Small Business Marketing
Importance of Market Research
Written by Richard San Juan for Gaebler Ventures
For startups and small businesses, conducting market research should be a priority prior to launching a new product or service. Market research gives an individual the capability to analyze the consumer market as well as potential competitors to determine what strategies to employ in marketing the product.
A good way to think of how important marketing research is to the viability of a startup or small business is to view marketing research as study notes in preparation for an exam.
An individual can indeed take the exam without the study notes and may have a chance at doing well, but there is an increase in probability of not doing well.
In comparison, a startup that does not do the proper due diligence and market research can possibly succeed but it would be better to ensure success by going through the process of studying the marketplace environment. Market research should be an essential part of any startup company that wants to enter a specific market.
Analyzing the "study notes" allows for good business decisions that are based on sound intelligence and dependable market research that help minimize potential risks.
In addition to lowering the probability of suffering big losses, there are other advantages of conducting market research. Market research assists in providing improved communication by getting feedback from your current or trial customers.
Customer experiences are indeed a valuable source of information, because they give you an idea on how well you are meeting customer expectations. Furthermore, these customers can also tell you what they like and what they don't like about your product or service.
They can also provide suggestions and what other features that they would like to see in your product. A good example of this type of feedback is screeners for movies about to be released. These screeners are done to judge audience reactions on certain parts of movies.
Any negative reactions could lead to certain segments of the movie being left on the editing floor. By asking the customer you not only show them that you care but you also take the guess work out of customer services.
Moreover, doing a thorough research analysis in a specific market would help a startup or small business identify opportunities—where opportunities are defined as certain demographic characteristics where your product or service normally does well. This can help not only evaluate the probability of success, but identify if a certain aspect of your marketing campaign needs to be changed or clarified to maximize the effectiveness.
In turn, the results from this research can help shape a new product or service. Creating benchmarks and measuring how your company is progressing towards meeting those benchmarks is another important aspect of market research. If early in the research it seems company is failing to meet certain objectives with alarming regularity, it may help indicate that there is a glaring problem in your product or service. If improvements are made, market research analysis can also determine if they have been effective.
Richard San Juan is currently pursuing an MBA degree with an emphasis in Finance from DePaul University in Chicago. He is particularly interested in writing about business news and strategies.
Share this article
Additional Resources for Entrepreneurs
Conversation Board
How important is market research? Share your thoughts on market research best practices and market research mistakes that should be avoided if possible.