Market research is key to business success and a vital skill for any entrepreneur who wants to get ahead. There are a number of different strategies and entrepreneurs can use to better understand their customers and their wants and needs.
Entrepreneurs can also use market research to learn more about the industry they are in and how they can differentiate their business from the competition. In this guide, we look at what market research is, why it matters and how it can be done effectively.
What is market research?
Market research is the task of purposefully gathering information about customers, other businesses and the general state of the market.
This gives entrepreneurs the insights they need to successfully test new products, improve current ones or find new opportunities. These insights can then be turned into action plans and customer personas, which help build a complete picture of a business ecosystem, and determine what appetite there is for a product or service.
The importance of market research
Business leaders who intelligently utilise market research and prioritise their core customers can build stronger businesses. In Hendrith Vanlon Smith Jr’s Wealth Reference Guide, the author emphasises the value of market research when he writes;
“In business, it’s very important to do consistent market research. It’s very important to understand your customers and potential customers. The more you understand them, the better you’ll be able to add value to their lives, and the more they’ll pay for that value.”
How to conduct market research effectively
Before you get started, it’s important to decide what the objectives of your market research are so you can stay on track.
For example, a new business owner could research other companies selling similar products to determine what is the average price for that product is, which will help in determining a price point. You can also carry out market research by reading market research reports which have been compiled by industry experts. These can give unique insights into the market and where any risk factors or opportunities are.
Figuring out the market
Businesses don’t exist in a vacuum and entrepreneurs need to be aware of other market trends or shifts.
It’s important that business owners stay on top of the latest news and trends in their market to see whether any new opportunities or news stories might affect their business.
Consistent market research
It’s essential that businesses remain consistent in their market research efforts. Business giants like Starbucks, Apple, LEGO and McDonald’s all spend billions each year on market research and this is key to their success and longevity.
After LEGO commissioned a market research study involving 3,500 girls and mothers, they introduced a new toy line specifically marketed at girls and the way they play. Your market research can highlight any gaps in the market or potential opportunities for your business.
Developing a market research strategy
Market research is vital for the success of businesses and there are a number of vital aspects of market research that are often overlooked. Tools like social media polls, basic ads and guerrilla marketing can all help an entrepreneur gauge customer interest for their product or service. Conversation with customers, industry insiders and other entrepreneurs can also be incredibly useful to better understand the market.
It’s easy to get excited about a new business idea or project and jump in feet first. Spending some time undertaking initial market research however, will give you a much better foundation for longer-term success and is worth the investment of time and resources.