Pitch Deck
A team is the core of any business. However great your planning and strategies might be, you need a great team to put everything into action. Assigning the roles to your team, and choosing the right person for the right task, is highly important. Give the investors a clear map of your management and operations team and their expertise.
Exit Strategy
Every investor wanted to know the exit strategy when the business gets transformed into a larger one, like going public, in the future. They would like to know your plans for the future and expansion strategies, or in simple terms, where the business will be in the next five or ten years. If you are planning on something like getting acquired, divesting your investments, etc. explain why it is the best choice for the investors.
Conclusion
The above are some of the key elements that should become a part of your pitch deck. They assist you in creating an imposing pitch presentation that in turn helps you secure funds and investors for your startup.
FAQs
What is a pitch deck?
A Pitch Deck is a presentation that gives an overview of the startup to the investors.
What are the important elements to be included in your Pitch Deck?
10 important elements to be included in your pitch deck are:
Product
Problems
Solution
Funding and Financials
Revenue Model
Traction
Target Market
Competitors
Team
Exit Strategy
Why Is Pitch Deck Important?
Pitch deck is the first communication means for entrepreneurs to reach out to potential investors.
We are living at a time where startups are playing a crucial role in every country, they are turning into industrial giants that are taking the name of their country further and boosting their economy as well. Now, for any business start-up, the most crucial step is to organize funds so that they can take the business forward.
Arranging for funds, however, can become a nightmare for many entrepreneurs. Being an extremely important part of establishing a successful business, even minor mistakes made, while presenting your idea can lead to the loss of prospective investors and hence hinder the path towards the foundation of a successful business.
This list here comes to your rescue, by putting down mistakes to avoid during pitching. In this article, we will explore some vital points that will help you during the pitching of your business to investors.
If you want someone to invest in your startup the first step is to get to know them well. Do your research before approaching the person or organization. Some mistakes to avoid during pitching to investors for your business. There is no need to get personally close all you need is the small official details about their area of work so that you can use it to your advantage while pitching.
Few points to consider while knowing an investor
Make a note of the different ideas that they have invested in earlier to find out what type of work they prefer to invest in. If you ask a person operating food chains to invest in a software business there are huge chances of you being rejected, so knowing your investment is extremely critical.
2. Work on Your Pitch
A chance to pitch can come up anywhere, a party, elevator, or on public transport. However, in these situations, there isn’t enough time at hand so reduce the length of your pitch. Ideally, try keeping it a minute or two long.
Most people start losing interest after a minute, hence, make the pitch small and effectively highlight all the attractive and remarkable points so that the investor is intrigued in doing business.
3. Focus On Your Presentation
Usually, start-up organizations end up putting all their points and ideas into a presentation hoping that the investor will be impressed, but a presentation filled with too many words will cause more harm than good.
When presenting, keep in mind that your slides only have a gist of the plan of action. It should be short, crisp, and to the point like your pitch. Try to wrap up your presentation in 12 to 15 minutes. Generally, you will get only half an hour with the potential investor including the time for Q&A, therefore, use the time wisely.
Main points to remember while preparing for the presentation
4. Present Your Business Plan
The pitch and presentation won’t be of any use if the business plan is not thoroughly laid out. If the business strategy does not highlight the goals of the start-up along with the expected revenue, size of the target market, and description of the start-up management team, the investors will not be convinced. The important point is to make them realize how strong the business is.
5. Increase Your Investor’s Interest
Every person wants to start a new company to provide people with better facilities and give them something but that’s not how an investor would think. An investor will only agree to fund a business if he is sure of gaining a profit; hence, you need to make sure that you mention your expected monetary gains for the next few years.
6. Make Your Proposal Unique
Sending your proposal to every potential investor through email in the hope of getting a response will not yield any results because investors are swarmed with thousands of proposal mails every day, so the chances of getting a call are very slim. You need to find unique ways of making your proposal stand out so that it can invest your potential investors.
