How Market Research Can Benefit a CompanyPublish Date: Oct 20, 2009
If you want to sell a product or service, then conducting market research is absolutely essential. That is, of course, if profit is important to you!
Market research basically involves collecting and analyzing information about your target market: i.e., your potential customers. It also involves gathering information about your competitors as well as the environment in general. The data may be obtained from research which has already been done or by getting information directly from people (e.g., by conducting a survey).
Since the market is becoming more and more competitive, market research is a high priority for all types of businesses and organizations.
By doing market research a company can gain invaluable information. In turn, the company can make better decisions resulting in a higher degree of success and profit. Since the market is becoming more and more competitive, market research is a high priority for all types of businesses and organizations. Small companies as well as large companies are recognizing the vital role of good market research.
So, what kind of information can be obtained from market research? Following is a list of some of the information good market research can provide:
- Specific needs and wants, likes and dislikes of current buyers as well as potential customers or clients. Knowing this can help a business determine what to sell or what they need to change about current products or services. Also, this allows a company to discover opportunities in the market.
- Demographic information of customers, such as age, race, gender, level of education and/or income, marital status, and location to name a few. This helps a business know about their typical consumer, and possibly find ways to expand their current market.
- Buying patterns and purchasing history of current and potential customers.
- Attitudes and preferences of consumers with regards to similar products or services already on the market. This is great information when it comes to launching a new product.
- How much consumers already pay or are willing to pay for a particular product or service. This helps a company decide the best price points for its products or services.
- How to make a product or service more valuable or appealing to consumers with particular demographics. If a current product is selling well, for example, to middle-aged women, this information will help determine how to make the same or a similar product appealing to women who are in a different age group.
- How to advertise a product or service more effectively so that more people buy it. Since more sales means more profits, effective advertising will increase overall profits.
- How to best utilize company resources. Most companies have limited resources, so knowing the most profitable use of available resources is crucial for maximizing net profits and minimizing waste.
- When to stop production of, change, or improve a particular product or service. Sometimes a product or service has run its course or just doesn't appeal to enough consumers. Knowing when to pull it or change it can save a company a lot of money, as well as lead to more profit down the road.
- Understand market trends to determine the best direction to go with current and future products and services.
There are several different methods of conducting market research. These may include:
- Customer surveys done via mail, telephone, the Internet, or in person
- Focus groups
- Interviewing consumers in person to find out various attitudes, preferences, likes, dislikes, and buying patterns
- Observing consumers (e.g., via videotaping consumers while they are shopping)
Effective market research is vital to the success of a business. The information is invaluable and can help prevent unnecessary loss and significantly improve overall profits.