It is essential to understand consumers’ needs before launching a new product, and business conducts market research to identify gaps in the market. Such research also includes coming up with creative solutions to identified gaps and reducing the risk involved in launching new or improved products.
What is market research?
A market is any place or online platform, where buyers and sellers meet or connect to trade products. It can be high-street shops, a shopping centre or a website. A firm in a marketplace is likely to compete with other firms offering similar products, and successful products meet customers’ needs better than other offerings from competitors. Markets are dynamic, and the components of a market like customers, competitors and market mixes, are subject to change because of the changing forces of demand and supply. For example, the price of a product will decrease if it is over-supplied. Contrarily, if the demand for a product outperforms supply, its selling price will increase. A business must know such market trends and evolving customer needs, and marketing research is a useful tool to help to identify and satisfy customers’ needs. Market research gathers information about the customers’ needs, competitors, market trends and existing marketing mixes. Entrepreneurs conduct market research to understand the market and provide competitive products or services.
What is market information?
The market is full of information on the customers, competitors, market mixes and trends. Market data comprise primary and secondary information. The primary or field-research information involves gathering new data, that has not been collected before — for example, surveying customers by using questionnaires or interviews. While secondary or desk-research information comprises gathering existing or already produced data. For instance, by researching the internet, newspapers, statistics and company reports. Data collected can be quantitative, comprising numbers, or qualitative, comprising opinions and views.
What do you research for?
Market research studies customers, competitors and existing market mixes to better understand the market and decide on the marketing strategy of a business. Markets comprise groups of customers who share similar characteristics and buying interests. These collective interests of a group of buyers make up distinct market segments. A segment is a group of customers who share common interests, values, attitudes or behaviours toward a particular product or service. Breaking down a market into segments or groups can lead to a better understanding of the needs of customers. For example, the Swatch watch producer targets the market segment of young customers, who like sporty and casual designs. Another tool used for customer segmentation and marketing positioning is market mapping, which identifies competitors and their products in the market.
A competitive market has many similar businesses striving to win the same group of customers, whereas a monopoly exists when there is only one firm in the market or one firm captures at least 25% of the market. Competition in the marketplace can be useful because it can help improve prices, product offer and customer service. Researching avails insights about market competition, and to conclude opportunities.
The market research also explores the exiting market mixes and concludes a list of opportunities. Market mixes include the 4Ps of the price, product, promotion and distributing channels.
Market information collected will be helpful for businesses to decide on their customer segment, competitive positioning, market mix and the marketing strategy as a whole.
What is the importance of market research?
Market search gathers information on the market and helps a business to write up its market and sales strategy. In this strategy, a business will decide on the best market and customer segment to target, the best market mixes, the sales target and the key performance indicators. Gathering market information provides the basis for a firm to evaluate options and decide on the best ways forward. Marketing strategy includes details on the target customers and market, the market mixes, sales targets, tactics to reach targets, action plan, resource requirements and key performance indicators.
This article is extracted from my new book- Mastering Enterprise Skills for Potential Entrepreneurs, which can be found on www.amazon.co.uk. If you want to receive more information about the book and our activities, you can register in our newsletter by using this link.
Prepared by: Munther Al Dawood
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