Market Research
Senior 5 · Entrepreneurship
Market Research
Lesson 1 of 4
25 min
Kayitesi has saved and borrowed Frw 2,400,000 to start Ifunguro Express, a service that cooks lunch in a rented kitchen in Rubavu town and delivers it by moto to people who work in offices, banks and shops. She is sure it will work: "Everyone has to eat lunch." (An illustrative business: the names and figures in this unit are invented.)
Her uncle, who once lost money on a car-wash, asks her five questions. How many office workers are there within ten minutes of the kitchen? What do they eat at lunch now, and what do they pay for it? Who already sells lunch to them? Would they pay extra to have it delivered? And how will they hear about her? Kayitesi cannot answer any of them with facts.
Think about it: which of the five questions, if the answer turned out badly, would make Kayitesi change her plan, or drop it?
Every business decision rests on beliefs about customers and competitors. A belief that has not been checked is a guess. Market research is the work of replacing guesses with evidence before money is committed, and of keeping that evidence up to date once the business is running.
Definition
Market research: the planned, systematic collection, recording and analysis of information about a market (its customers, competitors, prices and trends) in order to help a business make better decisions.
Example: Kayitesi counting the offices on three streets and asking 60 workers what they pay for lunch is market research.
Definition
Marketing research: the wider study of every part of a business's marketing, including how well its own advertising, pricing and distribution are working. Market research (about the market) is one part of it.
Example: after launch, testing whether a radio advert or a WhatsApp offer brought more new orders is marketing research.
Definition
Market: all the actual and potential buyers of a product, together with the sellers who compete to serve them. A target market is the particular group of buyers that a business chooses to serve.
Example: Kayitesi's target market is office and shop workers in central Rubavu who buy lunch on working days.
Good research follows a sequence. Skipping the first step is the most common reason research produces a heap of answers that decide nothing.
Tip
Start from the decision, not the questionnaire. Before you write a single question, finish this sentence: "When this research is done, I will decide whether to …". Every question that does not help that decision can be cut.
| Purpose | What the research tells the business | In Kayitesi's case |
|---|---|---|
| Identify customer needs and wants | What buyers value, and which problems they want solved | Do workers want cheaper food, faster food or healthier food? |
| Estimate demand | How many buyers there are and how much they will buy | How many meals a day she can expect to sell |
| Set a price | What buyers pay now and what they would accept | Whether Frw 2,000 a meal is too high |
| Understand competitors | Who else serves the market, their prices, strengths and gaps | Restaurants, street vendors and canteens nearby |
| Choose place and promotion | Where buyers can be reached and which media they use | Delivery radius; WhatsApp groups or radio |
| Reduce risk | Whether an idea is likely to fail before money is spent | Whether to spend the Frw 2.4 million at all |
| Spot opportunities and trends | Unmet needs and changes in the market | Demand for vegetarian or low-salt meals |
| Support finance | Evidence that lenders and investors ask for | Survey results to show a bank |
Research is not only for new businesses. An established firm researches when sales fall without an obvious reason, before it launches a new product, before it enters a new district or country, and to check how satisfied its customers are.
Worked example 1: from a worry to research objectives
Kayitesi's worry is "Will Ifunguro Express work?" Turn it into research objectives that can actually be answered.
Step 1: name the decision. "I will decide whether to rent the kitchen and buy equipment, and if so, what to charge."
Step 2: break the decision into the facts it depends on. Number of potential customers; how many would order; price they would accept; what competitors offer.
Step 3: write each as a specific, measurable objective.
Check: each objective names what is measured and, where relevant, for whom and where. "To find out if people like food" fails that test.
Worked example 2: is research worth its cost?
A small study (a survey of 60 workers, a count of offices and a visit to every competitor) will cost Kayitesi about Frw 150,000 in time, transport and printing. Her mentor estimates that without research there is a 40% chance the business fails and she loses the whole Frw 2,400,000. With research, she will either drop a bad idea or adjust it, cutting that chance to about 10%. (Illustrative estimates.)
Expected loss without research: Frw.
Expected loss with research: Frw.
Conclusion: research lowers the expected loss by Frw, so it is well worth its cost. The comparison changes for a very small venture: if only Frw 100,000 were at risk, a Frw 150,000 study would cost more than it could ever save.
Warning
Do not research to prove you are right. An entrepreneur in love with an idea tends to ask only the people who will agree and to ignore the answers that hurt. This is called confirmation bias. Decide in advance what result would make you change the plan, and take that result seriously when it comes.
Practice
Sources and credits
Written by Ganzaa: the Rubavu lunch-delivery case, the process diagram, the tables, the worked examples and the practice items. The business, names and figures are illustrative (2026).
