Use Market Research to Ensure Constant Business Growth
Market Research is an essential tool to ensure the future growth of your company, by providing the necessary input to allow you to adapt to the demands of your customers.
The graph below shows the hypothetical growth of three companies over time, emphasizing the points at which they conducted market research and the theoretical impact it could have on their growth trajectory.
This exercise focuses on dedicated market research campaigns that seek to address a specific need. Further to this, economic factors (such that would impact the disposable income of the target market, or the companies access to credit) have been ignored, and it is assumed that the companies are equally capable of executing their respective strategies.
Initial Market Research
Suppose these three non-competing companies launch at the same time in different but similar markets.
At the outset all companies conducted good preliminary market research.
This gave them a solid understanding of the wants and needs of their respective target markets.
As a result of their hard work and strategic thinking, all saw the early signs of exponential growth
Company A – Proactive and Agile
As time passes, the businesses continued to grow but their paths started to diverge.
Company A sensed it first. Management recognized the value of research, engaged with customers regularly and anecdotally felt that the market was changing.
They anticipated the changes in the market and asked the question “how do we stay ahead of our competitors?”
Company A then embarked on another round of MR to try to solve this riddle.
As a result of the research they made changes to their product and released a new low cost “Lite” version. Company A continued to see exponential growth.
Company B – Slow to React
Company B is slower to react to the changes in the market. They were focused on producing a quality product and did not have enough of a focus on the horizon.
It was only once sales started to stagnate that they realized they needed to do something different in order to continue the rapid growth they were previously experiencing.
Eventually they too embarked on a new program of market research to try to understand how the market has changed since their initial launch and why their growth had slowed.
Through a series of online surveys they identify significant growth opportunities in the continental European market where the product was popular but not promoted. They invested in marketing materials and a sales drive in continental Europe and sales returned to close to the original trajectory.
Company C – Set in its ways
Company C does share the same foresight as the first two. Though they invested in market research at the outset, and saw early success, they failed to adapt to changes in the market and the demand of their customers and sales started to decline.
Management invested in a series of initiatives to try and boost sales but it had little impact on the company’s fortunes. Reducing prices failed to attract new customers and only resulted in a further decrease in revenue.
Eventually, the marketing department suggested that new research was needed to understand the target audience better but this was received negatively by senior management who insisted that they had done their research and knew the market well.
With company C’s future in a dire position there are renewed calls for a market research study as part of a strategic overhaul to turn the company around, but it is too late and the company is forced to sell out to a competitor or face going into administration.
If you always do what you always did, you’ll always get what you always got.
If you want to succeed in business over the long term you have to be willing to adapt and change. Companies that are unwilling, or unable to adjust to market pressures face a dismal future as they are overtaken or consumed by their more agile competitors.
Market research is therefore an essential process to help companies understand their position in the market and what they need to do to maintain or improve it.
To give your start up the best chance of success it is vitally important that you recognise the significance or research and invest sufficient resources, not just at the outset, but throughout the lifecycle of your business.