Market research is the process of researching and understanding a company’s target market allowing it to make more informed business decisions.
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What Is A Market Research
Market research is the process of gathering information about a company’s target market that can be used to make better business decisions, improve products and services, and define a strategy to achieve business objectives.
In other words, market research is a systematic process of gathering, analyzing, and interpreting data collected about a company’s target market, its customers, the competition, or others.
When performing market research, a company or entrepreneur is looking to validate certain business potentials or gather information allowing it to make a strategic decision.
For instance, a startup will perform market research to gather useful information relating to its target market for the purpose of drafting a business plan.
On the other hand, an established company may perform market research to determine the potential of launching a new product or targeting a different market.
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Why Is Market Research Important
Market research is important in business as it allows business owners and managers to make more informed decisions.
In general, market research can help businesses, entrepreneurs, company founders, and other stakeholders get more insights into their customers and potential customers.
It will also help them better understand who are the competitors and how they are dominating their niche.
Market research can also be used to reduce business risk when entering into areas where the company does not have prior knowledge or experience.
For instance, the company may perform market research before investing in a new product or a service to ensure that there’s a market for it and that it can adequately satisfy the market needs.
Alternatively, market research can also be strategic in nature allowing a company to make strategic business decisions in consideration of the characteristics of its market, industry, and competitive landscape.
Particularly, by gathering good and credible data, companies can make projections and forecast the consequences of their business decisions.
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How To Perform Market Research
There are many ways you can perform good market research.
The first step is to look at the data and information that you already have on hand.
Companies can first study the characteristics of their customers and information they already have on their competitors and market.
Many companies may already have highly valuable insights into their customers and the market that others may not have.
The next step is to gather the information that you need to make your business decisions.
Gathering information can be done in a number of ways, such as online surveys, telephone surveys, mail surveys, focus groups, observation, or others.
Online Surveys
Online surveys can be an effective way of gathering information about a particular market.
You can potentially generate hundreds, or thousands, of responses to your online survey questions.
It’s important to ensure you perform a good survey so that you can get more accurate data and find ways for the participants to fully complete the survey.
Interviews
Interviewing your target market can be a highly effective way of gathering information about them, their needs, characteristics, and what drives their purchasing decision.
You can perform interviews in person or over the phone.
Although you can get very valuable information through interviews, getting people to participate can be challenging, especially if your interview is long.
Direct Mail Surveys
A direct mail survey is when you physically send a survey to your target market for them to complete and return.
The advantage is that direct mail surveys are generally inexpensive but can take a long time to complete as not many will respond to the survey.
Focus Groups
Many companies obtain insights and information on their customers and competition by holding focus groups.
Focus groups allow current customers or even potential customers to provide their feedback on different subject matters.
You can get very good insights into how your customers view your products and services and how they compare you to the competition.
Observations
Another way you can gather information on your target market is to observe their behaviour.
For instance, an e-commerce business will analyze how users navigate its website before making a purchase.
A boutique may look at how customers walk into the store and navigate the boutique.
Observing how your customers behave can provide good information as to how customers make purchasing decisions and what motivates them to buy from you (or not).
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Takeaways
So there you have it folks!
What is market research?
In a nutshell, market research is the process of validating or invalidating a business hypothesis, determining the viability of a new product or service, or discovering more about your potential customers and competition.
The objective of market research is to gather data allowing you to make more informed business decisions.
In some cases, you can use data that you already have (primary data) or data that you found through research (secondary data).
For instance, a company may perform market research to assess the viability of launching a new product or offering a complementary product or service to an existing one.
The better your market research, the better you can make more educated business decisions.
If you have done your market research and now are looking to start a business or you’re looking to scale your existing business, it’s a good idea to have the right team of internal and external stakeholders work with you so you can succeed.
Business lawyers can provide valuable service in helping you implement the legal framework for your business strategy or set up your commercial contracts.
Good luck!
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