There are many different sources for new business opportunities, but according to Raffi Amit, a professor of management at the Wharton School, perhaps the most promising ideas come from fully understanding customer needs.
“That is something we ought to do continuously, in order to understand what customers want, where they want it, how they want a product or service supplied, when they want it supplied, and at what price,” Amit said.
Another key step is evaluating your business competition and conducting a thorough competitor analysis. Gaining a more objective and comprehensive understanding of your customers and competitors can give you valuable insights into possible avenues for increased revenue and growth.
Here are six tips to help you get to know your customers and your competitors in business more deeply.
1. Use syndicated research to gain a 360-degree view.
Conducting do-it-yourself surveys or diving into web data may seem like a natural step, but you should go further than that to grasp the full picture.
Surveying your customers or analyzing data from your own website alone could result in a substandard pool of information available to you. Surveys can be answered by the most responsive or positive of your customers. Website analytics show customer activity but miss potential customers and their needs.
Syndicated, third-party research can reach into trends from all consumers, not just those current among your customer bases.
Using market research to analyze the customer on multiple levels will help you evaluate the demand for a product/service, and whether expanding into a potential new market is worthwhile for your company.
2. Ask these six key questions about your customers.
Explore fundamental questions that shed light on customer needs and their purchase situation:
- Who is the customer?
- What does the customer want to buy?
- When does the customer want to buy?
- Where does the customer buy?
- How does the customer pay?
- What price is the customer willing to pay?
3. Identify important consumer segments.
As you conduct a customer analysis, identify consumers segments that share common characteristics. These may include demographic factors such as age, gender, education, income, occupation, and place of residence, or softer variables such as lifestyle and values.
4. Evaluate consumer motivation.
Researching consumer motivation may be a particularly fruitful source of innovation.
As Scott Anthony, coauthor of the book Dual Transformation: How to Reposition Today’s Business While Creating the Future, describes in the Harvard Business Review, simply asking “what job is the customer trying to get done?” can reveal the frustrations and desires that drive purchases.
When you find a job not done well — for instance, when a customer’s key criteria is not being met, or when there are barriers constraining consumption — you can begin to identify possible opportunities for business innovation and expansion.
As an example, one of MarketResearch.com's clients, a major manufacturer in the construction industry, told us, "We use market research to get a better understanding of consumer motivation. What portion of customers is opting for lower-cost brands that are 'good enough?' How can we account for differences between specific types of consumers and how they approach the buying process?"
These type of data-driven insights can be used to guide future product development and marketing strategies to boost your bottom line.
5. Do a competitive analysis.
Knowing who your key competitors are and assessing their strengths and weaknesses is another essential step that can illuminate specific growth strategies and ways to differentiate your products and services.
When analyzing the competition, consider the following:
- Who are the main industry participants, and what is their market share?
- What products or services do they sell, and what is their value proposition?
- Which products and brands are growing more significantly and why?
- What are the strengths and weaknesses of your competitors?
- What strategies can you employ to build an advantage?
6. Consider your indirect competitors as well.
You may also want to look closely at indirect competitors. For example, airlines may want to consider how else people travel long distance (via bus or train), and how they can persuade customers to take a plane instead. Southwest’s low-cost airline service attracted people who might otherwise take the bus or not travel at all.
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This article is an excerpt from MarketResearch.com's free white paper Finding Business Opportunities: The Importance of Market Research.
Download the white paper to learn additional ways companies use syndicated research to gain a competitive edge and drive business growth.
About the Author: Sarah Schmidt is a Managing Editor at MarketResearch.com, a leading provider of global market intelligence products and services.