Not only is using groupon a great business tool in and of itself, but it’s also interesting from a market research standpoint. Want to gauge the demand for a new product or service? Want to see if your product will sell to a new demographic? Want to see if an expansion of services will help or hinder your value proposition? You can do this all risk-free using groupon’s services.

You can set up any promotional, targeted at any audience, for free. If there’s no demand, then you don’t pay anything. If there is demand, then groupon just gets a cut of the revenues you earn from the promotional. What’s more, you can track how many new customers come from the groupon promotional and who they are. This will give you data on the amount of demand and the customer base so you can successfully implement further marketing efforts.

“In 2010, just sell something special, something premium, something desirable in just one (geographical) location. Which means forgoing a chain-wide rollout or selling to all from a borderless e-shop. The limitation this will put on distribution opportunities will be compensated for by enthusiasm, PR and premium prices.”

The shotgun approach is almost never the best way to go. By targeting everyone, you end up getting no one. But if you’re going to target a small audience, you’d better know where to shoot. So where is the one, targeted location that you’re going to roll out your special, premium product or service?

Take a look at Google Insights. Type in some terms related to your product or service, and Google will pull its data together into a visualization to show you where the most demand is located. After typing in a few key terms and taking a look at the results, you should have a pretty good idea of where the people are located you want to target.

This is useful for many reasons. Enter a competitor name to track news updates, blog posts, and website additions. You can do the same for your own company name to see what people are saying about your brand. Enter words related to products or services you sell so that you can not only track what the industry is doing, but discover new competitors or potential partners that you haven’t been aware of. Or use the alerts to track job and business opportunities; they are great for getting the heads up on sales leads. You can even use them to track what is being said about people, like company executives.

The one problem with using the Google Alerts system by itself is that if you are tracking many different words and are receiving a large amount of alerts, it becomes a logistical nightmare to try and keep tabs on all of them. Lucky for us, there is a wonderful free service provided by AlertRank that provides for the classification, ranking, and sorting of all of your Google Alerts. This makes it possible to use Google Alerts in an efficient and effective manner; if you haven’t checked it out yet, head over and sign up for a free account. I would also recommend reading through the 5 part series on how to use the system so you can take advantage of all the advanced features.

Let’s just take a simple example and say we’ve invented a revolutionary new fishing fly that outperforms flies currently on the market. Now we need to answer the question of whether or not there is a large enough market to support a business selling such a fly.

Search Interest

We’ll start with search. Head over to Google’s Keyword Tool and type in some terms relative to your business. In this case you might try “fishing fly” or even get more specific with “trout fly” or “streamer flies.” It also helps to search around in Google first and read some sites related to your topic to get more word ideas to input into the tool.

The great thing about the tool is that it not only gives you a long list of related terms, but it also tells you how many people search for each of the terms every month, giving you an indication of how many people could be interested in out business. Go ahead and export all the words into Excel and graph the information to show visually how interested the market is in each specific word.

Location of csv Excel export button

Web Surfer Interest

Now let’s go back to Google search. Type in some of your relevant key words and visit the sites that pop up. Bookmark a few that are the most relevant to the market you are researching, and head over to compete.com. Sign up for a free account, and input the url’s of the sites you found to get an estimate of how many visitors each site gets per month. Important types of sites to put through this type of analysis would be blogs, news sites, ecommerce sites, and informational sites dealing with your given business idea. Below is the one we performed on fishing fly ecommerce sites.

Monthly Traffic Estimates

Another good indicator of web interest is simply how many blogs or web pages that exist that relate to your business idea. How many blogs exist that talk about fishing? Technorati and Blog Catalog are two good places to look. Finding this out also gives you a good idea of how many bloggers you could potentially reach out to so that they will feature your new product and spread it to their readers.

Social Media Interest

Let’s check out interest on Twitter. You can do this by hitting twitter directories such as Twellow and Wefollow to see how many people come up when you search for your key terms. What’s more, you can see how many followers these people have to figure how much influence each would have if they tweeted about your product.

Facebook is another important one to check out – do a search for groups or fan pages related to your business. How many pop up? How many members or fans do they have? Again, this gives you numbers representing people interested in your business that are on Facebook – and the amount of people you could potentially reach through that medium.

Summary

Now you have a decent look at the market potential for your business, and an idea of how many people you could reach using online channels and search optimization. And the entire analysis can be done in about 1 hour, for free.