Should You Have Market Research Done on Your Customers?
By Rebecca Factor & Calista Vantarakis on September 21st, 2015
If you’ve been following the business news lately, you’d know that Australian businesses are going through some tough times. According to the Australian Bureau of Statistics, only half of the businesses that started operating in 2010-11 were still operating in June 2014.
While many people attribute this to unavoidable global and local economic conditions, experts agree that there are many other factors at play. Poor understanding of the market, ineffective strategic planning, lack of meaningful communication with customers, and cash flow problems have all been identified as important factors in business failure.
The good news is that many of these obstacles can be overcome with effective market research.
What is market research?
Entrepreneur.com says market research is “the process of gathering, analyzing, and interpreting information about a market, about a product or service to be offered for sale in that market”.
For market research to be really effective, it should be carried out in a systematic and ongoing way, not just at the beginning of the business cycle.
What are the benefits of market research for a small business?
The benefits of market research are huge for small businesses; market research information doesn’t just give you information about how big a potential market is and what your customers want, it can also provide insights into how the product may need to be changed to suit the target market’s needs, associated risks and how to minimise them, as well as information about trends and competition.
To find out how market research can benefit your small business, read these five great tips:
1. Market research helps you identify opportunities in the marketplace
You think you might know what opportunities exist out there for your product, but until you’ve done some thorough investigation, you may be overlooking some important opportunities. For example, could your market be served better with more than one version of your product? Are there markets outside your target consumers who may benefit from what you have to offer? Or do you need to make your product or service available in a different way? Market research can provide answers to these questions and help you maximize your product’s potential.
2. Market research helps you communicate more effectively with customers
Communicating with customers is key, not just at the beginning of the business cycle but at all stages of business. Once you know who your ideal market is, you can get information about where they are on social media, or what their profile might look like in terms of age, location, marital status etc. Information derived from market research also helps you to tailor marketing messages directly to your target audience for things like direct mail, website landing pages, and customer loyalty programs that your target audience will find of interest.
3. Market research helps you minimise risks
If there’s no risk involved in your business venture, there’s probably no opportunity to profit either. But that doesn’t mean you can’t minimise your exposure to risk. Market research gives insight into trends and changes in the market, the number of competitors in your segment, and other information, which can definitely help you reduce your risk exposure.
4. Market research helps you plan strategically and financially
Lack of planning is one of the main reasons small businesses fail. Your product might be great, but if you don’t know things like how to compete/how much you need to sell to succeed/how your sales compare to your expenditures, you’re missing vital pieces of the puzzle. But planning isn’t just about strategy; you need to plan your finances as well.
There’s a relationship between cash flow and operating expenses. Do you need to raise extra capital with a business loan? Do you need to stock up on inventory? Market research can help answer these important questions.
5. Market research can identify your unique selling point
Every product or service needs a unique selling point – that important feature or benefit that differentiates your product from the competition. This point will become the basis of the ‘emotional promise’ that will make customers want to buy. Market research can help you to identify what makes customers form an attachment to some products and not others, and this information about buyer behaviour is invaluable.
To sum up, you should think of market research not as an expense, but as an investment in your business. Because the money you spend on it today could save you thousands in lost revenue later.
Rebecca Factor & Calista Vantarakis
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