Unfortunately far too many businesses tend to dismiss the need for market research when making business decisions. We’re not sure why this feeling not only exists, but seems more companies are willing to make sizable investments without fully understanding the opportunity or potential risks. Fundamentally, success in business is about mitigating and navigating risks while making the right decisions for where and how to grow revenue (aka market share).
Whether failure to conduct market research is arrogance, ignorance or nonfeasance, it’s wrong. Period. End of story. And eventually, end of business.
A mindset has emerged that focuses on getting to market first and then iterating to find the feature set that best meets customer needs. It can be argued that this happened before the internet era. But it’s been digitally native companies (looking at you Google) that regularly have played users releasing beta-level products (and worse), often charging full price, and using resulting data to refine their offering.
The aspect of leveraging user data to refine product features is great. No problem there. It’s the lack of initial research to define features, functionality and ultimately brand positioning for go-to-market efforts that is troublesome.
Here are five reasons why market research is necessary for effective early-stage decision making and improving chances for long term success.
According to the US Bureau of Labor Statistics, about 20% of start-ups will fail within their first two years, and only 25% make it past 15 years. While there may be many reasons for such failures, failure to conduct effective market research is chief among them.
Starting a business and sustaining it without a high degree of confidence in what customers want, price elasticity of demand, and preferred distribution channels is a recipe for disaster. Even more important today, when the brand is a reflection of its consumers, is not aligning to target market values. You are only able to understand all this and create a workable business model through research.
Conducting market research is the best way to understand the needs of the market. It can enlighten you on gaps in the market that could help a brand find a niche to fill or expand a current business. Businesses that regularly perform the research to update their understanding of market dynamics are able to stay ahead of the competition, plan effective marketing strategies, and generally maintain relevance in the market.
Market research can also help you predict future problems or opportunities for the business or brand. Prior identification of pitfalls enables planning and avoiding potentially devastating losses to your company. On the flip side, a market opportunity identified early can change the upward trajectory of the brand.
“DUH!!!” is our professional response. Different audiences will respond to a marketing campaign in their own way, so finding a strategy that your target audience will respond to favorably is crucial. Before the contract for media is signed, before the SEO program starts, before creative is started - know who you are trying to reach and with what message!
Research is your friend particularly with media vendors and agency services. You come armed with insights about what motivates your market. Having done your homework there’s less chance of buyers remorse when you sign that agency agreement. It’ll be on the agency to ensure they’re recommending solutions that match the needs of the market. Market research, whether B2C or B2B, is extremely helpful as it ensures that you reach your intended audience through the platforms that they most regularly engage.
Advertising and marketing are moving to digital forms including content marketing. This has increased the need for proper research, especially on targeted ads and themes to align with. Failing to focus the marketing on the correct needs of the audience can lead to expensive lost opportunities.
Today's business environment is very competitive and dynamic. The only way to improve the chance of long term survival is to be ahead of your competition. You can only do this by gaining more knowledge about the target audience to understand them better.
One strategic way of beating the competition is to effectively serve the clientele being ignored in your industry. To do this, you have to understand with a high degree of certainty why the market is dissatisfied, how they are underserved and the value of the market segment(s) in order to properly allocate resources to acquire these customers.
If you are making big business decisions for your company without data-based insights, you’re doing it wrong. Consumer-centric decisions are one of the most effective ways of attracting and keeping your customers, ensuring business success. Armed with insights from research data, decisions can be made more confidently and outcomes are more predictable. And on an individual level, it’s a heckuva lot easier to ask for budget when you have data you’re confident in that not having anything but a gut feeling. Because odds are if you only feel it in your gut, it’s probably gas.
Consumers should be the driving force to everything done within a company because, without them, the company cannot profitably exist. In fact it’s companies and brands who take a human-centered design approach via research that are the breakthrough brands.
Conducting effective market research will define the size of the market, what motivates it, key features / functions, and value placed on your solution. This knowledge will ensure that you more often than not make the right business decisions, whether you are running an existing business or starting a new one.
One last closing thought. Advances in technology enable quality market research to provide incredible insights without taking excessive amounts of time or budget.
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