Market research is the process of gathering information about a target market in order to understand their needs and wants. It can be done through surveys, interviews, focus groups or online research. This information is then used to develop marketing plans that will attract and retain customers.
There are several objectives that drive businesses to conduct market research. However, informing decision making is the key objective for market research in most cases. There are countless business circumstances that may lead decision makers to prefer researching more information. Some of the common drivers include:
When you need to identify new customers:
Research can be used to identify new customers within a market especially when looking to expand market share or size. By using research to understand present customers, businesses may be able to identify unexpected users of their products or services. This knowledge can be used to streamline or expand their processes and advertising to reach more lookalikes from the pool of potential customers in the market.
When you have little or limited knowledge of your current customers.
Knowing who your customers are in depth will allow you to better align your business with their objectives and lock them in as loyal fans of your product or service. During the peak of the covid 19 crisis, alcohol manufacturers couldn’t move product as much due to closure of most watering holes. They however noticed an increase in the purchase of spirits. A little investigation attributed this to the use of spirits as disinfectant due to the shortage of disinfectant products in the market. Understanding this specific new group of consumers and their motivation allowed some alcohol manufacturers to pivot in this crisis by producing and selling more alcohol to the new group. To do that they had to forge partnerships with known brands or create new product lines to compete with established disinfectant brands in the hygiene industry. In the end they were able to soften the blow of covid lockdowns on their bottom line.
When you need to develop/improve effective strategies.
Whether its packaging, advertising, product design or even sales and distribution strategies, market research is key in shedding light on the unknowns. Some of these studies include Pre/post-Ad-testing research which is used to polish communication and measure its impact after release. {See more on the article “How do I know if my advertisement is working”}
When you need to solve known or unknown problems.
In this moment some entrepreneurs will keep soldiering on through the “tough times” and hope that things change. Savvy businessmen however will conduct a study to understand the problem. Some of the common problems that trigger a market research response include sudden drop in sales, bad brand publicity incident or scandals, entry of a vicious competitor in the market, inflation etc
To expand market knowledge.
Even when everything is running smoothly, savvy businesses and corporations will maintain a steady ritual of research every month/quarter/semiannually or even annually. This is because continuous research can shed a lot of light on emerging issues and offer projections to help navigate the business’ future. Some routine studies are:
When entering a new market:
When a video-on-demand provider entered markets in Africa (Anonymous), they maintained monthly tracking surveys to measure their market penetration over a 48-month period among their target market. Each month we sought users of VOD services to inquire among other key metrics:
Whether they saw any “Anonymous” adverts over the last month? Where/On which platform? Which device? What time? What it said? What they thought about it? Whether it motivated them to consider subscription? Why they liked “Anonymous” among other critical metrics. This feedback advised month on month marketing decisions and among other items the choice of content to invest in to increase market share for the young brand.
There are thousands more reasons for market research documented over the years that we can’t exhaustively talk about in one go but we can attempt to list a few common utility scenarios:
- When expanding your offering.
- When introducing a new product line.
- When rebranding.
- When considering Mergers or acquisitions.
- When deciding pricing or when considering price reviews.
- To understand the impact of a proposed change in regulations or tax policies that have a direct impact on your market.
- To explore ways of defending your brand.
- To explore how to exploit your competitors’ weaknesses.
- To measure brand loyalty and recognition.
- To identify gaps and growth opportunities in the market.
- To create targeted marketing campaigns that are more likely to succeed.
