When looking to develop a new product or service, some businesses owners ignore the importance of market research. They might think of it as unnecessary, too expensive, or may even be convinced their new idea is so objectively great that it couldn't possibly go wrong. Or, if they're already established in their field, they may think everything is going just fine as it is.
This is almost always a mistake. Market research is an invaluable component of success in business, and any business that wants to see continued growth and relevance should take the time (and money) to invest in it properly.
Why Market Research Is Important
Why is market research so vital to the success of your business?
In short, market research offers concrete answers to the most major questions businesses usually face: is there a demand for this product or service? How much of a demand? Is the market big enough to justify its development? Is there something just like it already out there? What will customers pay for this product or service?
Here are a few of the main reasons why market research is so important to your business:
- Aiding in the successful development of new products and services. Finding out what your customers want, and then developing new offerings to meet those needs, is one of the cornerstones of ongoing business growth. Market research is far and away one of the most effective ways of finding out what customers want most from your company. By that same token, market research can be used to find out where your business shouldn't pursue further development, so your company doesn't end up developing something none of your customers want or need.
- Risk reduction. When a business branches out into a new market, or even takes a new direction within the same market, it's taking a gamble. It's also a gamble for investors when they're looking to back a new venture. Market research is a great way to reduce the risks on these kinds of ventures and prove there's a market for whatever offering is being considered.
- Beating the Competition. Your competitors are probably doing market research already (if they're smart). If you're breaking out into a new market with established competitors, you're starting from a potentially huge disadvantage. The best way to combat that disparity is to arm yourself with market research data to put yourself on a more level playing field, and maybe even find growth opportunities and prospects that your competitors haven't.
- Getting Ahead and Staying Ahead. Another important factor to keep in mind: the market is not static. Trends in businesses change. Customers develop new needs and grow more sophisticated. In order to stay abreast of the latest developments, you need to know about the current and future trends in the market and respond accordingly. If you don't, rest assured your competition will.
Using Market Research to Increase Business Intelligence
So where should you begin with conducting market research for your company? First, it helps to know what kind of research you plan on doing. Common areas of market research include brand and consumer research, product development research, usability testing, competitor research, and more.
There are also two basic types of market research:
- Primary research, which involves collecting new, first-hand data that hasn't been previously collected. This includes exploratory research which focuses on potential issues or problems, rather than existing consumer trends.
- Secondary research, which means gathering and analyzing data that's already been collected. This includes sources like statistical databases, historical records, established government or scientific studies, and so on.
Setting clear and measurable goals at the outset will be vital to getting the most out of your research. Your ultimate goal should be to increase your business intelligence. "Business intelligence" is the vital data that helps companies decide how best to develop and market their products going forward. This means using every tool at your disposal to gather customer data.
Some business owners may be content with pulling data exclusively from existing sources (in other words, secondary research). While this might save a lot of time, money, and energy, it probably won't give you the specificity you need to make your research truly effective.
The best way to get that first-hand information is to go straight to the source: your customers. Information-gathering methods such as surveys, questionnaires, focus groups, and interviews are an important first step in determining the future course of your marketing efforts.
If the thought of doing this in-house is intimidating, consider outsourcing your market research or consider offering continuing education or sponsoring employees to go back to school to become market research analysts. The truth is gathering the data is the easy part but knowing what to do with it and how to apply is what’s most valuable and having an in-house team member could be a real asset.
How to Implement Market Research Analytics into Your Business
What do you do with that data once you have it? Here are some of the most tried-and-true marketing research strategies.
- Use analytics to examine your current marketing strategies and sales campaign reports to see how effective they are.
- Check your conversion rates to see which marketing strategies are working, and which aren't -- a valuable practice across all channels, including websites, email newsletters, etc.
- Gather more information on your customers, such as income, demographics, shopping habits, and payment preferences, to better segment your customers. Use a CRM system to help all this data in one place.
- Use analytics to identify which products and services are the most successful, and which are under-performing. Use this data to either fine-tune the less successful products, or simply cut them from your business offerings altogether.
- The longer you track data, the more useful it becomes: use historical data to predict consumer trends and help forecast powerful marketing strategies in the future.
- Do research on your competitors to find out what's working best for them -- and use that data to either go toe-to-toe or find a niche they're not covering.
- Collect and analyze overall industry research and statistics to better determine where you stand in your respective markets.
The internet and information technology have made consumers more sophisticated, informed, and powerful than ever before. They also have more options than ever before. But that doesn't have to work against you. With proper market research, you can find out what they want and help shape your company into the best option to choose from.