Market research provides you with crucial information regarding customers, markets, competitors and industry dynamics. These insights help you develop a well-balanced business strategy for positioning your product correctly. While market research is recommended before launching a new product, it is also a good practice to do it periodically to get concrete feedback on your existing presence in the market.
It is an important aspect of your business plan for the following reasons:
- Knowing your customer – Understanding your customers and designing your offering as per their needs is essential for the success of your product. This requires in-depth knowledge of customer preferences, buying patterns, unmet needs, and expectations. Market research provides the essential information around which your strategy will revolve.
- Competitor analysis – Market research helps in identifying and assessing other key players in your segment and their USPs. It is useful to map the main competitors as a business can learn from both their successes and failures. Having knowledge of competitors can enable a business to be better prepared.
- Identifying markets – Market research can help you in finding new unexplored markets as well as gaps in your current market. Research can help you spot regions or areas with potential that the business has not identified so far. It can help in strategizing entry to new markets and discovering new opportunities.
- Industry dynamics – Market research includes tracking and monitoring the industry landscape as well. Geopolitical situations, natural disasters, an economic downturn can affect a business adversely. Market research can pre-warn a business, enabling it to be better prepared for sudden changes.
- Business goals – Market research helps you to set up realistic business goals. By having knowledge of customers, markets, and industry, the business can set objectives accordingly. It also helps the business have a clear vision and develop the right strategy.
Therefore, market research helps by providing detailed inputs on all the critical components of your business. Accordingly, you can design a judicious business strategy. You can take crucial decisions regarding the product, price, place, and promotion which will help you in building a strong business plan. Market research directs you toward profitable business opportunities. It minimizes the risk by sharing comprehensive knowledge of the market and industry.
Hence, market research is a necessary step and ideally, all businesses should carry out this process before designing their strategies.