What Is Market Research and Why Do It?
Market research blends consumer behavior and economic trends to confirm and improve your business idea.
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What is Market Research, and Why Should You Do It?
At this point, you probably have your business idea at least partially fleshed out, and you might be asking yourself:
Does my product solve a problem or fulfill a need in the market?
Which kind of customer will buy my product or service and are there enough of them?
Who is my competition?
How much should I charge?
What are the trends in my industry?
The answers to these questions will help you figure out whether you can create a realistic path to paying customers. To begin, you’ll need to research your customers, competitors, and industry.
Market Research is the process of gathering data on your customers, competitors, and industry, in order to figure out whether your product or service will truly satisfy customers' needs and also to determine the approximate size of your market.
What Does Market Research Help You Do?
Get to know your target customers. Without someone willing to buy your product or service, you don’t have a business. Getting out and talking to your customers can help make sure you’re building a product or service that your target customers will actually buy.
Also, getting to know your customers will help you test and refine your assumptions. For example, by interviewing prospective buyers you may realize that your product or service would be better received by a different demographic. Or you might find that there is a different or better solution than what you were intending to build.
Identify opportunities that exist in the marketplace. For example, through preliminary market research, you might find an opportunity to start your business in a location you hadn’t considered before, where little or no competition exists for your product or service. Or you might find an opportunity to provide a new feature for your product to meet market demand.
Pinpoint potential obstacles or problems with your business concept. Research can help you uncover direct or indirect competitors you hadn’t considered. Knowing about them will help you plan how to gain or maintain a competitive advantage in the market. You might also discover future development plans that could affect your business (for example, if you are building a retail business, the arrival of a big-box retailer in your target market location). This information can help to minimize your short- and long-term financial risks.
Communicate effectively to your target markets through advertising and promotions. By researching your customers and their spending and buying habits, you can create marketing campaigns to meet their specific interests and needs.
Benchmark and evaluate your success. By gauging the size of your market, how your competitors are doing, and who their customers are, you can set goals to reach your market, grow your customer base, and track how you are doing compared with your competition.