Knowing the importance of market research should be a priority when starting your business. As your business grows, market research will be your best friend to determine what direction you should move in.
Entrepreneurs who do not follow through with a target market research plan will either end up failing shortly after launching their business or never get their startup off the ground. Maybe they will become successful for a short time but drastically decline afterward.
What is Market Research?
Market research is the process of gathering data in order to build a strategic marketing plan for how your business will help others and determine it’s profitability.
This includes determining the audience, price point, method of marketing, product, services that will be offered, a competitor analysis, location, and interests.
The purpose of market research is to determine if what your business has to offer is going to benefit your ideal customer and if there is a demand for it.
The Importance of Market Research
So why is market research so important to your business? That’s the million-dollar question.
First of all you want to make sure that your industry or niche is not oversaturated. You will also want to analyze that your audience’s problems are not already be solved in another manner.
For example, if you live in a small town and decide that you are going to start a landscaping company because you love being outdoors.
You also think that everyone should have a nice yard. And you know that other companies are booming doing the same thing.
This does not mean that your business will be successful.
First off you want to see if there is a need or another service you can offer to weed out your competitors. How do you find out what this service should be or if people are even interested?
How do you determine price points, locations, or vouch that you can profit in so many months? Or do you know that you want your customer to be:
- an established middle-aged couple
- who doesn’t have time for landscaping
- or their health will not allow it?
All of this is centered around market research.
5 Reasons Market Research is Important
Understanding the importance of market research is going to be a foundational concept through our your entrepreneurial journey. The earlier you can learn to spot opportunities, pain points, and undeveloped areas, the quicker your business will rise to the top
When you can find who your target market is and know exactly what their pain points are, you can determine how you are going to solve them.
This will ensure you have less risk of a failing business and more room to grow and scale in the future.
Making budget allocations, shifting services/products, and customer retention will become much easier and less risky.
- Who is your ideal customer?
- What are they struggling with?
- How will you solve?
Find out how you are going to advertise your business. Small businesses typically have small budgets, so you need to know exactly where your audience is hanging out. It takes no genius to know that the population between ages 24 and 65 typically have a Facebook page.
In comparison we know that millennials and younger generations are more exposed to digital marketing methods. Whereas older people may respond to print ads like magazines, newspapers, and paper coupons.
We can also say that the younger generation loves Tik Tok. While corporate executives have a passion for LinkedIn, and Instagram falls somewhere in between.
Knowing where your audience shows up is important in your research. This will reduce your marketing budget if you know where to start. You will also gain awareness in all the right places.
You will also be able to gain traction by targeting early on with Facebook Ads and other digital tracking methods. This will also allow you to see where people are falling out of your sales funnel.
- Digital Marketing or Print or Both?
- Where is my ideal customer?
- What are industries similar to mine do they like?
Easily Beat Out Competitors
Having the perfect people in your target market is the best way to beat out competitors. You may read in local Facebook groups about other local companies not following through with their proposal.
This is where you would make a note of how your competitors are falling short and where their loss will be your gain.
Maybe once you start searching and surveying others you find a totally different demographic that is untouched. This could ultimately open your business to an entirely different market.
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- Take inventory of your competitors
- Compare their services/products to yours
- Find their weaknesses and replace
Having a strategic marketing plan in place after completing all of your research is going to allow you and your company to develop realistic target goals.
While there may be some surprises, you will have a better idea of what direction your business is going and whether you should continue or pivot before things get too challenging.
- Set short term goals
- Have additional services/products/features in mind
- Possibly pivot depending on demand
Increased Business and Networking Opportunities
Throughout your journey, during your market research you may be surprised to find new business opportunities. This could be areas you thought would not work previously: an undiscovered campaign tactic, or a way to connect with other businesses that can help grow yours.
- Form strategic alliances with people in your niche
- Referral incentives
- Create upsells and down sells of products/services or tiered packages
See how understanding the importance of market research literally guides your entire business? While this area may seem intimidating, simply start by defining the individual characteristics of your ideal customer. Then move on to investigating your competitors and see where things are overlapping!