The Importance Of Ongoing Market Research

Market research will assist a start-up business to determine:

• The demand for your product or service
• How much money you could expect to make
• Your potential customers
• Your competitors
• The ideal location
• The type of market that exists for your business
• The size of the market
• Realistic pricing details
• The nature of your competition
• Current and future market trends
• Whether your industry is growing or in decline
• Where your suppliers are located
• The economic state of the region where you plan to locate your business

Before you started your business you would have gathered market research information to give you an idea of your business' viability. The findings of your market research would have unearthed information around:

• What demand there should be for your product or service
• How much money you could expect to make
• Who your competitors would be
• A profile of your potential customers
• Where the ideal location would be for your business
• The size of the market
• Realistic pricing structure
• Current and future market trends
• Whether your industry is growing or in decline
• Where your suppliers are located
• The economic state of the region where you plan to locate your business.

Dealing with a changing market

But market research doesn’t stop there. The business world is volatile, dynamic and changing constantly. As your business develops, you may find your market changes. Your customers are individuals whose tastes and needs also change and therefore it is difficult for any business person to predict what these changes will be throughout the life of a business, product or service.

It makes sound sense that you undertake market research regularly and make the effort to update your knowledge of the marketplace and the people who are keeping your business profitable. This will help you make informed decisions about every aspect of your business.

Large corporations such as McDonald’s are excellent examples of organisations that do not let a changing market slip by.

Following the release of Super Size Me - in which a film maker eats nothing but McDonald's food for a month and monitors his health - the company received bad press. Customers were starting to bypass it’s products in favour of what was seen as healthier offerings from competitors. Market research showed the film was significantly damaging its reputation, so McDonald’s decided to launch a counterattack. They responded with an updated menu and a saturation advertising campaign, effectively telling the customer that their voice was being heard, and action had been taken to fulfill their needs.

The advertising and research budget of an SME is obviously very different to that of a McDonald’s, but the principle of this example is applicable - know your market, know your customer and respond to their needs.

It is just as important to know your competitors. You can be certain that they are doing their market research and addressing their findings in order to corner the market.

What else market research can tell you

Market research can tell you many important things about who your customers are, what their needs are, why they chose (or did not choose) your product or service, and what their feelings are about your business.

You may find there is a common reason for not choosing your product - you can turn this negative feedback into a positive and learn from mistakes you are making. As an example, you may discover your customers are unhappy with your method of service delivery - this might be an opportunity for you to consider alternate delivery channels, such as a website. Use any criticism as an opportunity to grow.

Undertaking market research will tell you how your company’s brand marketing is performing and enable you to be in a position to make educated predictions about strategic moves your competitors are making, respond to challenges, and throw down a few challenges yourself.

It is absolutely crucial to understand your target market well before undertaking any marketing exercise, product development or new business initiative. Forget sentiments like "We'd love to research our users, but there is just no time in the schedule." Or “Anybody could be a user of our product. How do we research everyone?" Or “We already know our users. We carried out market research two years ago.”

If you don’t undertake research regularly, you risk time and money on activities that might not get you the results you want.

Types of questions marketing research can answer for you

It is easy to get confused by marketing buzzwords and lose sight of what you need to achieve. To focus on what you want to learn from your market research you should ask yourself these questions:

• Is there still a demand or need for my product or service?

• What does my customer need? Am I fulfilling that need?

• Are my customers able to afford what I am selling?

• Am I targeting customers who have decision-making power?

• Are my products or services accessible to my customer?

• Is the pricing right?

• Should I be placing/distributing my product/service in both urban and regional areas?

• Is my packaging right?

• Is my branding spot on?

• Is my advertising working? Am I using the right media to promote my offering?

• What image comes to mind for customers when our company, brand or product is mentioned?

• Are my customers satisfied with my after service?

Unless your company specializes in marketing, or is large enough to include a marketing team, you may not know where to begin developing your market research strategies. These tips should help.

Tips for conducting market research

• Have a research goal. Consider what you need to know and why. Are you investigating a new product for your existing market or looking to expand to new markets?

• Contact your local chamber of commerce for demographic reports for your market. These are also commonly available in trade journals. Government agencies and association websites can provide other forms of demographic information.

• Conduct mail and telephone surveys - make sure you do not contact people who have explicitly requested not to be contacted!

• Visit trade shows and don’t be afraid to ask questions – this is a valuable way of learning about your competitors and what differentiates the successful companies from the not so successful.

• Use a variety of methods of collecting information from existing customers. Questionnaires are a popular tactic, and focus groups can be an effective way of involving your loyal customers in your business, and letting them know that you value their opinion.

• Watch how your employees operate and listen to them - as the first point of contact with your customers they are in an excellent position to gauge the mood of the market and see shifts. Encourage your employees to report thoughts they may have on the market. They may see something you have missed or not considered.

• Keep accurate sales records and study them closely - this can help you focus your market research strategies. It may be that a particular region is unprofitable for you.

• Consider hiring a market research firm if time or lack of marketing skill is an issue for you. These firms can be expensive, so think carefully about what you need the firm to achieve for you.

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