Why You Need To Take Market Research Seriously
Taking the time to conduct thorough market research ensures that your business gets off on the best possible footing…
Technology has rapidly changed the way firms conduct business over the past decade and companies large and small are increasingly basing their business decisions on the data they collect on their peers and their customers.
The era of Big Data is upon us and firms are mining huge volumes of data to find correlations between seemingly trivial things. Knowledge is power and the companies that can make best use of this information, whether it is from targeted offers to existing clients or identifying new clients, will surely have a competitive advantage over their peers.
Tesco, one of the largest supermarket brands in the world, can attribute their success in part to the hugely popular Clubcard loyalty scheme, which allows them to collect data on their customers and make them targeted offers.
But you don’t have to be a Fortune 500 or FTSE 100 company to put data at the heart of your business.
However small you are, you can conduct market research to collect data points on the key things affecting your business, allowing you to base your decisions on numbers rather than intuition. Whether you are an online or offline business, consistent monitoring of the perception of your product or service will allow you to make incremental changes to ensure that you remain valuable to your clients.
Too many businesses never reach the goals their owners originally set for them and they stagnate once they hit a certain threshold. Making a conscious decision to put market research at the centre of your business model from the outset and mandating continual evolution will ensure that this doesn’t happen to your business.
You don’t have to be tech savvy to have an understanding of this data. While high powered compute resources and a team of analysts will unquestionably help, they are by no means essential. If you literally don’t know how to turn on a computer or open a spreadsheet, you could still collect data and analyse it with a notepad and a pen. The important thing is that you recognise the value and commit to making research part of your plan.
In the early stages of your business, market research is all about testing hypothesis and mitigating risk.
The more you know about your target market and potential customers the less risky your enterprise becomes. While many entrepreneurs place value in gut feel and intuition, you are better off basing your decisions on facts and figures.
It is essential that you have some structure to your market research efforts so that you can have some level of confidence in your findings. If you are basing decisions on your analysis it is comforting to know that your numbers are accurate.
For this reason you can’t rely simply on asking your friends and family what they think of your product or service. What you really need is honest feedback and close friends and family could have a tendency to tell you what they think you want to hear; friendly words of encouragement. Ideally you should speak to people who have no vested interest in your happiness and won’t be afraid to tell you what they really think.
Market research should help to give you a really good understanding of the sector you are trying to break into.
You should already have some knowledge of your market, either through professional employment in this area, or as some part of your daily life. If this is the case, the background research is probably less important and you can start to think about the specifics of how your product or service will fit into that market.
If you don’t already know something about the market, you should seriously question why you think you’ll be able to break into it and if you are still determined to persevere, you should invest considerable time researching it.
Much of your early market research will also directly help your sales and marketing efforts.
Your potential clients will view you as an expert in your field if you can speak knowledgeably about your competitors. There may be opportunities when your solution isn’t suitable for a client needs and you are better off referring them to someone else rather than turning them away disappointed or forcing a sale.
It is difficult to try and compete with larger, established players on price, so you have to differentiate in other ways.
You need to find a way to differentiate your product from what is currently available and establish whether the market for your product is substantial enough for you to derive an income.
Be wary of an absence of major competitors. Many successful businesses have been built on the premise of “do it second and do it better” essentially copying something that an established business is doing but modifying it for a slightly different market or improving on it slightly.
Facebook was not the first social network and Apple was not the first company to sell MP3 players or mobile phones but both are now unquestionably the leaders in their field.
If there are no recognisable competitors to your proposed business idea, you should invest considerably more time questioning why this is the case and establishing the demand for your product. It may be that someone tried to launch a product similar to yours in the past but failed, or someone conducted market research and couldn’t establish sufficient demand.
Taking the time to understand the market research process and placing the same value on data as large institutions as you grow, will ensure you reap the benefits in the long run.