So why do we research a market?
There are four broad reasons for doing so:
- opportunities and problems,
- business growth
- and strategies.
First and foremost, all businesses need customers. No customers, no sales, no money.
So all businesses need to understand their existing customers,
- who are they?
- where are they located?
- what are their characteristics?
- what makes them buy?
- what makes them NOT buy?
- what price will they pay?
- how did they hear about you?
- what do they like about you?
- what do they NOT like about you?
- and many, many other questions.
Every business will lose a few customers every year simply because the customer may not use your particular product or service, or anyone’s particular product or service anymore. So it becomes critical to identify new potential customers.
Now you have a whole new problem on your hands.
How do you make these new customers aware of you and your great products and services?
This is where opportunities and problems need to be identified and monitored. New customers often bring new challenges and problems, but this many times is where the greatest opportunity for your business occurs. These new challenges will often lead you to produce new products, insert yourself into new markets, and if you’re lucky and skillful will lead you to greater business success.
This leads us to our third area business growth.
Market research helps us determine exactly what products the market wants, their characteristics as well as new markets that we can sell our new products in. Market research can tell us how big these markets are, give us an indication of what will be successful and even more importantly, sometimes what will not be successful. After all why waste limited resources on a product, service or market that will have limited success or are doomed to failure.
I know what you’re thinking. There are many people and companies that have gone against convention and won big. That is true and if you have lots of your own money or someone else’s money – go for it. But generally as a small business you just don’t have the resources. Get you first win – then with your newly gained resources, particularly you’re newly acquired experience, you can pursue higher risk project.
This leads us to our fourth issue – strategy.
As we create new products and enter new markets, we formulate strategies with which to exploit those markets. To be successful we need realistic targets, targets that we can actually hit. And this leads to the necessity for good decision-making on the part of management.
Market research can help us determine the current boundaries and obstacles in a market so that we can avoid the potholes and make decisions that results in happy customers and hopefully fat profits.