It takes quite a time to think of a business idea. And once we have found one, spending hours on market research is the last thing we want to do. Instead, most would just kick start into making or selling their product rather than thinking about the value of research.
For any business, be it trading or a service provider, a market research can be proven very beneficial. Especially for small-scale businesses, where the initial months can be crucial due to limited resources. These businesses relay most on their sales and customers and market research ensures that those sales keeps coming.
In this blog, we will explain what actually is market research and why is it important to a business.
What is Market Research?
Before we get into the importance of market research, lets first learn what it is. Market research is not a specific strategy or rule set to follow, its an effort of a business to learn more about their target customers, their needs, behaviors and preferences before buying a product.
Surveys and focus groups are known to be most effective tools of market research.
The Importance of Market Research
Below are seven reasons why we think market research is important for a business:
1. Easily Spot Business Opportunities
Once you have completed your market research, you will have a clear understanding on who you want to sell your product to (target customers), where can you reach them (marketing channels), and what are their preferences in buying a product. Once you have concluded all of the above, you’ll have able to easily spot business opportunities to grow your sales and customer base. For example:
Form partnerships with other businesses. A research study will help you find demographics of your target customers, which can help you find other businesses who serve them and form partnerships with such businesses which can be mutually beneficial.
Create exciting offers. Studying what additional products and services are of interest to your customers can help you increase your sales with adding products with one another, such as add-ons and product bundles.
New locations. Studying the geographical area of your customers can help you advertise your products and services which suits the needs and culture of that area.
2. Lower Business Risks
According to data collected from the Bureau of Labor Statistics, half of all businesses with employees do not survive past their fifth year. To ensure that your business stays intact with a steady follow of sales and customers, you need market research. Regular market research keeps you updated on current buying patterns of customers and potentials and keeps you ahead of your competitors. Here’s how you can apply this:
Test new products before launching. Before going all-out introducing a new product in the market, you can test it on a smaller group of your audience to see if they like the product. For example, while planning to retire a popular product, show the new product that will succeed the current one to your frequent buyers. Ask them if they’d buy the latest model or the previous old design.
Find out why customers don’t come back. Small businesses usually have recurring customers. For some reason if they do not come back, you can conduct a survey to your past clients and take their feedback to find out why are they not coming back.
Get insights on problem areas. If you find your sales declining on your most popular product for straight three months, you need to find out what the problem is and how to fix it. Survey your past customers and find out the issue behind it. You won’t know until you ask.
3. Create Relevant Promotional Materials
Market research helps you address exactly what to write in your product brochures, website, and social media accounts as it gives you the access of all of your target customers’ needs, wants and frustrations. Market research gives you the power to address their every question while creating your marketing strategy.
Here are some other ways beneficial to you while you create your marketing materials:
Perception of the buyers. Before creating your marketing materials, know your customers perception, if they see your product as a necessity or as a luxury. This will help you in designing your brochures, website, and social media accounts.
Age group of the buyers. Identifying the age group of your target audience can certainly help you drafting the tone of language in your promotional materials.
4. Know Where to Advertise
Small business owners often find themselves with limited budgets. To ensure them with the best possible results, market research helps them optimize their marketing budget in ways to achieve their desired results. Learning to your key target areas can help you reach to your intended audience.
Here are some of the budgetary solutions that your market research can help with:
Buying ads on social media. Based on the data collected from your market research, you can access where to spend your ads budget. For example, if your target market spends most of their time only on Instagram, there is no point of spending on ads on twitter.
Placing flyers and posters. Learning your target audiences’ geographic areas, you know where your customers might be spending their most time in physical spaces. For example, a university student is more likely to be spending time on campus, so placing ads on bulletin boards or announcements areas in such establishments can help reach your message to your target customers.
Targeting ads. Online ads on social media and per-per-click ads are known to be quite accurate in reaching to your target customers.
5. Outsell Competitors
If you know your customers more your business tends to win better. With the help of market research businesses can find out what their customers’ needs and wants and how to fulfill them. Here are some suggestions you can use market research to outsell your competitors:
Target dissatisfied customers. Learning frustrations of your target customers with your competitors’ products can help you recuperate your products and target those who are ready to switch brands.
Find an underserved customer segment. Through market research you can know if there are any segments that your competitors might have neglected. This can give you access to a new pool of customers.
Identify unaddressed customer needs. While conducting your market research, you might come across problems or desires that are not addressed by any of your competitors. You may address those points in your marketing materials and see if your sales increase.
6. Set Better Goals for your Business
It is common for business owners to set goals for their business, which usually means the growth of their company in terms of sales and customer base. To know an estimate if the business can achieve their desired goal or how to achieve, they need market research.
“You might desire to have your sales double by the end of the year. Do you know if the goal you have set for your business is feasible or not at the current growth levels of your company? Without having a clear view of your current standing, you’ll just be setting arbitrary goals”, quoted by Mr. Muhammad Salman, a research consultant from Greenland Market Research Dubai.
Market research helps you determine the growth of your customer base. Studying your target market will provide you answers to the questions you have. For example, to grow your network in an untapped market segment or to continue growing your customer base in your current audience.
7. Decision-Making Becomes Simple
Do I really need to market research for my business? This question frequently comes up to every business owner when making a tough decision. To keep it simple, business owners can just go back to their past market research data to analyze if the report helped them grow their sales and customer base.
Below are a few key decisions that can be solved with a thorough market research:
- Where and how much to spend on advertising a product
- If there is a demand for a new product in the market
- Whether to expand operations in a new area
- What should be the price offerings of your product
- Whether to discontinue a product or improve it
In current market scenario, there is a real need for market research for businesses. Armed with solid facts and data, market research helps us make complex decisions simpler and keep us informed on our target market.
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