In business, success is rarely put down to luck. In fact, there’s a whole lot of planning and research required – be it for launching a new product, considering glocalisation plans or simply trying to outsmart the competition. This is where researching your market comes in. But what is it and why is market research important for a business? We take a closer look.
What is market research?
There’s no single definition of this term. It can range from a deep dissection of a business’ market, putting in place analytical tools to measure past and future performance or even the strategies involved in gathering data. Ultimately though, it can be viewed as an initiative undertaken by a business in order to find out more about its customers, to plan future projects more effectively and to help your business grow.
Types of market research activities
Although the above attempt at a definition might seem vague, it is so for a reason. This is because there are many different ways to approach market research. One way is through brand research. This is when a business focuses on “refining” their brand to make a more favourable impression on their customers. This could include studying customer loyalty, determining brand awareness, what the brand is associated with, etc.
Then there’s an evaluation of the effectiveness of marketing campaigns. Although this type of research is much broader than marketing research, marketing research falls within the latter realm and is also worth exploring. This type of research involves looking at the success of marketing initiatives and their performance and it can help inform future campaigns. It’s one way of broadening a business’ reach and keeping the costs of customer acquisition relatively low.
Competitor research is another crucial part. By studying those you’re competing with, you’ll be able to figure out strategies on not only how your business can get ahead but also compare strategies to see where they are successful or not and how you can emulate them.
Next up is customer segmentation research. This is crucial for newly-established businesses because when you divide a larger customer base into different groups and personas, you’ll be better able to tailor campaigns to each segment more effectively.
Other types of research that you can undertake include consumer research (this means understanding your consumer who falls within a certain market segment), new product development (to stay ahead of the curve as well as ride trends as and when they arise) and usability testing (this focuses on how users use your products and how to fix bugs as quickly as possible).
All this of course is all good and well, but you need a starting point for conducting market research. There are two main ways you can go about it: primary and secondary research.
Primary research targets the core of the issue by helping you get out into the “field” as you collect data that’s novel and on a first-time basis. It can involve implementing strategies such as surveys, holding focus groups, interviews, observations (e.g. Hotjar sessions) or field trials.
Secondary research, on the other hand, is sometimes called “desk” research and it entails gathering information that already exists. Some examples of this information can be sourced from published company reports data, existing studies and surveys, newspapers, government and institutional data, government funded studies, books, statistical databases and more.
Once you’ve picked the route you’re going to take, you also need to decide on which methodologies you’ll be applying to your research – qualitative or quantitative. While qualitative research involves a “softer” approach, quantitative research delves into “objective measurements” through the use of numerical analysis of data.
Why is market research important?
Whichever option you choose to go for, it’s always a good idea to keep in mind the various reasons why you’re actually conducting market research in the first place. This is why it’s crucial to identify some of the reasons why and when you should do this and what benefits it yields.
- Gives you an accurate view of the business and market landscape: knowing where your business is currently situated in the industry landscape and how it’s positioned there can give you valuable insights into your market. This can be achieved through taking a closer look at your competitors and other primary and secondary industries that affect your business directly.
- Pinpoint with more accuracy who and where your customers are: knowing your customers is the golden rule of any business. But this does not only refer to knowing your existing customers but identifying new and potential ones, too. When you do market research, you can get an idea of both groups’ socio-economic standing, determine customer loyalty, see what sets you apart from your competitors and tailor your product or service offering to meet specific needs.
- Determine how your business is viewed: this point goes very well with your branding efforts and branding should not be underestimated. Branding refers to customers’ perceptions of your business and what it stands for. Are you a “green” or sustainable business? Do you source your products locally? How do you contribute to your local community? These are just some of the questions customers might have about your business and it’s crucial that you’re able to answer them and make sure your business not only talks the talk but walks the walk, too.
- Figure out the feasibility of a new product launch: it is inevitable for businesses to consider launching new products. This is part of a business’ natural evolution cycle. And researching your market can help you stay on top of trends so that you’re continuously offering customers products or services they’re looking for.
- Hone your marketing messages: market research and marketing research are closely related, as mentioned earlier. One can help refine the other. For example, thorough it, you can help create relevant promotional materials, get a better idea of where to advertise, help you with your public relations efforts, determine the best modes of distribution of your marketing message, help you promote the development of new products or services, improve promotions, advertising and pricing, determine overall market conditions, etc.
- Identify new business opportunities and strategies: when you do market research, you’ll also be able to identify new opportunities which will subsequently be fuelled by your business strategies.
- Increase sales over time: effective targeting, product development, pricing and an accurate marketing message can also help increase sales over time, ultimately impacting on your business’ bottom line.
- Identify gaps in customer expectations: studying your target market and the various segments in it can also help you identify gaps in customer expectations. Your customers may have expected one thing but received a variation of it and this may have led to confusion and unfulfilled needs. Here, market research can really help you figure out where customers are dissatisfied and enable you to take steps to address this challenge.
- Minimise risks when making business decisions: as mentioned earlier, business success is seldom based on luck. There’s often a strategy in place before a new business decision is made and it’s backed by qualitative and quantitative data. This data should inform all decision-making processes so that leaders who make these decisions are backed by facts and not made on whims.
- Set realistic goals and targets for your business: market research is also a great way of helping businesses set realistic goals and targets. This is because goals and targets are data-driven and can help give a strong indication of what is realistically possible.
- Solve business challenges and reduce risks: another way it is useful is to solve business challenges and reduce risks. This is because business challenges can be overcome with real data.
- Helps with expansion opportunities: finally, an in-depth analysis of a market helps with decision making related to pursuing expansion opportunities. It is only with facts and data that a business can identify opportunities for growth and then follow these.
It’s undeniable that market research is an excellent way of not only getting to know your customers better, thereby tailoring your offering to them better, but is an excellent way to stay on top of the competition while pursuing marketing and expansion goals. Whichever form you choose to use for your business, you need to start by having a clear goal in mind for it first. How will you use the research? What will the research entail? What decisions do you want to be guided by through it? With these questions in mind, you’re on your way to making better decisions for your business and taking it on the road to future growth.