Market research helps businesses—B2B and B2C, small businesses and large enterprise organizations—understand who their customers are and what they care about. It helps them understand whether new products will resonate with consumers. Market research helps companies understand their strengths and weaknesses, and the strengths and weaknesses of their chief competitors. Simply stated, effectively leveraged market research helps businesses grow and be more profitable.
There are many ways to conduct market research, everything from data analytics to customer surveys and focus groups.
As Entrepreneur correctly points out, market research is:
“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; research into the characteristics, spending habits, location and needs of your business’s target market, the industry as a whole, and the particular competitors you face.”
How Do Businesses Conduct Market Research?
Market research is all about gathering data that help a business make better decisions about their products and customers. Some of those data come directly from customers, while others come from external sources, such as those from trade associations, higher education institutions and state, local and federal governments. Specifically, there are two principal types of market research:
- Primary market research: If you want to know how customers feel about a current or new product or service, one of the best ways to find out is by simply asking them. You can do this by distributing surveys to representative sample groups via telephone, SMS, and online, or through focus groups.
- Secondary market research: There are multiple external sources of valuable information about consumer markets and industry trends. One of the best is your trade association, which likely has a wealth of market statistics that can guide your business in the right direction (it’s also a good idea to regularly read trade association publications that cover emerging industry trends). Another source of secondary market research is the government. Particularly helpful is the information you can get from the U.S. Census Bureau (like its “State and Metropolitan Area Data Book” and “Census Product Update”). The good news about the information contained in these sources is that a lot of it is free.
What Are the Principal Benefits of Market Research?
Every business is different, of course, with different customers, goals, and marketing challenges. That said, most businesses, regardless of their size, will benefit from robust market research in the following 4 ways:
1. You’ll Reduce Risk to Your Business
The decisions you make every day can spell success or failure for your business. Of course, every decision carries some degree of risk—but regularly conducting effective market research will substantially reduce that risk.
For example, let’s say your business is growing and you’re thinking about opening a second store. Knowing the demographics of prospective customers in your new location, how much foot traffic you can expect, and who your chief competitors in that location are will help you decide whether it’s advisable to take this important step.
2. You’ll Have a Better Understanding of Your Customers
Examples of companies that made bad decisions because they neglected to survey their customer base are legion (think for example of Ford’s Edsel and Coca Cola’s “New Coke” marketing debacles). When it comes to the viability of current and new products, it’s not what you think of them—it’s what your customers think. Effective primary research protocols will help you decide which current products to double down on, and which to eliminate. It will also help you decide if you should invest in new product launches.
3. You’ll Boost Sales
The more you know about your customers, the more products you’ll sell. Period. Simply stated, the products and services you launch need to help your customers solve a problem. You can’t do that if you don’t know what those problems are, and whether your products solve them. Market research will enable you to laser focus on your customers’ needs and wants, and that means greater profitability for your business.
4. You’ll Polish Your Brand
According to Small Biz Genius, businesses that effectively and consistently market their brands are almost 25% more profitable than those that don’t. Branding, of course, means different things to different businesses, everything from logos and taglines to color palettes and tone of voice. The point is, you can’t know how well the several components of your brand resonate with current and prospective customers if you don’t conduct smart market research.
Market research isn’t really about data. Market research is about the customer insights that data generates. Said differently, market research, when you do it right, is a game-changer for your business. However, it can also be both complicated and confusing. That’s where we can help.
To learn more about the ways our data collection, virtual call center, and analytics services can help you create an effective program of smart market research—and give your business the marketing insights that drive success—contact us today.