Understanding your customers and the current market conditions is essential for running a successful small business. Market research strategies and services can be used to obtain this kind of information, and can provide valuable insight for your business on a wide range of topics.
To help you gain a better understanding of what is involved, this article will provide a definition of market research and answer the question – Why is market research important for small business?
A simple definition of market research
Market research is the process of gathering and analysing data about one or more of the following:
- A specific industry – For example, trends and patterns affecting the industry as a whole.
- A product market – Research concerning the performance of a specific market. This research may look into things like the forecasted growth of the market and the number of competitors active in the market.
- Products or services – Research involving a specific product or service. This kind of research may involve estimating demand for a new product, or determining if sales would be improved by changing the appearance, branding or the cost of a product.
- Customers – Research that seeks to understand the behaviour of past, present and future customers.
The market research process can reveal information about product branding, product differentiation, pricing strategies, marketing campaigns and much more. It can be useful for established businesses who are looking to improve their sales, or for new businesses seeking to understand if their business model is viable.
Small-to-medium enterprises, freelancers, consultants and entrepreneurs can also gain a significant advantage by using market research strategies and services.
How can market research help a small business?
Some of the many ways market research can help your business include:
Finding out who your potential customers are
The more insight your business can gain into potential customers, the more easily you can craft your product or service to suit their requirements. Information including the potential customer’s gender, age, buying habits, intended use of the product or service, and level of education can all be very useful.
Your business can use the valuable information gained from the market research process to fine tune the marketing strategy of your product or service. It can also help test the feasibility of a new product or service before bringing it to market — potentially saving you thousands of pounds.
Obtaining more information about your current customers
Market research into your current customers can help your business improve sales figures, customer satisfaction and brand loyalty. Some of the valuable information that market research strategies and services can provide include:
- Learning which aspects of your product or service customers like or dislike.
- Discovering how much customers would be willing to pay for your product or service.
- Understanding why customers choose your business instead of your competitors.
- Learning if customers believe your business offers good value for money.
- Understanding which things influence customer’s buying decisions.
This information can help you refine your products or services in ways that will make them more attractive to your target market.
Determining how effective a marketing campaign will be
The information you gather during the market research process will help you develop effective, evidence based marketing strategies. You will understand how a price change may affect demand in the market, what kind of advertising appeals to potential customers, which media channels are the most effective, and much more.
The ability to make informed decisions and create effective marketing strategies can save your business thousands of pounds. You won’t be taking a “stab in the dark” when creating a new advertising campaign or product line — you will know precisely what will work, and what won’t. Market research can also help you make informed decisions about other business activities, including when to expand, consolidate or diversify the business.
Defining appropriate production goals for your business
The information gathered by the market research process can be used to accurately predict sales for your business. You will also understand how well new products or services will be received, allowing you to properly prepare for their introduction.
Identifying obstacles that your business may face in the future
Market research strategies and services will help you identify any problems that exist — perhaps the product or service is priced poorly or the market is simply crowded with competitors. The information obtained will help you understand if your business should cut its losses or improve the product or service you are offering.
Develop your business
Increasing the size of your small business can be a daunting task, because unnecessary over-expansion can cause a business to collapse. Market research allows you to determine if an expansion of your business is the correct path to take, giving you the assurance that you need to invest wisely. It can help you develop new products or services, make changes to distribution channels, increase/decrease output and much more. Market research gives your business some certainty about the decisions being made.
Monitoring the activities of your competitors
Market research allows you to keep a close eye on the performance of your competitors and answers important questions like — Why do customers prefer a particular competitor? Are competitors selling more product than me? What do customers think of the competitor’s branding and marketing? This information can help you devise business strategies that keep you ahead of the game.
Research new products and services
Businesses can use market research to predict how successful a new product or service will be in the market. For example, you can determine if the branding and price of a product or service is appropriate before launch.
Discover new opportunities in the market
Having a deep understanding of prevailing market conditions helps a business to take advantage of new opportunities. Market research can help you identify if a market is under serviced and helps you to take advantage of that fact. It can also help you spot changes in the overall market like population increases, shifting demographics and other important trends.
We hope you enjoyed reading “Why is market research important for small business?” If you are looking for a virtual research assistant to carry out market research for your small business or would just like to hear more about our executive virtual assistant service, feel free to call us on 0800 994 9016 or click here to request a free consultation.