Continuing the market research series, in this article, we’ll discuss the importance and benefits of market research.
To recap, in the last article we talked about what market research is, and the different types of market research every business needs to conduct.
10 Benefits of Market Research
From the last article you probably already have a good idea on the benefits of conducting your research, but let’s go deeper and expand on what you stand to gain from a thorough market research.
1. Provides Better Understanding Of Your Customers
Market research will help you map out the full profile of your ideal customers. Knowing who your customers really are will help you determine the market size and what triggers them to buy.
By conducting market research you stand to gain valuable insights like their age, location, gender & income, which will help you in creating effective marketing and pricing campaigns.
Market research will also help you determine the type of product or service that would be profitable to introduce in a market. Which would also help you test if the existing product/services in the market are meeting the customer’s needs or if there are potential customers you have not reached.
If you already have a product/service in the market that is not meeting customers’ expectations then the research will help you find out if you require a change in the packaging, delivery or in the product/service features itself.
2. Provides Insights On Your Competitor And How To Outsell Them
Your competitors are taking away your customers and winning in the marketplace because they’ve done their research ahead of you.
Market research is a good evaluation tool that can help you track your company’s progress and the growth of your competitors, by keeping an eye on your competitors. We can use the data collected to devise business strategies that would keep you ahead of your business rivals.
Being the best in your market demands a relentlessness to keep getting the basics right combined with a curiosity and willingness to innovate. Knowing how to leverage the findings and insights you get the from market research is the key to getting ahead and staying ahead.
According to Tutsplus Business, If you can beat your competitors at finding out your customers’ needs and you aim to fulfill those needs, you’ve got a better chance of standing out from the competition. Here are some ways you can use market research to outsell competitors:
- Target your competitors’ dissatisfied customers
- Find an under-served customer segment
- Identify unaddressed customer needs
3. Ability To Test Product Success Before Launch
You can never be 100% sure that your product will be a hit or will instantly connect with your potential customer.
However, with market research, you’ll find out what approach you should take when marketing the product and the key messages that resonates with potential customers
4. Helps In Decision Making
If the goal of market research is to identify business opportunities and strengthen your position in the market, then there would undoubtedly be several big decisions that could facilitate the success of your business.
The need for and importance of marketing research frequently comes up when making tough business decisions. Instead of guessing, going with your gut feelings or having arbitrary criteria for the decisions you make as a business owner, you can always go back to your market research report.
Based on that research you would get answers to questions such as
- Will this decision lead to more customers?
- Will we be able to reach more people who are likely to buy from us?
- Will it be clear to customers that our business can meet their needs?
While not all decisions should be solved by market research, many of them can be, such as:
- where to spend your advertising or marketing budget
- whether there’s a demand for a new product you want to make
- if you should open a storefront in a new location
- which products to discontinue and which ones to improve
- how to price all your offers
5. Spot Business Opportunities
Every business is constantly looking to identify new market opportunities for existing and new products.
There is a lot of competition out there, for every product or service you put into the market, there are at least a dozen others from competitors. Even worse, consumer needs are difficult to predict based on product functionality alone.
This is where market research comes in to play. Good market research will assist in production planning and make the distribution process seamless.
After you’ve done your market research, it’ll be clear to you who you want to reach out to (your target customers), where you can reach them (your marketing channels), and what they’re interested in. Once you’ve defined these, you’ll be able to easily spot business opportunities such as:
- Partnerships with other businesses
- Profitable order upgrades
- New locations to sell to
6. Strengthen Your Business Position In The Market
When done right, market research can provide detailed information on the market share, competitors, customer dissatisfaction levels, sales performance, and channel distribution.
Which would, in turn, identify potential issues with your business and ideas on how to address these issues quickly.
As the saying goes Knowledge is power. You should use market research to gain a better perspective and understanding of your market or target audience and ensure that your firm stays ahead of the competition.
When it comes to strengthening your position in your target market, the whole idea is to promote and distribute ideas, goods, and services to create a satisfying customer base. This is the basis of business growth.
Going a step further, market research also helps to analyze the cause of an existing customer choosing a different brand over the old one. The goal here is to retain your customer base while generating profit at the same time.
