Whether you’re a small business, mom&pop shop, or a multinational corporation, the need for market research is unequivocal. And it’s not just a one-and-done activity, where you just perform an initial background check on your target market and take it as a business constant. Any successful business is backed up by a solid market research team who guides the business in terms of where to drill their sales force.
The Importance of Market Research
Effective market research shows a business where it should be devoting its resources to. Without this piece of information, your company can go about wandering blindly into the markets in the hopes of striking oil. With it, you can answer questions like “who is going to use my product or service?”. You’ll also be able to specifically identify potential customers based on age, gender, location, and other demographic parameters.
Understand Your Existing Customer Base
Understanding your existing customers is key to retaining their loyalty and patronage, yet it’s something that you will find difficult to constantly predict. Market research involves looking into consumer behavior and spending patterns with the goal of adjusting your marketing approach to stimulate favorable behaviors and decisions from consumers. What magazines are they subscribed to? Why do they pick your product or service over competitors?
Setting More Realistic Goals
Data extrapolated from your market research can be used to set realistic goals rather than aim for ambitious yet unattainable targets. Sure, it’s great to set high standards for your company. But if you’re not careful, you may find yourself spending too much of your finite resources chasing these unrealistic goals until you eventually run out of capital.
Implement Research-Driven Strategies
Market research gives you data to formulate effective marketing and production strategies. For example, if your product is deemed subpar by most of your target audience, you can temporarily lower production numbers while simultaneously increase production quality by either hiring a new manufacturing plant or switching to higher-end materials.
A Gateway to Business Expansion
By looking into new markets you can target, expansion is made not only possible, but with a higher rate of success. Market research can pinpoint expansion areas that you can test out your product or service before you decide to allocate more resources into it. For example, an online business may find new potential customers in certain physical locations that prefer the personal shopping experience.
David Milberg is an investment banker from NYC.