Running a business without adequate market information is like driving a car with a foggy windscreen – very slow progress and a lot of prayers. Market research is a valuable tool for any business because it provides guidance and detailed information encompassing customer demographics and demands, market trends and competitors’ analysis for better decision making. Whether you are thinking of launching a new product or service, scaling up your existing business, or just trying to improve your business activities to gain a competitive edge, market research is a crucial component.
Most businesses underestimate the value of market research and focus their efforts on selling their products or services right away based on the insights and instincts of a few persons at key positions. However, without properly understanding the market and its stakeholders, these efforts will be in vain.
We have outlined five reasons why market research is important during various stages of the business life cycle:
The business that understands its customers more tends to win more. To stay ahead of the competition, you need to identify your target customers and their needs. The more information you have regarding your target customer’s likes and dislikes, purchasing behavior and expectations, the more you will be able to cater to their needs resulting in your business being their number one choice.
Through market research, you can map out the full profile of your ideal customer including their age, gender, location and income among others. This, in turn, will help you to determine the market size and factors that trigger them to buy. Simultaneously, you can also effectively tailor your marketing and pricing strategies to match your customers’ interest.
Today’s market is filled with a myriad of competitors creating entry barriers for new businesses and making it difficult for existing businesses to stay in the game. It is as difficult to acquire a new customer as it is to retain an existing one.
Market research, however, can assist in making this process a whole lot easier by helping you gauge the competitive landscape. Through market assessments, key players in the marketplace, as well as those showing growth potential, can be identified in turn helping us to pinpoint their strengths and weaknesses. The competitors’ gaps can be used to your advantage to capture the target audiences. Furthermore, learning what performed best for your competitors can set an example while modeling your own strategy for the business.
Before taking the leap and launching your product/service at a full scale, it is essential to determine if your product/service resonates with your target audiences or not. Testing the market will help you realize if there are any mistakes or improvements that should be considered. While saving additional expenses, it will also avoid the business from delivering a bad product/service.
Although one can never guarantee the success of a product/service, market testing provides you with a slew of guidelines and measures that can be adopted for better improving your product/service.
This statement by Bill Clinton surely holds immense truth in the area of businesses. We all know the story of Nokia – once a giant brand – who lost in the mobile industry due to their failure to predict the future of the market. However, brands such as Apple and Xiaomi have penetrated the market by conducting their research ahead of the competition and are now targeting different audience segments with the same product – mobile phones.
Therefore, if you want to stay in the game, it is essential to realize that it is equally important to predict change as anticipating it.
The growth of any business relies on how effectively and efficiently you have carried out your market research. If you have done your research properly, then you can realize problems before they occur saving you and your business from loss.
The process of market research is designed in such a way that it helps businesses to minimize risks and make the marketing strategy cost-effective. It does so by discerning customer demands, keeping track of the competitive landscape and gaps existing in the market and modifying your marketing strategies according to current market conditions.
It can be concluded that market research is imperative for businesses that aim to succeed. While performing research, it is extremely important to keep an open mind. Too often, we get attached to our ideas that we fail to perceive things from the customer’s point of view. Starbucks is an example where a company disrupted an industry by catering to the needs of its customers. Apart from good coffee, it realized that the customers were seeking a better experience for consuming their coffee. This led to modifications of seating arrangements and the entire atmosphere of Starbucks coffee chains. Examples such as this help us better understand why market research is important to a business.
Market Research is one of the highly sought services of Biruwa Advisors and we would be delighted to help our clients in this area. Please feel free to reach out to us for your research needs or even to throw around some ideas (firstname.lastname@example.org).