10 Key Benefits of Market Research
What Is Market Research in Business?
Every business, big or small, can benefit from understanding market research. Understanding both existing and potential customers should be a primary component of any marketing strategy, and organizations keen on maintaining a competitive edge are wise to invest in market research.
Market research can be as simple as getting to know a business’s target market, or hearing about feedback from focus groups. Making the most of valuable information about customer behaviors and emerging opportunities all comes down to a proper understanding of market research.
“If you are thinking of starting a business, the first thing you have to do is to conduct thorough and extensive market research,” Business 2 Community reported last year. “There has never been a business which grew successfully without going through the painstaking process of researching the market they are playing in.”
What Types of Businesses Use Market Research?
Market research data can be beneficial to any type of business or organization, large or small. Large, international corporations can especially profit from market research that identifies cultural changes in foreign regions. Anyone trying to conduct business with anyone else can gain insights from market research—primary research, as well as secondary.
Benefits of Market Research
There are a number of market research benefits, and it’s usually possible to tailor them to an organization’s unique business objectives. Market research can help organizations gain a better understanding of their competitors, and it can identify opportunities for growth. Market research can help identify emerging customer trends within a target audience, and it can clarify why customers might choose one product over another.
Market research can also help organizations streamline their operations, eliminate unnecessary spending, and conduct more effective strategic planning. Here we’ll examine 10 of the many other benefits of market research.
1. Helps steer business communication
Market analysis allows businesses to understand how and when to communicate with their customers. It can help them avoid mixed messaging and prevent corporate communications from getting lost in translation.
Marketing research can also identify what customers expect to hear from a company, and assist in learning about their feelings when those expectations aren’t met. Market research helps everyone communicate more effectively.
2. Limits risk
Better communication is one thing, but perhaps even more important is properly understanding and managing the potential for risk in the marketplace. Business-forward organizations understand that some of the most important market research has the potential for risk in mind.
Market research data can impact a company’s mere survival by identifying extremely risky scenarios in advance—which allows it to better allocate responsive resources, or to avoid the possibility completely.
Additionally, let’s not forget that members of a target audience are human, and change their minds over time. There’s a lot of risk involved when companies disregard shifting consumer attitudes, and effective market analysis can assist those companies in staying connected with their target audiences.
3. Identifies opportunities in the marketplace
Any business that anticipates market needs and opportunities before others will have a competitive edge. Market research can identify emerging trends, which allows, for example, companies to develop new products to meet new customer needs.
Market trends around the world are influenced by culture, natural events, technology, and many other factors. When we utilize market research to help us become more aware of the changes a different society or culture is experiencing, we’re all able to answer the call for new products and services.
4. Discovers potential issues
How many times would you have saved time or money by knowing in advance that business would be hitting a snag? It applies to nearly everyone, and here’s where market research can be especially helpful.
When we conduct market research, we’re not just doing so with competitor research in mind. Ideally, we’re also learning ways that our own businesses might not meet customer needs. Or, we’re able to learn when external influences impact the way business is done (new government regulations, for example).
Market research helps us prepare for many different situations, both internal and external.
5. Estimates sales and fully utilizes advertising expenditure
Consider as well how market research helps organizations budget resources for the promotion of a new product or service. Any budget, in fact, benefits from market research.
For example, let’s say you notice at the grocery store that peanut butter is going up in cost. Well, that simple observation is considered market research, and it will allow you to budget funds appropriately for the next grocery trip.
Now imagine that scenario on a massive scale: Let’s say you’re a purchasing agent in charge of stocking a million packages of peanut butter per year. You can see how market research tools can be essential for budgeting and advertising.
6. Determines brand reputation and customer needs
Now let’s think about brand reputation and customer needs. Every single brand today banks big on their reputation. It’s why a styrofoam cup of coffee from a gas station might cost $1.50, while a coffee chain might charge $6.50 for the same product.
Every time a brand’s reputation gets “dinged”–that is, becomes less favorable in the public eye–their entire existence might be at stake. Market research can be invaluable in helping an organization or company keep tabs on how it's perceived (not just by devoted customers, but by potential customers as well).
It’s not just harmful mistakes that can damage a brand’s reputation, though. Sometimes, emerging trends can cause the public to see a company as simply old-fashioned or out of touch. Effective market research helps companies avoid that trap, too.
7. Establishes customer trends
It’s important to recognize trends over time. A single major trend can render a business obsolete overnight; on the other hand, a missed opportunity might have been an organization’s chance to continue serving its customers into a new decade.
Here’s where ongoing market research can be particularly important. Customer acquisition costs can be sky-high, and any market research project, for best results, will be a long-term investigation into every factor that might impact business.
This routine market research might surface as weekly, monthly, quarterly, or annual reports. It’s important that these market research reports are shared with all key stakeholders (especially those resistant to change—you probably already know a few of those types at your own business).
Over time, it becomes easy to understand customer trends. Bonus: With that time, you’ll be able to compare past spending and resource allotment against past customer trends, which will allow your market research to reach new levels of value. How well did you meet yesterday’s changes, and what did you learn that will come in handy for tomorrow’s changing customer?
8. Monitors market position over time
You might be at the top of your game today, but tomorrow’s another story. That’s been the case for businesses since the dawn of time, and it will always continue to ring true.
With market research, you’re able to determine your market standing or position in the minds of those who are most important to it: customers. Proper market research allows you to understand how your customers think about you. Are you held in high regard? For what reasons might they think poorly of you or your products?
A market research project can also determine your customers’ thoughts toward your marketing campaigns. Funny, offensive, out of touch, you name it—we can all think of organizations with marketing campaigns that have fit any of those bills. Marketing research helps to make sure you’re held in high regard, and as often as possible.
9. Resolves conflicts between gut feeling and the actual insights
There’s a lot to be said about “gut feelings”—those moments when, evidence be damned, you just have a notion that one decision is better than another.
While that debate is free to continue (and it will), we’re sticking with data.
Market research allows you to minimize risks and develop business strategies that are based on solid feedback. Have a hunch? That’s fine, but let’s run it by what your customers are saying. You might have a change of heart when confronted with facts.
10. Helps define a brand promise
When you run a business, you deliver a lot more than just products and services. You provide customers with a promise to deliver on their expectations.
But are those expectations being met? Market research allows you to gain insight into the ways your brand promise might be successful, or failing. Every marketing strategy should include both primary research and secondary research to learn firsthand what customers think.
Conducting research isn’t just about asking the questions yourself. A successful business will be able to learn from data that others have collected, as well. It all leads back to making sure you’re keeping your brand’s promise.
Limitations of Market Research
Market research helps you understand your target audience’s motivations, and a thorough market research strategy includes both the insights you collect directly, along with secondary research from other sources. Remember to conduct research with both your own goals and those of competitors in mind.
Market research tools are evolving, though, and it’s key that you adapt to emerging technologies. Customer satisfaction and the future of business depend on it!
Technology magazine reported in 2021 that some of the most important emerging technologies and tools for market research will include virtual reality, AI, microdata, and social listening. While customer satisfaction polls can be valuable, there’s a lot more to market research than questionnaires.
Ready to learn how Creatives On Call can help with your market research journey? When you give us a call, we can get started today.