What Is Market Research In Business

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Market research is a set of different types of research that any company can use to assist them in making better decisions. The first thing that you have to realize is that there are many different factors involved in market research. This article on why is market research important will give you an idea of the type of options that are out there. Open up your mind to new possibilities. Get ready for some serious information!

Market research is a process used by a business or a group of businesses to collect information on customers. This includes customers’ opinions and reactions, as well as customer preferences.

Market research is the collection and analysis of information about consumers, competitors, and the effectiveness of marketing programs. While market research is crucial for a business startup, it’s also useful for established businesses to increase profits. It’s accurate information about the marketplace, the target market (customers), and the competition that allows the development of a successful marketing plan.

Three key objectives of market research

A market research project may usually have 3 different types of objectives.

  1. Administrative: Help a company or business development, through proper planning, organization, and both human and material resources control, and thus satisfy all specific needs within the market, at the right time.
  2. Social: Satisfy customer’s specific needs through a required product or service. The product or service should comply with the requirements and preferences of a customer when it’s consumed.
  3. Economical: Determine the economical degree of success or failure a company can have while being new to the market, or otherwise introducing new products or services, and thus providing certainty to all actions to be implemented.

Why is market research important?

Conducting research is one of the best ways of achieving customer satisfaction, reducing customer churn and elevating business. Here are the reasons why market research is important and should be considered in any business:

  • Valuable information: It provides information and opportunities about the value of existing and new products, thus, helping businesses plan and strategize accordingly.
  • Customer-centric: It helps to determine what the customers need and want. Marketing is customer-centric and understanding the customers and their needs will help businesses design products or services that best suit them.
  • Forecasts: By understanding the needs of customers, businesses can also forecast their production and sales. Market research also helps in determining optimum inventory stock.
  • Competitive advantage: To stay ahead of competitors market research is a vital tool to carry out comparative studies. Businesses can devise business strategies that can help them stay ahead of their competitors.
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How Do Businesses Use Market Research?

Business owners use market research to:

  • Determine the feasibility of a new business. Market research is an essential component of a business plan for startup businesses - if market research does not indicate a demand for the product or service, the proposed business will not likely be viable.
  • Test interest in new products or services to respond to customer needs.
  • Find and develop new markets or expand existing ones.
  • Monitor industry and economic trends and develop strategies to adapt the business to the changing environment.
  • Determine optimal product placement – when, where, and how a product or service will be distributed.
  • Improve aspects of their businesses, such as customer service.
  • Monitor the competition – checking competitors ads, websites, social mediacampaigns, etc. to see how they attempt to capture some of your market share.
  • Develop competitive strategies – for example, setting competitive pricing for products or services or determining how your products/services and customer service compare to the competition.
  • Develop optimal strategies for promotion - how to get the message out to the target market via branding, traditional advertising and/or social media, etc.

Use Market Research Before Starting or Expanding

Business owners use market research to determine the feasibility of new business opportunities. Market research is an essential component of a business plan for any startup businesses. If market research does not indicate a demand for the product or service, the proposed business will not likely be viable. Businesses may also use results to expand into new markets.

Monitor Your Competition

You can use market research to monitor industry and economic trends. Use these results to develop strategies and adapt your business to any the changing environment.

By monitoring the competitions ads, websites, and social media campaigns you can see how they attempt to capture some of your market share. Use results to develop competitive strategies. For example, setting competitive pricing for products or services or determining how your products, services, and customer service compare to the competition.

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Customer surveys 

These are conducted in various ways, including online, one-on-one interviews, “Satisfaction Surveys,” and phone calls. Traditional phone surveys are on the decline due to cost and the low rate of response (most people find them irritating). Many businesses provide a short customer feedback form in a prominent location on the premises (or include the form with invoices), so customers can record their comments.

Market Research with Product Trials

Providing samples of new products to customers in a live setting and gauging the response can be an effective market research tool. Direct customer feedback can be used to make changes to the product or determine optimal pricing. Product trials are ideally suited for businesses like food service establishments that wish to test new menu items.

Direct observation

This involves watching or video recording customers in a natural setting to see how they respond to displays of products or services. Note that for privacy reasons, direct observation by video can only be conducted in a public setting unless the person being surveyed is aware of being video recorded. Direct observation has advantages in that for the purposes of collecting information the customer is behaving naturally (rather than possibly responding in a contrived fashion as they might with another survey form), but it is a very time-consuming method of market research.

Research With Your Web-Savvy Business

Use your online presence to conduct market research by encouraging customer feedback on business websites and social media. A short web-based questionnaire about your products and services is a simple, inexpensive, and effective way to survey customers. Make sure the survey is usable from mobile devices. Social media platforms, such as Facebook, Twitter, LinkedIn, and others provide a dialogue between you and your customers so that you can receive immediate feedback on product and service offerings and make your customers feel like you value their opinions.

Unfortunately, social media campaigns can also backfire as people are statistically more likely to post negative comments or reviews than positive ones. Poor customer service and negative product reviews can lead to widespread criticism on social media and be disastrous for businesses.

Benefits of an Efficient Market Research

  • Make well-informed decisions: The growth of an organization is dependent on the way decisions are made by the management. Using market research techniques, the management can make business decisions on the basis of obtained results that back their knowledge and experience. Market research helps to know market trends, hence to carry it out frequently to get to know the customers thoroughly.
  • Gain accurate information: Market research provides real and accurate information that will prepare the organization for any mishaps that may happen in the future. By properly investigating the market, a business will undoubtedly be taking a step forward, and therefore it will be taking advantage of its existing competitors.
  • Determine the market size: A researcher can evaluate the size of the market that must be covered in case of selling a product or service in order to make profits.
  • Choose an appropriate sales system: Select a precise sales system according to what the market is asking for, and according to this, the product/service can be positioned in the market.
  • Learn about customer preferences: It helps to know how the preferences (and tastes) of the clients change so that the company can satisfy preferences, purchasing habits, and income level. Researchers can determine the type of product that must be manufactured or sold based on the specific needs of consumers.
  • Gather details about customer perception about the brand: In addition to generating information, market research helps a researcher in understanding how the customers perceive the organization or brand.
  • Analyze customer communication methods: Market research serves as a guide for communication with current and potential clients.
  • Productive business investment: It is a great investment for any business, because thanks to it they get invaluable information, it shows researchers the way to follow to take the right path and achieve the sales that are required.
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Conclusion:

The primary goal of market research is to help you make an important decision. Whether your goal is to select a new product, improve existing products or services, or develop a marketing campaign, market research will provide valuable information about what customers are looking for. The market research also provides information on how customers learn about products and services, what they think about them, what influences their buying decisions, and more. Knowing this can help you shape your organization’s future strategies.

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