Importance of Market Research For New & Existing Businesses

Introduction

If you are an entrepreneur who plans to start a new business, or to improve and strengthen an existing business, then you must understand the importance of market research. Implemented during the planning stages for a new business, market research yields crucial data to determine consumer needs for a particular product or service, as well as to identify competitive businesses. An existing business can use market research and ongoing effective marketing to continually modify and improve products, services, practices, and customer service. Conducting market research can make all the difference between laying or building on a solid foundation, and not succeeding due to lack of vital information.

3d rendering of ‘marketing’ word and arrow showing business growth

Conducting Market Research

According to MoreBusiness.com, market research provides a useful and important step in building and maintaining a healthy business, as it addresses the customer perspective on the product or service, price, distribution channels, and marketing communications.[1]

While the main goal in business is to make a profit, no business owner will succeed unless he or she knows how to “find, satisfy and retain customers.”[2] This is the primary importance of market research: to define the customer, and his or her relationship to the product or service.[3]

Another name for market research is feasibility study – as an entrepreneur, you want to learn how realistic it is to take an idea and start a particular business; as an established business owner, you need to know the likelihood of success for a new product or service, or change in business practice. [4] In addition, you need to learn about your competition to ascertain if your product or service will only duplicate what is already available, or if you can offer a totally new, or “new and improved” version.[5]

Self-employment expert and small business coach, Karyn Greenstreet, advises business owners to learn about their customers’ preferences, as well as industry trends, through a variety of marketing research tools: internet research, literature research, surveys, and other information gathering techniques.[6] MoreBusiness.com further divides market research into two types, primary and secondary, and defines them as follows [7]:

1. Primary: provides information through activities such as monitoring sales levels and measuring the effectiveness of existing business practices, such as service quality and communication tools; gathers information on competitors of similar businesses.

2. Secondary: creates a company database to perform situation analysis by collecting existing published data; helps identify the company’s competitors, performs benchmarking strategy, and determines areas of the company to target, based on behavioral patterns, demographics, life style, population, and usage rate.

Market research data collection methods typically include both qualitative and quantitative [8]:

• Qualitative: forms a basis for quantitative methods by defining problems, generating hypotheses and identifying determinants; typically small samples, including interviews and surveys.
• Quantitative: employs mathematical analysis of collected data for typically large samples.

Conclusion

If any new or existing business owner wants to succeed, he or she must understand the importance of market research. Effective marketing research can make the difference between the success or failure of a business, since it considers the customer perspective on various aspects of the product or service. Market research includes both primary and secondary types, and employs qualitative and quantitative data collection methods.

References, Resources, & Image Permissions

Please check out the relevant references for this article, as well as helpful resources to expand your knowledge on this topic. The article’s image permission is also below.

References

[1][2][3][7][8]MoreBusiness.com. Why is Market Research Useful? The Importance of Market Research. Retrieved from https://www.morebusiness.com/running_your_business/management/Market-Research.brc

[4][5][6]Passion for Business. “Ground Truth” and the Importance of Market Research. Retrieved from https://www.passionforbusiness.com/articles/ground-truth.htm

Resources

Alison - FREE Online Courses. Diploma in Business Management & Entrepreneurship. Retrieved from https://alison.com/courses/Diploma-in-Business-Management-Entrepreneurship/content

Ashworth College – Affordable Online Courses. Career Diploma in Marketing Communications. Retrieved from https://www.ashworthcollege.edu/programs/career-diploma/marketing-communications/

[AC also offers undergraduate and graduate certificates, as well as associate, bachelor’s, and master’s degrees in marketing - all with low down-payments and convenient affordable monthly payments].

Penn Foster Career School - Affordable Online Courses. Internet Marketing Certificate**.** Retrieved from https://www.pennfoster.edu/internet-marketing-cert/index.html

Image Permission

Image: 3d rendering of marketing word and arrow showing business growth; by permission of renjith krishnan / FreeDigitalPhotos.net