7. Lower Business Risks
According to data from the Bureau of Labor Statistics roughly half of businesses with employees don’t survive past the fifth year. And we all know that the only way to make sure that your business survives is to ensure that you’ve got a steady stream of sales and customers.
Here’s the kicker, you need market research to sustain your business.
Market research helps you understand your customers’ demands, identify more business opportunities, plan the perfect marketing campaign, minimize losses, and keep track of the competition.
Even better, it allows businesses to Identify problems in their strategies and business executions before they happen. Effective market research will not only help you predict some pitfalls that can occur but also it will save you a lot of money too.
We all want to believe that our product or service is the perfect solution to your customer’s needs, that our offering is a perfect customer-market fit, but what if that isn’t the case? What if you’re wrong and giving launching would be a big risk?
The process of market research itself is designed to reduce the risk.
What if you’re yet to launch, but is considering investing in a business venture? Well, Market research is also essential here. Spending what is a small proportion of your investment in researching and testing the market, product, concept or idea makes sound business sense.
Regular market research will help you check your business performance with your current customers and potential customers to ensure that you’re still meeting their needs.
8. Create Relevant Marketing Resources
We know that when we run ads, we should test to see what phrases, colors, images perform better than others. The same thing applies to marketing in general.
With in-depth market research, you’ll know what images or phrases to put on marketing assets such as fliers, website, social media, blog posts, videos, etc.
You’ll know this because if your research targets the right audience, then technically your target customers have already told you their wants, needs, and frustrations. And as such, you’ll know exactly what to address and how to address it when you create your marketing materials.
For example, an author or blogger can ask their readers via a survey, what problems they have and are trying to solve. and instead of blindly coming up with blog topics, they can use the result of the survey to create posts that readers are really interested in.
Here are some other ways your marketing materials will be easier to create:
- Knowing whether customers see your products and services as a necessity or as a luxury can help you design your product labels, brochures, and a website that fits their perception.
- Identifying the age range of your customers can tell you the type of language you’ll be using in your promotional materials. You’ll write differently when addressing retired Baby Boomers than you would when addressing young professionals.
The collecting relevant data and analyzing this data can help businesses adopt a proactive approach for both, framing and implementing market strategies.
9. Knowledge On Where To Advertise
Market research not only helps in identifying new business opportunities but also helps in designing ad campaigns that will directly target the interest of your potential consumers and help in increasing sales.
Thorough research should provide valuable information about the sales potential of a particular market segment, during a specific time period, and within a particular age group.
Let’s be honest, Ads can be expensive and one major issue small businesses face is a limited budget. This means you need to get smart with your marketing budget, and your ads must be optimized to give you the best possible return within your budget.
Conducting market research can help ensure that you’re reaching your intended audience in the channels where they’re most likely to see your message.
According to Tutsplus Business, market research can help with:
- Buying ads on social media: If your market research shows that your target audience spends most of their time on Instagram and almost never use Twitter, you’ll know to direct most of your social media ad budget to Instagram and forget about Twitter.
- Placing flyers and posters: Knowing the physical spaces where your customer spends their time will tell you where you can best place your advertising. For example, university students are likely to be on campus, so placing ads for that market means that you can try bulletin boards on campus or outside local establishments that their crowd frequents.
- Targeting ads: Online ads such as social media ads and pay-per-click ads can often be targeted with precision. This means that you can target based not just on the usual demographic data, but also based on online behaviors, life stage, and interests. If you truly know your customers, you’ll be able to maximize the potential for targeting. For example: here are some targeting options for Facebook Ads.
10. Facilitates Strategic Planning
What is the basis of your current business strategy? If it’s evidence-based and you’ve taken the time to invest in market research, you can be confident that you’ve given yourself the best chance to achieve your business goals.
When businesses set goals for their business, it’s typically related to growth in sales or customers. But without market research, you won’t be able to know if your goal is achievable and how to achieve it in the first place.
You might say that you want to double sales by the end of the next quarter. But how would you know if this goal is feasible if you don’t know whether the size of your target market is more than twice the size of your current customer base?
Without knowing the current size of your potential market, you’ll just be setting irrational goals.
Now that you know the importance of market research and how it can benefit your business, in the next article will discuss how to create a market research proposal. A template of the proposal process will also be included.
Comment with any questions you have about Market Research Proposals and I will get back to you ASAP.