Market research reduces risk and helps you make better decision.
Market research is one of the vital things you must do before you launch your product. You must have thought of different business ideas. I want to believe that you have analyzed all the business ideas and found a particular business idea that is right for you. Or are you still finding it difficult to determine the business idea that is right for you, I recommend you read our article on how to choose the right small business idea. After you have found the right small business idea, there is tendency that you will be so filled with excitement that you will like to hit the ground immediately. Business doesn’t work that way! If you want your small business to succeed, you must understand your product or service, customers and the market generally. The only way to achieve this is by conducting market research first. One of the reasons why some small businesses usually fail is their failure to carry out market research. Without market research, small business will know little about their local area, competitions and what people are prepared to pay for its product or service. Therefore, the need for market research cannot be over-emphasized. Market research can be primary or secondary. It can also be the hybrid of the two.
Types of Market Research
- Primary market research
- Secondary market research
Primary Market Research
Primary research is new research, carried out to answer specific issues or questions. It involves gathering new data that has not been collected before. Primary market research is usually tailored to the particular needs of a business. It can either be conducted by you or you hire an expert to conduct the research for you. Examples of primary market research include focus groups, surveys, field tests, interviews and observation.
Read Also: 22 Reasons for Small Business Failure
Primary research is preferable if you’re launching a new product or service. This is because it delivers more specific results when compare to secondary research.
Secondary Market Research
Secondary Market Research on the other hand involves gathering existing data that has already been produced. It makes use of information previously researched for other purposes and publicly available. Examples are researching the internet, newspapers and company reports.
Why Market Research?
Market research helps you identify potential customers
You cannot actually know or identify your potential customers without conducting research. Without researching the market, you will only base your assumption on perceived customers. But if you conduct research, you may find out that your perceived customers do not actually represent your potential customers. If you don’t have a fair knowledge of your potential customers, sales projection for your small business will not be realistic.
It helps small business to understand its existing customers
Market research is not limited to the point at which you want to start your small business. As your business continues to grow, there may be a need to develop new product or service. At this point, you need to conduct another market research. This will help you determine how the existing customers will react both to the new and the existing products or services. It is possible that the new product or service will impact on the prices of the existing products or services. Therefore, the research is not just for the new product or service. It covers your entire business product portfolio.
It helps small business to set realistic targets
The knowledge of your market, competition, customers and what they are willing to pay will help you in setting realistic targets for yopur small business..
Small business owner can easily develop effective strategies
The output of your market research will help you come up with effective strategies. For examples, information about your competitors and what the customers are willing to pay will help you develop effective pricing strategy. The location of your customers and the fierceness of the competition will determine the marketing strategy you will put in place.
You can quickly examine and solve business problems
It is easier for a small business to solve problems that can easily anticipate. You have time to prepare for the solution to the problems. That is why it is good to plan ahead and that is what research does for small business.
Small business can quickly prepare for business expansion
The same way market research can help you identify problem; it can equally help you identify opportunity for business expansion. During your market survey, you may find out that the number of potential customers exceeds your expectation. Having this in mind, you can quickly start planning on how to expand your business before your competitors take over the market.
It helps small business identify its business objectives
You set up the small business to meet the needs of your customers. If the needs of your customers do not align with your small business ideas or objective, there will be a problem. Researching the market will help you to quickly identify the gap so that you can align the objectives of your small business to that of the customers. If you get this right before starting the small business, you will enjoy progress and speedy growth.