Market research serves a critical function for achieving growth and reducing business risk. Market research is applicable to a wide range of departments across an organization, including corporate planning and strategy teams, finance, marketing, sales, and product development.
Because market research is often a significant investment, it’s important to understand why it’s so valuable and the reasons it deserve ongoing attention.
To explore this topic in more depth, I talked to a variety of professionals in a broad range of industries who were eager to explain how market research can help a business accomplish its goals as well as the disadvantages of not doing market research. Read on to learn their top reasons for why you need market research.
1. Pursue Promising Business Opportunities
Market research is an important component of any business plan. Understanding the market demand and the overall competitive landscape can help you avoid the gut-punch of business failure.
“If you get swept up in the excitement of starting a new business, your overoptimism could lead to its early downfall,” explained Max Wesman, COO at GoodHire, a background check company. “Instead of exposing yourself to risks you haven’t prepared for, it’s important to be objective. Your conviction alone cannot carry a business idea to success.”
Wesman advises businesses to conduct market research thoroughly and at regular intervals. Doing so can help you target the right group of consumers, price your products and services appropriately, create the right messaging strategy, stay ahead of market changes, and pivot when needed.
2. Make Informed Business Decisions
Market research grounds your decision-making in data and facts, which can help eliminate blind spots and allow you to set realistic targets for your company. “Business decisions are not made in a vacuum or based on assumptions,” said David Bitton, Co-Founder and CMO at DoorLoop, a rental property management software.
Because market research is data-driven, it can help organizations create strategic plans and allocate their resources and budgets effectively. Venture capitalists, investment banks, and management consultants all routinely rely on market research, because high-stakes decisions require much more than guesswork or hunches. Before taking a leap, people want to see the data.
3. Gain a Competitive Advantage
Market research is also an important tool for benchmarking and competitive analysis in a market defined by constant change.
“New innovations and companies enter the market every day, so performing market research is an essential part of staying competitive,” said Laurel Mintz, Founder and CEO of Elevate My Brand, a marketing agency based in Los Angeles. “It’s important to use direct, indirect, and aspirational competitors as a comparison to where you are, not only to see how you can improve, but also to use for marketing.”
For example, if a company does market research and they discover that their prices are significantly lower than the competition, it could be a sign to raise prices or use their low prices in their marketing strategy, according to Mintz.
4. Stay Current and Relevant to Consumers
In addition, when you truly understand your competition, and how industry trends are shifting, you give your company the opportunity to adapt.
Market research can even give brands the chance to adopt new concepts from other companies within their market. “Inspiration is a powerful tool,” explained David Batchelor, President of DialMyCalls.com, a texting and calling solution. “Industries are constantly evolving due to new technology and changing consumer behaviors. So if you’re not a ‘first-mover,’ you need to be a ‘fast-follower’ as a result of thorough market research.”
5. Develop an Effective Marketing Strategy
Market research should also help inform all your marketing efforts so you create content that resonates with your target audience and produces real results. You should know who you are creating marketing content for, who you are attracting into your sales funnel, and what their pain points are.
Understanding and marketing to the right audiences is key. “Companies that skip this essential step may lose insights, additional sales, and brand strength that all add up overtime,” said Jason Panzer, President of HexClad, a company that produces hybrid stainless steel nonstick pans.
6. Refine Your Messaging During Pivotal Moments
Market research can not only improve the effectiveness of your marketing strategy, but it can also help you avoid PR disasters that can tank your brand’s reputation and push loyal customers away.
“Unexpected events like the pandemic and inflation have changed consumer shopping trends in drastic ways, so how you address these issues can either help or hurt your brand,” explained Greg Gillman, Chief Revenue Officer at MuteSix, a performance marketing agency accelerating growth for disruptor brands. “By understanding the impact of world events on customers, you will avoid coming off as tone deaf to those issues.”
7. Take Your Sales to the Next Level
Market research can also improve the bottom line by helping you cross-sell, upsell, and create highly personalized and targeted pitches, according to Manish Mishra, Associate Director of Sales at LeadSquared, a marketing automation and CRM software for businesses.
What’s more, the insights you glean for your sales team can build on each other over time. As Mishra explained it, “Strategies for when, what, and how much to sell can be sketched out from the available information. Similar to how it takes multiple meetings to build a relationship, market research gives much better information about leads when it is repeated regularly.”
8. Identify Avenues for Growth
In addition to boosting sales and marketing efforts, companies also use market research to enhance product development and to plan how to expand into new markets.
“Regular market research initiatives within your company can help you discover new opportunities for growth and improvement,” said Laurice Constantine, Digital Managing Editor at Forbes Middle East and Founder of Casadar.com, an online marketplace that connects buyers with sellers and consultancy service providers in the field of decoration, architecture, and interior remodeling. “You might discover that there are untapped customer bases that would benefit greatly from your products or services. You may also discover that your products or services could be improved.”
Market research can also give you ideas for ways to combine offerings, create add-ons, or upsell items to boost your profits.
9. Reduce Risk and Gain Support from Stakeholders
Although risks are inevitable when running a business, market research can help you decrease them during the start-up phase and beyond. “An effective way to make informed decisions and reduce pitfalls is through market research,” according to Igal Rubinshtein, Founder at Home Essentials Direct, an online marketplace for home goods and DIY projects. “Through past information and by predicting future trends, you are undeniably in a better place to make a decision in the direction of growth.”
Having data to back up your ideas can also help bring other stakeholders on board, whether you need the approval of the executive suite, to win over investors for your business, or to impress clients. By providing a solid foundation for your idea, market research can help you make a persuasive case and tip the balance in your favor.
10. Save Time and Money
Lastly, market research can help you streamline your business operations and avoid waste.
“Targeted efforts are always more effective than broad ones,” explained Geoff Cudd, Founder of Don’t Do It Yourself, a website that provides advice and reviews to help people choose the best freelancers and tools to grow their business. “By conducting market research, you can avoid wasting time and money on marketing and advertising efforts that don’t reach your target market. Instead, you can focus your resources on strategies that are proven to be effective with your specific audience. This will help you get the most bang for your buck and use your resources more efficiently.”
Market research can also help you understand where the market is going, so you can plan what business lines to scale up or scale down, and ensure your investments are proportional to market demand.
When you have tough business questions, market research can help you move forward with confidence. Will it pay off to acquire a new company, build another factory, or expand your business into another country? Market research can help answer these types of critical questions and position you for success.
Where to Start
When you need market research, MarketResearch.com is here to help. With more than 20 years of experience in the market research industry, hundreds of market research report publishers, and thousands of clients, no one is better suited to help you zero in on research you can trust. Contact us anytime for help finding what you need at the best price available.
In addition, please download our free white paper for more information on the value of market research for validation and decision making.
About the Author: Sarah Schmidt is a Managing Editor at MarketResearch.com, a leading provider of global market intelligence products and services.