Whether you are an up-and-coming business, an already established organisation or just a company launching a new business initiative, it is essential that you know your market.
Almost every business has used or will use market research at some stage of their lifecycle, whether they are aware of it or not. This could be undertaken consciously, by employing a market research agency to research an aspect of the business or subconsciously, through feedback from customers when at the till about their experiences while shopping. Although informal, this method is still considered to be market research, even if it was conducted in an informal setting by a cashier, shopkeeper or waiter. Questions such as “did you enjoy your stay”, “was everything OK” or even “can I help you with anything else” are all examples of questions that employees ask to gain a greater understanding into the market their company is in.
Market research helps companies to make informed decisions on projects, investments and new initiatives that will impact on a company’s growth. Although the positives of conducting market research outweigh the negatives, it is interesting that some of the most innovative entrepreneurs the world has ever seen, such as Steve Jobs, was famously dismissive of market research, stating that “a lot of times, people don’t know what they want until you show it to them”. On the contrary, Bill Gates explained that he believes “in innovation and that the way you get innovation is to fund research and learn the basic facts”. This is just one example of arguably two of the greatest entrepreneurs of the century sharing contrasting views on the importance of market research. What is it then, that makes market research such a vital component of a successful business?
Expanding knowledge
Market research allows a business to expand the boundaries of their knowledge. It provides opportunities for businesses to identify problems in their organisations, understand the needs of existing and future customers, identify existing and new market trends, recognise new areas for expansion, set achievable targets for business growth and sales and above all else, market research provides an opportunity for businesses to make well-informed decisions about their services and develop effective strategies. When starting a business, there is an element of risk, no matter how positive you feel about your product. By conducting market research, this element of risk is reduced substantially and the ‘gut’ feeling you had about your new business is transformed into an informed decision on what to do next. The elimination of guesswork out of marketing then increases the chances that a company can accomplish their objectives and goals set out in their marketing strategy. Needless to say then, that companies who use market research are more likely to gain a competitive edge as market research provides data on the ‘4 C’s: customers, competition, company and climate.
Customers
The amount of data available to businesses regarding customers is plentiful but it is worthless unless it can be analysed with respect to a market segment. The advantage of good market research is that it opens a portal for businesses to understand how big the existing market is, how big the potential market is and how fast the market is growing. It also allows a company to understand what are a buyer’s characteristics, where do customers buy their products, what buying process they go through, how brand loyal are consumers and what market segments exist. Knowing your customer is key to knowing what product to manufacture.
Competition
An important aspect of any business is knowing your competition and how to make your business more appealing than theirs. Market research offers the opportunity to do this as a business can find out such things as what is the market share for each player and what are the likely future sales, what percentage of buyers are aware of each brand and how do buyers perceive them, what is the satisfaction and repurchase rate per brand and what are competitors’ marketing plans and strategies. This knowledge and awareness of how competitors are marketing their products is a golden ticket in getting a step ahead of them and can be attained through conducting research.
Company
Research can also give an insight into how your own company is performing, what aspects of it can be improved and what is working well. Investigatory research into a company can lead to discovering how effective distribution, advertising, sales promotions, sales personnel and pricing are and can also aid in the understanding of how customers respond to change and how buyers will react to new products. Internal research is often underestimated in the business world but there is no doubt that this type of research, if done correctly, can yield very positive results for the future of the business.
Climate
The climate of a business is more associated with the external environment. Why do you need to know this and why do you need market research to find this out? Well, the environment also plays a huge role in how productive and successful a company is. It can benefit you financially by various means. How will technology affect the company? How will changes in the media affect the market? How will social and regulatory changes affect the market? How will changes in the general economy affect the market? These are all external factors that a company has no influence on that can alter its performance. Without the knowledge and foresight to discover future trends and environmental factors outside of the company, a company could be failing without even realising it. However, the understanding of external trends, made possible as a result of market research, opens windows for companies to create new opportunities for themselves without the hassle of worrying about the future success.
Are you ready to succeed?
So now you understand the importance of market research. What is the next step? With the market landscape fully depicted, you now have a solid foundation from which to explain how you are going to win in the marketplace. With a complete understanding of your market, you can confidently approach any customer, potential partner, or investor knowing that you have a well thought out market understanding. Your chances of gaining a greater insight are improved and your likelihood of success is much greater.
Unless you have a revolutionary idea that you think can change the world like Steve Jobs had, consider taking Bill Gates’ approach which is to cut out risk and eliminate guesswork through use of market research, as it is a proven method in giving your company the best chance of success.
OPINIONS MARKET RESEARCH 