It has been said that: “The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.” This axiom is just as true in the business world as it is in other aspects of life.
For instance, some companies will devote much time and many resources to the launch of a new product. Perhaps senior managers and other executives will feel supremely confident in their product’s financial viability. “After all,” their reasoning may go, “why wouldn’t customers line up out the door for something so innovative, so practical, and so affordable?”
Yet, all too often when the big day comes, sales are underwhelming, and high expectations slowly crumble. The illusion of knowledge paved the way to disappointment and failure.
Thus, it comes as no surprise that company leaders want to gain accurate and comprehensive knowledge of the market before committing to a new product launch, or other business ventures that carry an element of risk. How can such knowledge be gained, and then applied in practical ways? One of the biggest keys that can unlock those vital insights is to conduct market research.
What Is Market Research, and Why Is It Important?
Entrepreneur.com has defined market research as, in part:
The process of gathering, analyzing and interpreting information about a market, about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service.
In simple terms, market research is research conducted to answer the following questions:
Will this product sell? Who will buy this product? Why will they buy this product? Why is this product better than similar products already on the market? What will make this product even better?
Market research typically involves surveying a segment of your targeted consumer base, or even several different demographics at once, with the objective of gathering a specific set of data. The data can be both quantitative and qualitative, and it typically revolves around factors such as the anticipated level of demand for the product your company intends to offer, consumer opinions on similar products currently on the market, and other information relevant to your intended product development and roll-out process.
How important is market research to the ultimate success of your product launch?
Consider this statistic, courtesy of HubSpot: “Only 3% of consumer packaged goods exceed the sales goal benchmark of a successful launch.” In other words, the majority of product launches either underperform, or end up DOA; and lack of extensive market research is one of the main culprits of this trend.
So, how can market research positively impact your business? Let’s consider 6 ways.
1. You Will Gain a Better Understanding of Your Customers
Market research can help you gain a better understanding of your customers in 2 ways:
- Who they are, and…
- Why they buy
This will prove helpful to your marketing efforts in a number of ways. First of all, you’ll know which segments of your consumer base on which to focus your marketing efforts. For instance, will you target seniors or young people? Affluent families or blue-collar households?
Secondly, you’ll gain a deeper insight into what motivates your target audience to buy. Do they view this product as a luxury item or a necessity? Is price the primary factor in their purchasing decision, or quality? Answers to such questions will make your marketing initiatives sharper, and thus yield a higher ROI.
2. It Drives Communication with Current and Prospective Users
During the market research process, your company representatives will come into contact with prospective customers, (as well as current users if your product has already been on the market for a while). This can provide an excellent opportunity to generally increase your brand’s exposure; it is likely that many of your respondents will end up purchasing from your company at some point in the future. Moreover, user feedback can drive quality improvements in future iterations of your product.
3. It Helps You to Identify and Seize Opportunities
Market research can help you to identify the “low-hanging fruit” that is there for the taking. For example, perhaps a small adjustment to your product’s functionality has been suggested by multiple users. Once implemented, that adjustment could potentially lead to significantly increased sales.
Moreover, market research can help you to identify which opportunities are likely to be most productive, and which ones are dead ends. In the end, this will lower the venture’s risk as well, since resources won’t be wasted on unproductive tangents.
4. You’ll Gain Insight into Your Competition
Effective market research should include the identification of your key competitors, and potential future competitors. A detailed analysis of their approach to the market will help you to spot weaknesses in their business model; weaknesses that you can then exploit, and perhaps even leverage as your product’s USP (unique selling point).
5. You’ll Be Better Equipped to Predict Change
Market research will help you to stay ahead of the curve as the market changes. You will probably not be able to predict every fluctuation in consumer demand or anticipate each new innovation. However, you will be able to spot trends early on, which can help you to leverage every open gap in the market to your advantage.
6. It Will Help You Test and Refine Your Product
A large part of market research is user testing. By fully subjecting your prototype to the scrutiny of your consumers, you will save on costs in later production phases. You will also save your brand’s reputation by avoiding the general release of a product that still has several performance issues.
Furthermore, as you navigate through the testing phase you’ll be able to refine the key marketing message that will resonate the most with your target audience.
As we’ve discussed, market research can help your business in several ways. Whether it relates to the launch of a new product, improvements to an existing product, or another business endeavor, effective market research can mitigate risk and give you a leg up on the competition.
Of course, in order for market research to yield optimal results, those taking the lead in the surveys and/or interviews must have the training and experience to ask the right questions, clarify the answers, and effectively compile the actionable insights gleaned from the process.
At Precision Opinion, our market research experts have the necessary background and skill set to efficiently accomplish such tasks. If you’d like to learn more about the services we offer, reach out to us today for further information. Don’t settle for the illusion of knowledge; gain the accurate, comprehensive knowledge that you need for continued business growth.