The importance of market research in business is often underestimated by young entrepreneurs. They might think that it’s not essential if you’re just putting up a small enterprise.
However, one must realize that going into business without researching your target market is like going through a maze blindfolded. You’re placing yourself at too much risk and hoping that simple luck will lead you to success.
Moreover, one must dispel the myth that doing market research is expensive and only big companies can afford it. While it’s true that large corporations regularly spend a lot of money conducting market research, it’s also a fact that any entrepreneur on a tight budget can likewise produce a comprehensive market analysis on his own and without resorting to expensive research outsourcing.
If you’re planning to put up a business, doing your own market research is fairly easy. Here are a few tips and some facts that you need to know before going out into the field to gather data.
Market Research Objectives
Perhaps the first thing that you need to do if you plan to do your own market research is to define your objectives. Basically, ask yourself what do you want to know. If you’re planning to put up a new business, then you may want to find out the profitability of your product or service, the type of location where you need to place your business and the demographic profile of your target market.
Quantitative And Qualitative Data
In market research, there are two different types of information you’ll encounter. The first one is quantitative data which primarily involves statistical information about your market such as current prices of similar products, saturation of the industry and the age brackets of potential consumers.
The second one is qualitative data that answers why and how your product or service will perform in the market. More often than not, this data is a result of quantitative studies. If a product is selling favorably among young urban professionals, then a qualitative analysis might reveal the reasons. Furthermore, by discovering the rationale behind the product’s performance, one can explore new avenues to improve it or extend its market reach.
Areas Of Research
In general, there are three areas you should consider for your research. These are customers, competition and environment. Customers simply mean your target market. Learn everything you can about them such as their population, lifestyle, priorities and spending habits. The more you know about them, the better you can focus your sales and marketing efforts towards them.
The second area you should study is competition. Determine the saturation of the market and learn how other businesses in the industry are doing. Find out what other products and services they offer and study their sales, production and marketing strategies. By discovering what works for them, you can position your business properly once you enter the market.
The last area you should focus on is the environment. This is the study of economic, social and political forces that affect your industry. The information you gather in this field helps your business to respond quickly and properly to specific trends and events in the market. The scope of your research should not only consider local and national situations but global markets as well.
In summary, before you invest in business and spend your hard-earned money on a new venture, consider conducting market research first. Doing so will allow you to discover:
- The feasibility of your business and the marketability of your product or service
- The size, need, lifestyle and preferences of your target market
- The correct niche and positioning of your business
- The required resources to play competitively in the market
- The possible obstacles you will encounter when your business is launched
Now that you know the basic concepts and importance of market research, the next step is to learn how you can conduct one for your business even on a small budget. Don’t miss that article and subscribe to Ready To Be Rich.
Furthermore, if you would like to participate in social surveys and earn some extra income, then read my previous article on how to Get Paid For Market Research and Customer Survey.
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