According to the U.S. Small Business Administration there are over 30 million businesses in the United States in 2018 and that number is only representing businesses that have less than 100 employees. The number 30 million does not even reflect larger corporations such as Walmart, Apple, Exxon, CVS, AT&T, General Mills, or General Motors.
What does that number really mean for a business? It means any business that offers a product or service has competition. Any business is not the one and only option in their industry. In order for a business to be successful and a leader in their marketplace, they need to standout and speak directly to their ideal customer in a crowded marketplace.
Now, any business has the capability consistently create new products and new marketing materials with no true strategy, with the hope that a product or service is purchased and revenue increases, but that method the equivalent of throwing spaghetti at the wall until it sticks. Approaching product creation and marketing campaigns without strategy wastes time, money, and energy.
How does a business ensure their products, services, and marketing campaigns are strategic and purposeful? Market research, that’s how.
Wondering how important market research is and how it can be used? Read this article offering 3 reasons to prove its worth from our market research company.
Simply stated, market research is the action of gathering information about customer needs, wants, opinions, and preferences. Conducting market research is highly valuable for businesses for a number of reasons.
Reason 1: Market research can identify problem areas.
Every company strives for consistent and steady growth in revenue. When revenue is down, market research is a useful tool that can identify problems within the business. Problems within a business can be internal or external, and market research can be utilized to identify both.
Imagine a company is experiencing a high turnover rate. Surveys, focus groups, or one-to-one interviews (IDIs) can be used to identify why employees are leaving, and provide direction as to where changes need to be made to increase employee satisfaction and retention.
Another example, imagine if a skincare line is experiencing a decrease in revenue. Conducting market research in the form of a shop-along could identify why consumers are choosing a competitor’s product off the shelf at the store.
If a company has a subscription-based product or service and they are noticing a drastic decrease in the renewal of subscriptions, market research can identify the problem. After conducting surveys of current and past subscribers, it could be found that customers are highly unsatisfied with customer service, and therefore choosing to opt-out of the subscription, or they feel the quality of the product or service is not what is used to be and no longer worth the price.
In all of the examples above, market research would provide valuable insight about problems areas and create an opportunity for the business to make needed improvements. Ultimately, resulting in the return of steady revenue growth.
Reason 2: Market research provides insight to needs, wants, and preferences.
Both B2B and B2C customers buy a product or service for two basic reasons.
1. The product or service is the solution to a problem.
2. There is a desire for a product or service.
By conducting market research, a company can learn about the problem(s) their ideal customer is experiencing in general or with a specific product or service, and use that insight to demonstrate how their product or service is a solution to those problems in their marketing efforts.
Imagine Google has a new idea for a product. Market research could be conducted with consumers to discover what is currently working with the consumer’s technological devices, what’s not working, what are they frustrated with, what problems are they experiencing, what features do they wish they had, etc. Designing, manufacturing, and advertising a new product is an expensive and time-consuming process. Market research can ensure the new product idea is valuable and desired in the marketplace before time, money, and energy is ill spent.
Another example, imagine someone wants to open a new hair salon in town that offers high-end services. Conducting market research within that town could provide valuable insight about whether or not there is a market and a desire for high-end services of that nature. Helpful for the possible new owner to know before a lease is signed, business license acquired, equipment purchased, and employees hired. Market research would identify the needs, wants, and preferences of the community to ensure that business decision will return a profit for the investor.
Or, think about a company wanting to launch a new product that ties a tie for you. Market research could be conducted to find out if there is a desire in the marketplace for such a product. Is that idea something people would actually want or need? Market research could answer that.
Reason 3: Market research can help a business understand why or why not customers choose your products or services over competitors.
There are two fundamental reasons a person chooses one product or service over another, branding and marketing. On a basic level, branding is how a consumer perceives a business, and marketing is how a business promotes their products and services.
Branding goes beyond a memorable logo. Good branding increases the value of the company. Think about Nike. Nike is a business that is globally recognized in the marketplace. Nike does have a memorable logo and tagline, “Just do it,” but they also have developed a high level of perceived value in the marketplace. When a consumer purchases a Nike product, they know they are purchasing a quality product. Consumers have such a strong perception of the brand that when the box arrives at their doorstep, they know what is in the box will be exactly what they thought it would be from the picture they saw online.
Marketing campaigns are a series of actions to create visibility of a product or service in front of an ideal market. Marketing campaigns are designed with the objective of guiding an individual to purchase and become a paying customer. Think about how many advertisements you see daily. Billboards on your way to work, commercials on television, print ads in magazines, pop-up ads while you are scrolling the internet, and so much more.
Billions of dollars are spent each year on advertising, but that money is only money well spent if the advertisements generate new paying customers.
Surveys, focus groups, one-to-one interviews, and shop-alongs can provide insight about a businesses’ brand in the marketplace. Asking questions such as:
• Are you familiar with the logo?
• What products or services does (company name) offer?
• Why did you choose X product over Y product?
• What do you think about the packaging?
Knowing how familiar your market is with your business brand can help establish a plan to increase brand awareness over competitors.
With attraction marketing the most crucial component is the words used in the advertisement. Market research enables a business to understand their ideal customer by asking questions and paying close attention to the words chosen in the responses. By using the voice of the customer (VoC) in the copy (actual wording used in the advertisement), the advertisement directly speaks to the business’ ideal customer.
Consumers are more likely to buy when the advertisement speaks to them. As a business you want them to think, “Are they talking to me?” or “That’s me!” By using their exact words, a business can appeal to a potential customer and guide them to purchase. Professionally designed market research projects can yield the exact problems and words the ideal consumer is using, so in-turn the business can demonstrate how they can solve their problem and use their words to create a successful marketing campaign.
With millions of businesses offering a wide variety of products and services, market research is a critical component for business success. Competition is at an all-time high, and new products and services are being launched daily. Market research can help your business standout in a crowded marketplace by identifying problems areas, providing valuable insight about your ideal customer, and increasing brand awareness, as well as providing exact wording to inject into successful marketing campaigns.
If you are unsure if market research is worth the investment, think about what revenue you missing out on by not doing it?
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