Importance of Market Research in a Business Plan
Market research forms the crux of any good business plan and plays an important role in defining marketing and sales strategies. Conducting market research is imperative while starting a new business or introducing new product or service to an existing business. Market research gives a thorough understanding about the target market, creates a path way to enhance sales and acts as the focal point for future growth prospects.
Key steps involved in market research:
A good market research report in a business plan helps in showcasing enterprise’s expertise in a particular market to the investors. It also demonstrates the opportunities that the market can offer as a whole. Some of the key steps include:
- Demographic segmentation: To write a successful business plan, it is very important to be well informed about the different segments the market consists off. The market research report should provide details about the strengths and weakness of every competitor in different demographic area.
- Regulation and entry barriers: Before writing a business plan, it is important to have detailed knowledge about the regulatory restrictions and entry barriers of starting business in some specified areas and how to overcome them. It is important to include this information in the business plan as investors will consider looking into this before taking the final call.
- Market sizing: Writing a business plan requires detailed market research report covering total market value in terms of sales during a particular period. Investors usually consider present sales value and future projections of particular geographies and products while making their investment decisions.
Role of market research:
- Helps identify new customers: Market research provides key insights covering customer’s demographics. It provides information about potential customer’s age range, income level, geographical location and many more information.
- Provides good understanding on existing customers: Market research provides a good understanding about the existing customers. It provides some key information like reasons why customers choose particular products, factors influencing a particular buying decision and inputs that help to identify up sell opportunities within existing customers.
- Helps to set realistic targets: Market Research provides detailed information about potential and existing customers. Enterprises use this data to set realistic sales goals and use it as road map for future growth.
- Helps in analyzing competitors: A well designed market research helps to determine competitor’s strength and weakness. Further it helps to get a grasp about new players in the market.
- Helps to explore new business opportunities: Market research helps to discover new market opportunities. It helps in identifying changing market trends and reasons behind it.
A well-prepared market research section in a business plan acts as a key indicator to show how well one knows about the business. It acts as the confidence booster to go ahead and launch the product or service in real market scenario.
– Pavan Mudholkar