Market research involves gathering information about your customers and gaining knowledge of your competitors. Knowing how prospective customers will react to your products and services can guide your business decisions and position your company for success.
This article explores the reasons to conduct market research, the benefits of market research projects and the best time to conduct market research.
As an entrepreneur, you’re conducting market research when you
- talk to customers about your business
- evaluate your competitors’ prices
Formalizing this process produces information about
- your customers
- your products and services
- the marketplace in which you operate
Why conduct market research?
The purpose of market research is to gather the information you need to make wise business decisions about your products, price, placement and promotion.
Increased awareness of your customers’ needs and wants can help you improve your products and services. You can then focus your efforts on function, appearance, customer service, and warranty or maintenance agreements.
Develop your pricing model based on the price customers are willing to pay, competitor pricing, financing options or popular profit margins.
Compare retail, wholesale and online sales. Understanding the characteristics and value of each can help you decide on your sales and distribution model.
Create more effective marketing campaigns to reach particular market segments. Understanding your target customers’ purchase habits can help you choose the most appropriate advertising, publicity, social media and branding.
It’s unwise to rely solely on your intuition and experience. Arming yourself with market research and concrete facts gives you a more accurate picture of your market. Market research also helps you keep pace with and plan for
- technological advances
- changes in the economy
- updated or new regulations
- shifts in your target demographic
Understanding the market allows you not only to identify opportunities to grow or increase your profits, but it also allows you to mitigate risk in your business decisions.
When’s the best time for market research?
Don’t assume that market research is only done during a business’s planning and startup activities. Market research drives the success of both new and existing businesses. Established businesses rely on market research when deciding whether to
- expand or relocate
- increase production levels
- launch new advertising campaigns
- introduce new product lines or new services
Information gleaned through market research during both the planning and growth stages can be useful to your day-to-day operations. In fact, market research is a critical element in every business plan because it helps to
- determine your products’ and services’ sales potential
- set the price for your products and services
- establish your company image
- ensure that marketing efforts are on target
- attract customers to your business and earn repeat business
How to conduct market research
Done right, market research can be a very eye-opening experience. Before undertaking market research, ensure that you have clearly defined what you need to know, as well as the reasons you need this information. You’ll then need to determine your research strategy and choose which methods you’ll use to gather data. Our companion articles can help you learn more about the two main types of market research, primary research and secondary research.
Whether you’re just starting or an established company looking to grow, trust Lift Legal to help you position your business for success. Contact us today to learn more about our legal services for corporate and business matters.