Why and when your business should use market research
For many people, market research seems like something meant for someone else. It’s for big corporations, those with lots of time on their hands, or people who have no idea what they’re doing. But that isn’t the case. Market research is for every business, big and small, old or new, experienced or start-up. It takes on many forms and can be as simple as a few phone calls, a survey, a focus group, or buying a report. But the first question you need to ask yourself is: what do you want to know?
If you own a business, want to start a business, or work for any type of organization, that could be a loaded question. Here are common examples when you should consider engaging in market research:
Expanding into a new market
If you have a successful business, you may already understand your customer. But if you’re expanding into a new market, you’re looking at new customers you’re not familiar with. Different markets have unique needs and require different tactics. A great example of this is Microsoft. Their launch of Xbox was a huge success, so they used the same team to launch their new mp3 player, Zune. But the market for music was very different from gaming, and it was a colossal failure. If you’re trying to reach a new market or new customer base, use market research to understand your customers’ needs. This will better ensure your successful expansion.
Acquiring a company
Market research isn’t just about talking to customers. If you’re looking at an acquisition of another company outside the purpose of absorbing assets or customer lists, use market research. Knowledge of the current competitive landscape plus market conditions are crucial. Understanding economic, social, and technological trends will affect the company valuation. You also need to understand the market needs that the company serves and how customers value their products and services. Market research can help to test whether the acquisition will be a good one.
Adding a new product or service
You may think that it’s simple to add a new product or service to your existing portfolio, but getting the right value proposition can be tricky. Market research helps you to understand what your customers value so that you can build a new product or service around what is important to them. Coca-Cola learned this the hard way when discontinuing Coca-Cola and introducing a new formula of Coke in the 80s. The backlash was severe, and products soon reverted back to Coca-Cola. Brand managers felt that they were smarter than their customers. Some good market research could have saved the company and shareholders tens of millions of dollars.
Refreshing your brand is critical today, since businesses and customers are changing and evolving. Understanding what your brand means to customers and how it can evolve is important to stay relevant. By conducting market research into how customers perceive your current brand, you can have the data you need to determine how to update it. This way you stay relevant with your customers and better attract your target market.
Updating your marketing materials (website, collateral, etc.)
As a business owner or marketer, the questions you should ask yourself often are:
- Do I truly understand my customers?
- What are my customers’ primary needs?
- What do my customers value?
- How do they search for and consume information about my products or services?
- What information do they want to know about me?
Targeted market research can get you the data that you need directly from your customers so that you know what they care about. This can help you design your marketing materials with their needs in mind and give you the confidence that it will be effective.
Creating a new marketing campaign
Have you come up with a new marketing campaign that you want to test before you put a lot of time and money into creating it? Market research can help you quickly validate your idea for greatest efficiency. As an added bonus, by talking to customers about your ideas, you can tweak and enhance your message. Market research also helps to understand what mediums are best to use to reach your customer with any marketing campaign. That way your marketing dollars can give you the biggest bang for your buck.
Starting a business
When you make the jump to go out on your own, there is a lot to do to ensure you’re successful. Conducting market research at the front end will give you an idea of:
- How your offering can compare to what’s on the market
- How to position yourself in relation to the competition and customer needs
- Where to reach customers
- What their biggest needs are
- What the risks are from market conditions that could threaten your business
With this data in hand, you’ll have a greater chance of success as you enter this new venture well-informed.
Building an innovation pipeline
Do you want to come up with new products and services that will keep your company ahead of the competition? Market research is your ticket. It takes multiple inputs to build an innovation pipeline:
- Looking at other industries to see how they are innovating
- Identifying and uncovering new customer needs
- Watching customers in their own environment
- Reviewing technology changes
- Understanding macro and micro trends
All these data points will yield a wealth of ideas for products and services that can shape your business’ future.
A little market research can go a long way
Market research isn’t a holy grail to solve all your business challenges. But it is a way to gain the knowledge that you need to make better decisions, be more effective in marketing, create new products and services, and connect with your customers. In short, it gives you the power and confidence to help build and grow your business.