Market research is the process of gathering, recording and analyzing qualitative and quantitative data. This data usually relates to a specific market’s characteristics. Market researchers use techniques like feasibility studies, advertising evaluation, customer satisfaction surveys, mystery evaluations, tracking studies and so forth.
It has been established that the majority of product or company failures come from the fact that little to no market research was done beforehand. As it is said, failing to prepare is preparing to fail. So, wherein lies the importance of market research and what are the benefits associated with it?
1. Identifies new products or services
Market research can help you to discover what new products or services the market needs and how you can provide that. Key issues with developing a certain product or services can be identified and it can help you to avoid expensive mistakes with its development. It also helps you establish the factors that are most important to customers and how you can incorporate those factors into what you want to bring to the market.
2. Identifies potential customers
Demographic data such as gender, age, income, occupation and lifestyle can help you to understand your customer base more in-depth. If you know what your current customers look like, you can now who to market your products or services to in the future. Marketing to the wrong type of customer can lead to the product performing poorly.
3. Establishes viability of a product or service
If your company is already planning on bringing a new product or service to the market, you need to first establish whether the market is open to it. Will the product be welcomed? Is the product needed by the customers you are targeting? Will it be viable and what is its potential to succeed?
4. Anticipates and discovers future market trends
By knowing your market and the trends that are arising in the future, you can develop strategies that will help you counteract any downward trends that may affect your business. Upward trends can, in turn, be utilized to progress your business.
5. Keeps your company ahead of competitors
Comparative studies are great for tracking the progress of your competitors in comparison with your company’s progress. If they are moving far ahead of you, it is a great opportunity for you to learn what they are doing differently to you. Business strategies can be developed to move ahead of your competitors.
6. Decides best marketing strategy
Research is great for establishing what medium or channel is the best way to reach those who are truly interested in what you have to offer. If you can discover that your customer base frequents a certain medium more than another, it stands to reason that your efforts should be focused there and not somewhere else. Resources are valuable so putting them where success is guaranteed is a no-brainer.
7. Reduces risk and increases profitability
Having the right knowledge can help you reduce the risks your company takes and if need be, help you understand what risks are worth taking based on past information and future predictions of market trends. Market research helps to establish market viability which reduces the risk of failure. Knowing your customer needs is also essential to reducing risk. Reducing risk also helps to increase profitability at the end of the day.
8. Identifies threats and opportunities
Many of you may have heard of the SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. Market research can help to determine all four of these areas. Where do your company’s strengths and weaknesses lie? What opportunities are available for your business on your market? What threats/risks do you need to overcome or avoid in order to be successful?
9. Helps to understand existing customers
Market research can help you to understand existing customers on a deeper level. Your customers are complex and what they may have needed before may not be what they need now. To be successful you need to check the pulse of your customer base regularly. What are their immediate needs? Are there new needs that your company can fulfil? What are their thoughts on your company and products?
Market research also helps to establish customer satisfaction levels. If you discover their satisfaction levels to be low, you can find out why and fix it. If it is high, you can establish why they are high and learn how to maintain that level.
10. Assists in realistic goal setting
Real-time data about your market and your customer base can help you to set goals that are attainable. Establishing a growth pattern over time lets you know what you can expect in the future and what plan you can implement in order to gradually expand that growth in a realistic manner. If you set unattainable goals, you will overexert your resources, fail before you’ve even started and miss out on goals that are better for your company in the long run.