7. Be Humble
When you land an interview, with a potential investor, be humble. Let them ask questions. If any flaws are pointed out in your model or plan, accept them and find ways to improve them. The investors have seen their fair share of business proposals and the advice they give will be beneficial.
Do not be stubborn and keep an open mind while answering. The reason an investor ask questions is that they are interested and wants to make sure that they are putting money in the right place.
8. Avoid Exaggerating
Exaggerating financial gains and lying about them is going to get the proposal rejected instantly. The investor will want to know exactly where and how much money is being spent. If you get caught while lying, it could make a big opportunity slip through your fingers.
9. Do Not Show Desperation
The funds are extremely important for the survival of the business. There might be an urgent need for the funds but showing that desperation to the investor would be a wrong call. Confidence is crucial and you must possess that regarding your business idea as it is very crucial.
10. Do Not Be Overconfident
Even though being confident is good, being over-confident and bragging about the growth and profits of the business will drive the investor away. This will give them the impression that you are not realistic and will get you rejected. Try to be subtle while approaching potential investors.
Conclusion
It’s always challenging to pitch your ideas to Investors as an entrepreneur. Focus on numbers while presenting your story in front of investors. Don’t forget to share the marketing plan. Otherwise, practice your pitch and dress well. Prepare yourself for your next pitch, while keeping the above points in mind.
FAQs
How do we find investors for business?
Look for relatives and friends who are interested in your business, private investors are also there to choose from, crowdfunding platforms can also be used to find investors.
Can we pitch an idea to the company?
Yes, an idea can be pitched to the company but with the proper showcase that fulfills the criteria of that exclusive firm.
How can we convince the investor?
Investors can be convinced in many ways, some of the most common techniques to follow are to have a clear business plan with proper knowledge about its type of audiences, market conditions, and competitors. One also goes ahead with the convincing part by asking for the guide from the investor itself.
How to approach an investor?
Approaching an investor seems bigger task than actually dealing with an investor. One can always take the help of any intermediate party available, or the best approach for an investor is to go with the means of asking for a guide rather than directly coming up with the investing part.
What’s the first thing that comes to our mind, when we think about Jeans? Yes, your guess is right! It’s Levi’s. The widely famous American clothing brand whose denim jeans are worn by every second person.
Levi’s includes a sub-category of four brands, Levi’s, Denizens, Signature, and Dockers. The brand is known for its remarkable quality and comfort of blue denim jeans, which holds the status of highest sold brands.
The brand has seen a lot of ups and downs but still, it remained one of the most extraordinary clothing brands across the world. Today, the hype of Levi’s is known by everyone. The brand has opted for such an advanced and ultracool marketing and pricing strategy that has been a great success. In 2021 Levi’s appointed Deepika Padukone as its global brand ambassador.
The 167-years-old blue denim jeans company, Levi’s keeps up with the track of every ongoing change that occurs in retail habits. The tagline of the company goes by “Live in Levi’s”.
You must be wondering how this company has still such a strong foothold in the market! Levi’s follows very extraordinary and advanced marketing strategies that show how people would be shopping in the future.
In order to address such remarkable marketing strategies, we have presented this article, to discuss the marketing strategies of Levi’s. Let’s get started!
When it comes to Levi’s products, they are extremely comfortable and of great quality. Through this, the company owns immense popularity in the market and has a huge customer base with loyalty.
Levi’s offers such incredible products and services that they don’t look elsewhere for purchasing. Its denim jeans are innovative, enough spacious for keeping the necessary stuff and come with double layers for durability.
The most popular Levi’s product is its blue denim jeans, however, over the past few years, other products are also gaining prominence.
Besides its fame for denim jeans, Levi’s provides a great range of products including skirts, jeans, underwear, shirts, dresses, jumpsuits, belts, accessories, and many others.
Its denim jeans are further categorized in many designs such as Taper, Skinny, Boot cut, Slim, Flare, Relaxed, Moms, and Big and tall. The most unique part is, it associates a three-digit number with its jeans.
