10 Reasons Why Market Research is Important for Today’s Business
The topic or question mentioned above, holds the holy grail in making a business successful or failure in 21st century!
With monopoly long gone and technology advancement, the term ‘Market Research’ makes it imperative for business houses to be involved in it. This is the reason why a front runner company like IBM spends $5 million every year with Gartner for market research, says- Gideon Gartner, Founder & CEO Gartner Inc.
On similar terms Microsoft and European Car giant Volkswagen spends nearly 13.4% and 5.2% of their revenue in market research and development. The list goes on…
There is not just one reason that speaks out the vitality of Market Research but myriad of them.
Following 10 points will summarize the value and necessity of market research:
1. To know better what you are going to do
It sounds very generic. But it is the first thing that reveals the significance of doing market research. Shooting in the dark, you may hit the bull’s eye once but may never again. This proves, that market research is a commanding move to understand every aspect in and out before jumping in to the market.
Pat Keogh, the CEO of Arema Connect says, “Market Research plays an integral part in virtually all of our business decisions, whether we are sourcing new suppliers, developing our service/product range, researching new international markets and potential new client sectors.”
Market Research process can clear countless queries and can give you first hand approach to move forward with your business. In other words, you will gather voluminous market information that will help analyze all your strengths, weakness, opportunities and threats.
2. Better insight on target customer
Target customers can be either currently loyal or potential customers. A good market research can clear doubts on potential customer identification such as age, gender, location etc. Further, deep analysis on loyal customers will open doors on what more your business needs to do and make better products to retain them.
Interestingly Brian Cornell, CEO of Target Retail Store, had been out on his own with customers, incognito, exploring one of the company’s stores. That’s how important it is to know them.
3. Customer behavior pattern
This point is an extension of the previous. It is actually an advanced research that can offer substantial perceptiveness on customer’s requirements. With advanced software technologies like Artificial Intelligence, Machine Learning, Big Data, Hadoop, Google Analytics etc. behavioral pattern of customers can be understood. And once this pattern is traced much more refined and customized products can be shaped for its target customers.
Country leader-information management, of IBM India/South Asia, Asheet Makhija mentioned, “E-commerce companies use Big Data in two ways. One is to analyze past behavior of customers to find patterns, and the other is real-time analysis, that is, reacting when the customer is shopping online.”
4. Analysis on competitor
Famous philosopher Sun Tzu once said, “Know your enemy and know yourself; in a hundred battles, you will never be defeated”. At the beginning of the article we mentioned that monopoly is no more in today’s era. Every business be it small or big, there is a fierce competition all around. Research in the market and on its tentative competitors can unlock strategies that can help you either squeeze the growth of your competitors or run ahead of them.
Most importantly it will always enable your business to revamp and keep improving the quality of your products and services.
5. Detailed Segmentation-Targeting-Positioning (STP)
Once the above goals are met a proper and thorough Segmentation, Targeting and Positioning can be rolled in. A robust market research on segmentation based on location or demography can do wonders in advancing with the business plan. Next step, it reduces the targeting overhead and narrows down the optimal customer base. Finally, positioning a product in the minds of the customer become a cake walk with the market research.
6. Foster better decision making
After a market research is completed, decision makers have all the insights and knowledge at their disposal which helps in a healthier decision-making process. From financial and marketing to procurement, every aspect of business can be garnered timely. Further it can propel faster conclusions with guaranteed result.
7. Finer Sales forecasting and selling activities
Keeping an optimum inventory level and regulate the demand supply balance is the prime objective of sales forecasting, which can be met with market research. Techniques like sales force estimate method or/and Jury method are regularly used for this purpose. After sales forecasting, new ways of selling current goods, or manufacturing of alternative products for selling can be designed. Additionally, news sales territories can be discovered via market research.
In the words of Napoleon Hills “The best way to sell yourself to others is first to sell the others to yourself.” In order to sell yourself you need to know more on current trends and market possibilities. Hence an insightful market research is vital for sales and sale forecasting.
8. Refined end-to-end communication mix
This is significant to any organization. A virtuous market research based on a communication mix can positively clear the loop holes. Plus, a well-defined media mix will project the company’s objectives to end-users in a crystal-clear fashion. It is also a great source that can enable advertisements to get designed spot on for grabbing customers.
9. Expedite smooth new product introduction
Whenever a new product is to be introduced many factors like pricing, utility and feasibility are taken into picture. An accurate market research should be carried out so that penetration of the product is executed in an effective manner. Particularly for new product if market research is not done then be prepared for a rough road ahead. Or in worst case shut down!
10. Reduce risk and loss significantly
Contingency approach is always kept as a backup in accounting terms. There is a 50% probability that your business plan might not go well. To further reduce this 50% probability to around 25%, market research offers an important back up plan. In laymen’s terms market research does reduce risk as well as loss of a business by many degrees. Market research provides information that are backed by concrete findings.
These 10 points, to be fair, are feeble to justify gamut of benefits a thorough market research can offer a company.
We at Infoholic Research, a global market research and consulting organization, can provide strategic and high-level market intelligence in emerging and niche technologies. Connect with us for any kind of research reports catering to your business needs.
– Shantha Kumari,
Sr. Technical Writer,