Why is Market Research Important? Well, there are different types of data that the company needs, but one thing is for sure, all of them work towards achieving a better economy for the business. The information that the company gathers helps it to plan for the future and make decisions based on the statistics.
Marketing research involves data gathering, analysis (leads to decision making), and interpretation about the marketing situation for businesses. It is important in order to make sound decisions on all matters regarding business.
Identify new customers
In order to identify potential new customers, you must first understand who your customers are. You will also need to know key demographics.
When looking at your product or service, it’s important to consider questions such as:
- Who will use your product or service?
- What is the age range of your customers?
- What is their income level, marital status, and geographical location?
Understanding these factors will enable you to target customers more effectively.
Customer insight
Your customer records can provide a wealth of information, such as purchasing trends, most selling services in different demographic segments, etc. Market research can help you assess key trends to anticipate how the market may change. It is a vital step in identifying new market segments, developing new products and choosing your target market.
Market research done well helps you plan your strategy. Even if you are an established company, you need to keep in touch with your customers’ needs, as well as with market trends and your competitors. By using an insights repository as part of your market research process, you can get quicker, faster and efficient research insights that matter.
Market research can also measure the effectiveness of your own marketing. You can find out how well people know about your products and services. The results can give you ideas about effective packaging and advertising to generate more brand awareness.
Develop new and effective strategies
Data from market research will help you to make more informed decisions. For example, relating to pricing, distribution channels, marketing mediums, or to identify opportunities to introduce a new product or service. These results will also help you to make more informed decisions about your existing operations and activities.
- Should you expand or reduce?
- Is there room in your current operations to diversify?
- Are you targeting the right audience with your marketing activities
Casio used market research to get better insights on customers & resellers and adjusted the marketing strategies to be more effective.
Easily Spot Business Opportunities
After you’ve done your market research, it’ll be clear to you who you want to reach out to (your target customers), where you can reach them (your marketing channels), and what they’re interested in. Once you’ve defined these, you’ll be able to easily spot business opportunities. For example:
- Form partnerships with other businesses. Learning about who your customers are, such as their demographics, can help you find other small businesses that serve them. You can approach these businesses for joint promotions that’ll be mutually beneficial.
- Create profitable order upgrades. Knowing the other products and services that your customers tend to buy can help you come up with add-ons, product bundles, and upsells that increase the average value of each order.
- Find new locations to sell to. Knowing the geographical areas where most of your target customers live will allow you to create compelling targeted campaigns that suit the needs and culture of that area.
Identify how to expand your offering
Market research may help you discover new markets that are under-serviced or in demand. For example, you can identify changing market trends due to new housing construction, increased levels of education, or other changes that will bring new opportunities for your business.
All in all, market research isn’t just for new startup businesses. Businesses of all shapes, sizes, scope, industry and experience levels can benefit from market research. Market research can help you to learn about new and existing customers, identify issues and solve problems, and even help explore new opportunities that pave the way for business growth.
Helps You Keep An Eye On Your Competitors
As a startup founder, you may think being original is all about being focused on what you’re doing and not worry about what everyone else may be up to. This approach spells long-term disaster. While you should certainly keep your focus on your own efforts, it is critical – and smart – to keep tabs on your rivals and know what they are thinking or planning.
With sound market research on your side, you can better prepare for what your competitor may be about to do next and make sure they aren’t able to put a dent in your market share. With regular research, you can not only learn to anticipate their next move but be in a better position to avert any possible damage from their end.
In addition to conducting market research, you can pair it up with regularly monitoring their social media, blog posts, and seeing what is trending in your market. Here is a great resource on how you can go about it.
Lower Business Risks
Around half of businesses with employees don’t survive past the fifth year, according to data from the Bureau of Labor Statistics. The way to make sure that your business survives for longer is to ensure that you’ve got a steady stream of sales and customers. To do that, you need market research.
Regular market research will be your way to check in with your current customers and potential customers to ensure that you’re still meeting their needs. Here’s how you can apply this:
- Test new designs and products before launching. Before you go all-in on a dramatic change for your business, you can test it on a smaller subset of your audience to see if the change would be welcome. For example, if you plan to do a redesign of a popular product, show the new design to your most frequent buyers. Test or ask them if they’re more likely to buy the new design versus, an alternative new design, or the old design.
- Find out why customers don’t come back. Ideally, your small business should have recurring customers. If they don’t come back, you can conduct a survey of previous customers or set up a focus group to find out why you’re not making any repeat sales.
- Get insights on problem areas. If your most popular product sees a big drop in sales for three consecutive months, you need to find out how to fix it before it ruins your profits completely. Survey your most frequent customers about the product and find out where the problem lies. It could be anything from a decline in the product quality or a glitch on your online store. You’ll never know unless you ask.
Helps You Conduct Your Marketing Based On Informed Decisions
Launching and running a business means making decisions every day – about products, services, expansions, HR, and so much more. Without solid market research backing your decisions, all you are doing is guess-work, hoping the results will be in your favor.
With research helping your business, you are better informed about areas to invest in, gauge the potential success of new products, test new markets to expand into, and to determine what kinds of products/services will be most favored by your customers.
This is certainly what Starbucks does. The company has a whole dedicated platform ‘My Starbucks Idea’ where employees and customers and anyone who wants can pitch in and share what they think the company should do next, the flavors it should try, the new products it should launch, bring back some old favorites, and more.
The platform helps them remain informed on all important aspects of business investment and propels them towards ventures and venues that hold the most potential.
If you aren’t a humungous company like Starbucks and cannot afford to host dedicated platforms to gain important information, invest in market research whenever you have a big decision coming up. It isn’t as expensive as you think and doesn’t take that much time. Plus the results can be relevant for a lot of related areas that you may want information on.
Conclusion:
Marketing Research is the systematic obligation to investigate and gain insight into consumer behavior, the marketplace environment and organizational activities. You don’t have to submit your marketing plan or concept to a research firm for their review and recommendation because you can do it all by yourself. Just call a market research company and you’ll clarify the questions you want the answers for.