For a business to truly prosper there must be an extensive knowledge of both customers and competitors. Market research is the method in which information is gathered to help companies become more aware of their customers perceptions regarding current or potential products and services. Market research doesn’t have to be an intimidating process! Most business owners conduct market research without knowing it; talking to customers about your business or conducting pricing analysis against your competitors are all beginning phases of market research. Formalizing the research process can produce an abundance of information about your products and services, your customers and the marketplace you operate in.
The Purpose of Market Research
Piloting an effective market research process will equip your company with the necessary knowledge to make informed business decisions about innovation, development, and the 4 P’s of marketing:
- Product - A product can be a palpable good or an impalpable service that satisfies the needs or wants of consumers. Whether you sell custom jewelry boxes or provide lavish accommodations, it is crucial to have a strong understanding of what your product is and what makes it unique before you can effectively market it.
- Price - Once the product offering is established, the proceeding step is to make some pricing decisions. Determining price points will impact profit margins, supply, demand and marketing strategy. It is important to set prices based on prevalent profit margins, competitors' prices, financing options or the price a customer is willing to pay.
- Promotion - promoting a product or service includes components like: advertising, SEO marketing, public relations, social media marketing, email marketing, video marketing and so on. To effectively promote a product, businesses should work out how to reach specific market segments (parents, students, professionals, etc.) in areas of advertising, social media, and branding.
- Placement - placing the right product, at the best price point, during an optimal point in time is key for a successful marketing campaign. When determining placement, it’s essential to assess the characteristics of different locations and the value of points of sale such as retail or wholesale.
The fundamental part of conducting market research is being able to avoid unpleasant surprises. Instinct and experience can be useful, but research and data help paint a more accurate picture of your market. Performing market research on a continual basis will ensure that your business keeps up with the dynamics of the economy and demography. Overall, market research will help your company; understand your customers and their partialities (4 P's), identify opportunities to grow and increase profits, recognize and plan for industry and economic shifts, monitor the competition in your market, and mitigate risk in your business decisions.
Knowing When to Conduct Market Research
Market research is most often used during the planning stages of business development. It is true, market research is a crucial step for new companies and show be a key component of any entrepreneur's business plan. Data collected through market research serves a purpose in several areas the business plan, contributing to sections on; determining the sales potential of your products and services, attracting customers to your business, and selling to customers and earning repeat business.
Business plans and market research are not exclusive to new businesses only. Accurate assessment of the market and development of an effective plan is critical to the success of both new and existing businesses. Businesses contemplating significant changes, such as business expansion and relocation, are also wise to use market research to support their decisions. Examples of situations that might call for market research include: new advertising campaigns, opening a new location or changing business locations, increasing production levels, introducing new lines of products or services.
The kind of information gathered through marketing research during the planning and growth stages of your business can also be very useful in its day-to-day operation. A regular flow of market research information can help you to maximize the potential of your current business activities and help you to create a roadmap for future growth.
Takeaway: Put Your Plans into Action
Market research can cover a wide range of activities with many levels of complexity that can be used to best suit your market research campaign. Depending on the objectives, businesses can perform do-it-yourself research, such as short customer satisfaction surveys or undertake complex research studies that require assistance from a professional market research firm. Regardless of the size of your market research budget, the time you have available, or your level of experience, some form of market research is possible, and it can help you to improve your business decisions.