Suppose, you find great jeans with a number 201 but in the men’s section, then you can find the exact same jeans in the women’s section with the number 200. Sounds incredible, right!
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Levi’s is entirely distinguished into three major geographical areas: Levi’s Strauss Europe, Levi’s Strauss America, and Levi’s Strauss Asia Pacific. Its Asia Pacific region includes the Middle East countries like Qatar, Oman, Kuwait, and United Arab Emirates as well.
The official headquarters of Levi’s is based in San Francisco, United States. Levi’s distribution strategy is remarkable. It manages the entire supply chain smoothly as well as the delivery through distribution channels, franchise models and advanced qualified staff.
Its products are delivered through numerous distribution channels. Alongside its holds, several factors owned retail outlets and showrooms within Levi’s franchise.
Levi’s is a very well-established brand that comes with a great policy of conserving standardly fixed prices across the globe. Its pricing for the pair of denim jeans is measured with tons of factors behind it.
These factors are the demand for products, cost of products, product’s uniqueness as well as convenient features, and product’s affordability based on the target audience.
Likewise in India, the price of denim jeans ranges from Rs 1299 (for Levi’s cost-sensitive customers) to Rs 7000 (customers with luxury).
Its pricing strategy is totally based on the preferences of its customers and that’s why it is quite prominent with its services.
Levi’s opts for mass targeting strategies in order to convince the requirements and needs of its customers. Levi’s Market position is quite upright and competitive but at the same time, the brand prioritizes the value of money for the customers. And that’s why it influences its customers and gained such a huge base.
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Levi’s functions in a very rigorous and competitive marketplace. The market holds a huge counterfeit category of products and services along with various nationwide performers. All these combined are majorly affecting the performance and development of the brand. However, various other components such as climatic circumstances, Labour expense, and developing lifestyles are some of the central factors that are influencing the marketplace across the globe.
In 2021, Levis appointed Deepika Padukone as its global brand ambasaador. The brand is planning to target millennials. The popular actress was also seen in its new campaign focused on the new range of jeans.
On its association Deepika Padukone said,
“Authenticity, Originality, and Honesty are values that the brand has been built on and are values I identify with the most! For those unaware, I have always been jeans and t-shirt kind of girl. The right pair of jeans not only make me feel comfortable but also confident!
I am absolutely honoured and delighted to be associating with one of the world’s most iconic brands-Levi’s.”
Besides being one of the most popular clothing brands across the world, Levi’s manages to keep up with its records. The brand follows some of the very significant marketing strategies that have brought incredible results for the company.
From products to marketing analysis, Levi’s is known for its tremendous strategies that have kept the brand on the top for 167 years. The marketing strategies of Levi’s are immensely famous as well as strong.
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A lead generation agency can have a significant impact on the success of your business. By generating leads, they can help you increase sales and revenue. In addition, a lead generation agency can also help you build relationships with potential customers and clients. You can contact these individuals and offer them your products or services by providing them with leads. By doing this, you can establish trust and credibility with potential customers and clients, which can ultimately lead to increased sales and revenue.
What are the Best Sources that Generate Leads To Your Agency?
Things to Know Before Hiring a Lead Generation Agency
There are a few things you should consider before hiring a lead generation agency. First, think about your budget and what you’re willing to spend on lead generation services. Next, consider what your lead generation goals are – do you want more website visitors, more newsletter signups, or more sales? Once you know what you want to achieve, you can start looking for an agency that specializes in that area. Finally, read reviews and case studies to learn more about the agency’s work and see if they’re a good fit for your business. With these things in mind, you’ll be able to find the right lead generation agency for your needs.
The following are the points that need to be considered before hiring a lead generation agency:
Define Your Lead Generation Goals
Before hiring a lead generation agency, you need to define your lead generation goals first. What are you looking to achieve? Do you want to increase brand awareness, drive more traffic to your website, or generate more leads? Once you know what your goals are, you can start to look for an agency that can help you achieve them.
