Marketing research is required on a continual basis if one wants to keep up with the latest market trends and gain a competitive edge in the business environment. Understanding market research and using techniques to your advantage are vital skills in reaching out to your target audience and ultimately increasing your sales.
Market research is also a key element in the development of a bankable business proposal for new a business or to expand an existing business idea.
Market research is thus important for every business, and should not be just a one-off activity. Successful businesses conduct research on a continual basis to keep up with market trends and to maintain a competitive edge. Regardless of whether you’re starting or expanding your business, market research is vital to understanding your target market and increasing sales.
Researching your market prior to entering is a sound decision for any business owner. Unfortunately, it’s often overlooked and ignored. The results can be loss of revenue and a slow start.
What are the benefits of market research?
Market research should be able to help with the following business strategic issues;
Identify problem areas in your business
Understand existing customers and why they chose your service/product over competitors
Identify new business opportunities and changing market trends
Recognise new areas for expansion, and increase in customer base
Discover potential customers and their needs to incorporate your findings into products/services
Set achievable targets for business growth, sales, and latest product developments
Make well-informed market decisions about your services and develop effective strategies
Help minimise risk
Create benchmarks to help you measure progress
What are the advantages of
Market research helps in identifying new business opportunities and designing marketing campaigns that directly target your potential consumers’ interest helping in increasing sales. Marketing research provides valuable information about the potential of a particular market segment, during a specific time, and within particular age group.
Marketing research help track your company’s progress as well as the growth of your competitors. By keeping an eye on your competitors, you can devise strategies that would keep you ahead of your business rivals.
Market research can help in reducing the probability of a business making losses. Before launching a product, you can identify problems and determine possible solutions. Research carried out after the launch of a product can help you find loopholes and devise plans to counter that loss and increase profits.
Market research assists business in the process of developing and designing mechanism to counter competition. From a banking perspective, these mechanisms are of paramount importance because they form part of the basis upon which credit can be advanced or denied. Banks are usually interested in knowing some pertinent information that can only be generated from carrying out basic market research.
If you’ve identified a business problem, research will help you work out what is happening. For example, if your sales have fallen you might discover that brand awareness has also fallen, or that a new competitor has entered the market or a substitute product has become available.
Research will help you identify areas for expansion and test the market’s readiness for a new product/service. For example, you could be looking to open a new retail store and you need to find the right location or you could plan to make changes to your distribution channels (eg: from home parties to retail) and need to determine how that will affect your customer base.
Your research could identify new business opportunities. You may find an unserviced or under-serviced market. You could identify changing market trends such as population shifts, increasing levels of education or leisure time which bring new opportunities.
Market research should also be able to provide information to the various business organisations on the sources of funding. Once a business has been able to identify its products and markets, it should be able to tell the type of resources and the source of those resources. Banks are not the only sources of financing for SMEs, some of the funding can be obtained from certain non-governmental organisations or State institutions. In the case of trying to source the funds from the NGO sector data collected through market research becomes the requisite information for developing a project proposal and the budget to the proposal.
What are the consequences of
failure to do market research?
Some of the consequences of failure to do market research include:
The withdrawal of the product from the market for any reason;
The inability of a product to realise the required market share to sustain its presence in the market;
The inability of a product to achieve the anticipated life cycle as defined by the organisation due to any reason; or,
The ultimate failure of a product to achieve profitability.
High level executive push of an idea that does not fit the targeted market.
Overestimated market size.
Incorrectly positioned product.
Ineffective promotion, including packaging message, which may have used misleading or confusing marketing message about the product, its features, or its use.
Not understanding the target market segment and the branding process that would provide the most value for that segment.
Incorrectly priced — too high and too low.
- Sanderson Abel is an economist. He writes in his capacity as Senior Economist for the Bankers Association of Zimbabwe. For your valuable feedback and comments related to this article, he can be contacted on [email protected] or on numbers 04-744686 and 0772463008