Pakistan’s Veteran Digital Evangelist, Saad Hamid, believes that a start-up’s success depends much on its customer care. He disapproves the idea that startups neglect the importance of market research. But what is market research and why do start-up’s need to do it.
Market research is basically the gathering of information about a market and the people in it. Businesses can use pre-existing industry information or they can conduct their own studies directly. Start-up companies that use their time and resources to fund quality market research projects before they introduce their first product gain valuable knowledge that can then be used to recognize need of the customer strengthen relationships and anticipate change, all things that boost their chances of becoming eventual market leaders.
However, an entrepreneur’s enthusiasm and passion for their business idea, along with their personal connection to those they are asking will mean the data is far from relevant or useful. Unbiased information obtained from primary market research can allow an entrepreneur to build a product and service which will meet client’s needs. Here we have listed five reasons why market research is important:
1. Looking at the Market Need:
In order to take any business idea to the next stage it is essential to prove, using reliable information, that the idea is wanted or needed by the target market. First and foremost, a product must satisfy a need. If consumers don’t need it, they won’t buy it. Collecting facts and figures that detail the current market setting, such as its size and trends, and other socio-political influences affecting it, helps new companies to modify themselves. The research will determine market audience’s typical interests, age, and gender? Is there a specific group you haven’t thought of as a profitable target?
If biased participants are used to conduct primary research, it will not aid the launching of your product or service. When a product or service can satisfy a need or a want in the target market, the business plan becomes far more valid and reliable which is one factor that will attract investors.
2. Reveal Customer Need:
There’s a slight but relevant difference between market need and consumer need. While the first is general, the second is specific. For lasting success companies must know if a need exists, and then they must target the right people. Market research is vital for startups because it details who might buy a company’s product, as well as when and how often and from where they will get it; that is all the essential details. This helps businesses to identify their ideal customer (including their age, gender, education and income levels) so that products and services are properly and appropriately tailored from the start.
3. Determine the Business Location:
There is no denying that a company in the right location attracts the most customers. Market research helps reveal the location most feasible for your targeted customers to approach. Very often similar businesses are found in close vicinity because they have potential customers. An unbiased and thorough research can help determine if it will be beneficial to set up a business there or will you be just another name in the already congested area, or will you need to think of reaching a slightly different audience in order to differentiate?
4. Reveal the Competition:
Market research will not only pinpoint the physical position of the competitors but also their position in the market that is their share in the market. If the market is saturated it will affect the product design, price and distribution for the new business. The research will uncover for you the supply demand gap in the market and how you may use it for your benefit and gain market hold/share
Tip: Make sure to compare your strongest competitor’s audience demographics with the total market. This is because the difference may be one of the reasons why their growth is dissimilar with the entire industry trend. So you may not be misguided.
5. Marketing Practices:
Businesses invest a lot of time and money in their marketing campaigns. Market research is vital for startups because it helps them determine the type of marketing campaign that will reach and resonate with the most people in their target audience. Startups already know a thing or two about a typical marketing mix in their targeted market. Smart work would be to find out what extraordinary tactics (if any) your top online competitors used to get above the average. They can then allocate their budget in a way that supports those preferences instead of putting a burden on their already strained finances.
These are just a few but the crucial reasons for conducting market research. For a new business it is important to gain trust and establish credit and for this it is important to conduct an unbiased market research. Once primary market research has been conducted and an idea has been adapted and finalized into a business plan, an entrepreneur’s chance of securing market footing increase greatly and so does their potential to gain funding.