Do Your Research
Once you know what you’re looking for, it’s time to do your market research and find the right agency for you. There are a lot of lead generation agencies out there, so take your time to find one that’s a good fit for your business.
Set a Budget
Before you start working with a lead generation agency, you need to set a budget. How much are you willing to spend on lead generation? This will help you narrow down your options and find an agency that fits within your budget.
Ask for Referrals
If you know anyone who has worked with a lead generation agency before, you can ask them for referrals. This can be a great way to find an agency that you can trust your business’s marketing with.
Sales Aladin – Lead Generation Company in India
Check Out Their Portfolio
When you’re looking at different lead generation agencies, make sure to check out their portfolios. This will give you an idea of the type of work they have done in the past and whether or not they are a good fit for your business.
Read Online Reviews
In addition to checking out an agency’s portfolio, make sure to read their online reviews. This can help you better understand the agency’s work through others’ points of view and experiences.
When you’re considering working with a lead generation agency, ask about their process. How do they generate leads? What kind of methods do they use? This will help you determine if they are the right fit for your business.
Inquire About Pricing
Pricing is an important consideration when you’re hiring a lead generation agency. It is essential to understand their plans and pricing upfront to know what to expect.
Get a Contract in Writing
Before you start working with a lead generation agency, get a contract in writing. This will protect both you and the agency, and it will ensure that everyone is on the same page from the start.
As your business grows, so does the complexity of your sales process. You can no longer rely on a single salesperson to generate all of your leads and close all of your deals. Instead, you need to build a team of specialists who can each play a role in generating and nurturing leads until they’re ready to buy.
That’s where a lead generation agency comes in. A lead generation agency can help you build an effective lead generation system, from generating initial leads to qualifying and nurturing them until they’re ready to buy.
Here are a few reasons why you need to hire a lead generation agency:
It has the expertise and experience to build an effective lead generation system.
It makes use of various categories for the organization of data to make it more relevant to the target market.
It knows how to work with special marketing tools and thus, better sales for your business.
It can help you measure and optimize your lead generation efforts.
It can help improve your business’s online visibility.
Thus, a growing business demands a need to hire a lead generation agency as they have the expertise and experience to build an effective lead generation system that can help you generate leads on a large scale.
Conclusion
Before you hire a lead generation agency, ask them about their process and how they plan to generate leads for your business. Ask for case studies or references from previous clients to get an idea of the quality of leads the agency has generated in the past. And finally, make sure you have a clear understanding of what the agency will and will not do for you.
FAQs
What does a lead generation agency do?
A lead generation agency combines the information of customers and businesses that it can sell to a particular business wishing to buy new leads.
Is hiring a lead generation agency worth it?
Yes, hiring a lead generation agency is worth it as the businesses with efficient lead generation practices have a 9.3% higher sales success rate.
Which are some prominent lead generation companies in India?
Sales Aladin
TDCX
Invensis
B2B Associates
Flatworld Solutions
What is the difference between lead generation and digital marketing?
Lead generation simply means initiating customers’ interest in your products and services. On the other hand, digital marketing focuses on the entire journey of buyers.
Wondering what are Tier 2 and Tier 3 cities? Based on population density, Indian cities are classified as X (tier 1), Y (tier 2) and Z (tier 3) categories. Where Tier 1 contains metropolitan cities like Delhi, Bangalore, Mumbai & so on, Tier 2 has cities like Gurgaon, Vellore, Kochi etc., The remaining cities fall under Tier 3 i.e., Kanpur, Chandigarh & more.
Normally, businesses use different strategies and techniques to cater to different customer segments residing in any of the tiers. This makes operating in different cities difficult. To understand the challenges faced by businesses while operating in Tier 2 & Tier 3 cities, StartupTalky reached out to entrepreneurs from diverse fields to get their insight on the same. And here’s what we got to know –
Sanjay Tiwari – Co-founder, 21CC Education
Sanjay Tiwari – Co-founder, 21CC Education
We are operating in these locations on behalf of logistics and supply chain brands that are gaining attention and interest in these locations. While we are aware of the challenges businesses face when it comes to skilling and employability in these areas, since we ourselves aren’t approaching these markets directly yet, it is too soon to comment from an informed lens.
