— April 17, 2019
If you are thinking of starting a business, the first thing you have to do is to conduct thorough and extensive market research. There has never been a business which grew successfully without going through the painstaking process of researching the market they are playing in.
Entrepreneur.com defines Market Research as “the process of gathering, analyzing and interpreting information about a market, about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service; research into the characteristics, spending habits, location and needs of your business’s target market, the industry as a whole, and the particular competitors you face.”
Regardless of size, industry, or type of business, Market Research is important. Whether it’s for a multi-billion conglomerate or a simple mom-and-pop store, it is crucial that you be informed about your consumers, their behaviours, their wants and needs and even your competition.
Companies spend huge amounts of their capital just on research alone. If you think that they’re wasting money, then you are wrong. Research allows companies to understand everything there is to know about their market. Without information on the latest trends, for example, companies would not be able to cater to the viral phenomena of the world. This will be a greatly missed opportunity for not only Conversion but also Brand Awareness.
Perhaps, the best examples of companies who are into Market Research are multi-billion companies: Apple, Microsoft and Google. These company giants are well-known for placing huge importance in analyzing consumer behaviour. Their care on what their market wants keeps them on top.
Before you start a business, ask yourself this: Do you already know your target market? What do they want? Are there viral trends and bandwagons that you can hop on to? Will you be able to fulfil a need in the lives of your customers? This is what Market Research answers and more.
Below are some Advantages and Disadvantages of Doing Market Research Before Starting A Business.
Advantages of Market Research
One thing you have to learn about starting a business is that there will always be risk involved. While there is no such thing as no risks in business, there are multiple steps you could take to ensure that the risk is so small, it’s not even an issue anymore.
Market Research will provide you with insights on which decisions to implement. For example, the idea of expansion is something that all businesses dream of but it is not a step that all should take. Often, this immediate jump leads to their downfall. The research carried out will also give you an inkling on whether a certain project will be successful or not. When you start a business, it pays to know whether each decision you make will be good for your business.
Thorough market research will assist you in developing your product or service. Constantly improving the product/service you provide is a must if you want your business to grow. If you’re providing subpar services, no matter what tactic you employ, you will not be able to tap your customer’s loyalty.
Market Research will tell you your customer’s needs and wants which is important. A business should fill a void in a customer’s life. If you’re providing services and products that they do not need then why would they avail it? Another reason is that you will be informed of the latest viral trends. This means you can jump on them and interest more customers.
Listening to your customer’s comments and suggestions can also be helpful. You want to please them and who better to ask how than they themselves.
Better Image On Customers
Once you start pleasing your customers, they will start talking about you which is essentially free advertising. Pro Tip: Never dismiss word of mouth as it is better than any ad you can ever show. People are more susceptible to a referral than to an advertisement.
Measure Brand Reputation
Market research will tell you what your brand reputation is. This means that you can know what your customers think of your brand which allows you to rebrand if needed. For example, brands which are considered as catering to only one group of people can rebrand so that they are more inclusive of all customers regardless of sex, social status, age, etc. This also allows you to tap into more markets.
As a business, especially for startups, it is recommended that you take the time to build up a great reputation. You want to look helpful and approachable. The image you build is important as it will determine which customers you can interest.
Disadvantages of Market Research
Research Is Expensive
One of the main reasons that turn off companies from doing Market Research is the huge costs that they have to shoulder. For businesses which are just starting, it can be quite intimidating to know just how much goes into Market Research. Unfortunately, without Market Research, it will be like bringing a dull knife to a gunfight.
Hiring a company to do the research for you can cost you a lot of resources. Of course, you can have current employees do it. However, it would still cost to do research — questionnaires, interviews, etc.
Market Research Takes Time
Another resource that Market Research uses up is Time. You need to do proper research with the right questions and audience. This means that if you want to have credible information, you would need to devote a lot of time into it.
Market Research Can Only Target a Small Population
One problem that even actual researchers face is a lack of respondents. While you can figure out easily which part of the population is your target audience, asking them to fill out surveys and questionnaires can be tricky.
As you can see, there are also some disadvantages to Market Research. However, you can lessen some of this. There are different ways to do Market Research and some of this can reduce some cons.
For example, Market Research can be as simple as conducting an online survey. The Internet is your friend. You can derive data from Google Trends, Analytics, and other online tools designed to help companies improve their standing.