Importance of Market Research for New Business Ideas
A business idea is mostly an impulsive thought, which strikes and then never fades away. While there are plenty of ideas that people come up with Market research is crucial for an entrepreneur to understand the consumer, to know whether the idea is already existent in the market in the form of another product or service. If its already present in the market, how different or similar it is to your own product or service and the steps you need to take to make the product different from the one already prevailing in the market.
Market research can be carried out at various stages of a business life cycle, from pre-launch and beyond. Having a greater understanding of your marketplace through market surveys, qualitative and quantitative market researches from the very start will enable you to create a sound business strategy to establish and grow your brand into one that’s better than the competition.
At the end of the day, it’s not just the idea or its uniqueness that attracts funding but the overall execution and feasibility instead.
Budding Entrepreneurs Common Mistakes
Every new entrepreneurs entering the market aspires for their business idea to be successful. Most of them come up with brilliant ideas but often it does not culminate into business profits as people fail to show interest in their products and services or sometimes it may so happen that the consumers may not want to pay the expected price for the specific product or service.
Here are the common mistakes that the entrepreneurs make:
- Assume their ideas or products are what the consumers want (without actually making an effort to understand who their consumers are)
- Fail to identify who actually are their competitors
- Fix the price of the product at random without doing any research on how much money the consumers are willing to pay for the product
All the above reasons make market research essential for a new entrepreneur to avoid facing failure of their new enterprise.
Market Research to the Rescue
The scope of the market research you’ll undertake is influenced by your overall business objectives. What do you want to learn about your market (market insights) and the external factors influencing it? The importance of market research can be best perceived by understanding the various factors that impact your business.
Market research begins with
- Defining the scope of your business research - depending on your locations, customers, industry, trends etc.
- Answering why customers will opt for your business - Pros and cons, differentiating factors etc.
- Using market tools that help with the research, highlights your competition and customer base etc.
Entrepreneurs can opt for either of the two options to conduct Market research:
Collect information by yourself or hire someone else to collect it directly from the marketplace.
- Monitoring the effectiveness of sales
- Ascertaining the quality of services provided by competitors
- Understanding the channels of communication used by competitors
- Assess the active competition within the market
Primary Research can help to gather two basic types of information:
- Exploratory research – open ended questions, surveys, interviews, direct mails or telephone calls with a small group of respondents.
- Specific research - precise in scope and is used to solve a problem that exploratory research has identified. Interviews are structured and formal in approach.
Information that is already collected and made available through other sources.
- Published company reports data
- Existing surveys and studies
- Newspaper, magazine, reports
- Government data and agencies
Keys for Successful Market Research Reports
By successfully completing a market research before starting your business, you can be assured that your product or service is properly priced and positioned and you are offering the most sought-after features. Applying this market insight will make your company a powerful force in a competitive business landscape.
Here are four important steps to any successful market research study for entrepreneurs
- Examine whether previously similar market research has been executed
- If so, analyse the existing relevant data that meets your objectives – providing it meets your budget
- How will the existing data be used and by whom?
- Do you need to conduct your own primary market research too? If so, with whom?
The key to a successful market research is to be open-minded and adaptable when conducting market analysis as some of the feedback may not be exactly what you were expecting and hoping for. Be adaptable and consider making adjustments to accommodate your customers’ demands.
Only by understanding the public response to the specific product or service can a business hope to get funding for its business. The biggest advantage of undertaking market research for an entrepreneur is getting consumer feedback. The response obtained from consumers enables an entrepreneur to make the necessary corrections to the specific product or service before marketing it.
Market research plays a crucial role for all establishments and allows business owners to make better decisions regarding their operations. Mistakes can be avoided through adequate market research that should precede all the activities of a business.
- Shantha Kumari,
Sr. Technical Writer,