BANKIT tries to reach this segment of the audience through retailers who are already familiar with the customer and can reach them more effectively. This also helps in overcoming the most common challenge that companies face while reaching consumers in Tier 2/3 areas: Gaining their trust. The other most commonly-faced challenge is the language. India with its varied cultures has different languages in the same state and district and due to lack of exposure people in smaller cities and towns understand only one language that a company may not be versed with.
Shalabh Upadhyay – Founder & CEO, NEWJ (New Emerging World of Journalism)
Amit Nigam – COO & Executive Director, BANKIT
The biggest challenge (and an opportunity at the same time) for homegrown startups is to build in-house, India-centric expertise and capabilities and not solely be governed by tech and social media giants for reaching their audiences. With the Government’s clarion call for Atmanirbhar Bharat, I believe that our time has arrived to rise to the occasion in terms of shaping the larger global narrative and discourse through ‘Bharat First’ solutions.
Considering the lack of resources in rural areas, there were several challenges that we had to face. It was difficult to invest in local content and customer support and there are still a lot of areas with no high-speed broadband which makes it tough for us to reach them effectively and students completely relying on a device for all their educational needs could be restricting at times”
Self-awareness among the parents was not there. The need to teach kids to code was not a priority in these cities. Also, due to inevitable circumstances, kids do not have proper laptops or computers to learn to code.
Challenges vary depending on the degree of reliance the solutions have on technology and what proportion of the delivery can be managed remotely without compromising consumer experience.
In our case, the most significant challenges are Tier agnostic. While there is no shortage of great talent in India, the biggest challenge we face is the need for instant gratification. Loyalty from talent is coming at a considerable premium. It is less about remuneration and more about the talkability, the halo effect, and the prestige the job provides to the recruited talent.
Tactically speaking, finding T2 and T3 talent that is both an expert in vernaculars and proficient in English is not easy to find.
Raj N – Founder, Zaggle
Raj N – Founder, Zaggle
They say that real wealth of India lies in its villages. “If the village perishes, India will perish too”
Brands need to understand that the rules of game are different when it comes to rural markets, especially in India, where diversity rules. The rural environment is vastly different from the urban and therefore communication to potential customers requires a specialized and integrated approach.
Tanul Mishra – CEO, Afthonia Lab
Tanul Mishra – CEO, Afthonia Lab
I believe that today’s world is knowledge forward and as such is a catalyst for driving a rapid pace of advancement and innovation in everything we interact with. And while there are many great startups with path breaking ideas that can truly come from anywhere, getting the right support from the right quarters to help sustain and grow that idea is critical to the survival of that venture.
What I have seen is startups at least in the initial stages require intense support for the right kind of network access to the experts and industry stalwarts who can share knowledge and insights with them from their wealth of experience helping them avoid the pitfalls of starting a business from the ground up. This support may not necessarily be easily available in tier II and III cities – especially the tier III cities and can be the difference between the startup thriving or perishing.
To my mind, therefore the first challenge to solve is the lack of access and thankfully we have the resources today to digital create a borderless support ecosystem, wherein an incubator like ours based in Bengaluru can easily spot and support a great idea emerging from a tier 2 town in Gujarat or Uttar Pradesh. This is crucial as instead of waiting in the wings these startups from smaller towns in India get an equal opportunity to be heard, to be nurtured and eventually find their own space in a complex market like India and even venture towards international markets with the right support ecosystem in place.
Conclusion
Problems are inevitable. It is the knack of cracking the solutions that takes people ahead in life. As per the above views from well-known entrepreneurs, though they face various challenges along their way while catering to Tier 2 and Tier 3 cities, ‘Never Give Up’ becomes their motto!
Hope you got an understanding on the problems faced in entrepreneurs in various industries while operating in Tier 2 and Tier 3 cities.
Parnas Ghosh
