Did You Know?
A reputed market research firm which operates in over a hundred countries today, the Nielsen Corporation was founded by Arthur C. Nielsen in Chicago in 1923.
Market research can be described as systematic collection and analysis of data about the prominent attributes of the market, like consumer behavior, competition, market potential, necessary reforms, etc. It is a continuous process, wherein the company collects data and interprets it to bring about the necessary changes in policies and strategies. In a broad sense, it helps the company to evaluate its relationship with the consumer.
The data collected through market research can be broadly categorized into two types: (i) primary data and (ii) secondary data. While primary data collection includes monitoring aspects like sales and marketing strategies through direct communication with the consumer, secondary data collection includes collecting published statistics and analyzing them. Primary data is ideal to determine the company's progress after a product launch. In contrast, secondary data comes handy when the company has to decide―before the product launch―which segment it should target.
Importance of Market Research
A well-executed research allows the company to determine whether it has been able to satisfy its customers or not. It provides crucial information about the various factors which affect the business. It helps the company to formulate plans, take necessary measures, and evaluate its performance. As we go ahead with this write-up, we will get into the details of each factor that makes market research an indispensable exercise.
Communication with Consumers
First and the foremost, it will help you understand your existing customers and communicate with them effectively. For example, a research undertaken a year after the product was launched will make things a lot more clear by helping you determine where you stand, identify the loopholes in marketing, and devise plans to counter loss ... or increase existing profit margin. Additionally, it will also help you evaluate the scope of expansion. It will tell you exactly what you need to do to increase your customer base.
Analyze Market Potential
Market research is not just for those who are already in business. If you intend to start afresh, it is as important for you as it is for those who are already set. To start with, it will help you identify opportunities available in the market and make the most of them. You will be able to identify and tap potential consumers by dividing the market into various segments―on the basis of age, gender, geographic area, etc.―and cater to their needs, thus making the most of the available resources.
Efficient Fund Allocation
Investment is one of the basics when it comes to any business. A well-orchestrated market research can help you determine how much you will have to invest to get going. It is very important to allocate funds properly, which is what marketing research will help you do―identify areas that need attention and allocate funds for the same. Additionally, it will also give you a rough idea as to what returns you can expect. In this way, you will be able to set realistic goals for yourself.
Identifying Problem Areas
Knowing what problems you are likely to face is always a blessing in disguise, because it helps you to be prepared for what is coming your way. If you are planning a product launch, market research will help you identify the risks involved and potential problems―the ones that you might face in the future. On the other hand, if you already have a product in the market, research will help you identify existing problems. Once the problem is identified, you will be able to come up with an effective solution for the same.
As an Evaluation Tool
An important facet of market research is its use as an evaluation tool. It helps you set a benchmark and evaluate what you have achieved over the course of time. You can use it effectively to undertake comparative studies to track your progress and plan things accordingly. Furthermore, a good businessman monitors his rival's progress as much as he does his own. In this context, market research will help you to keep an eye on your competitor, and devise strategies that will help you stay a step ahead of the competition.
The economy is becoming more and more versatile and competitive. Planning―a vital aspect of successful business marketing―is only possible when you have apt knowledge about the market and, more importantly, the consumer. This is where market research comes into the picture. It helps you understand consumer behavior and initiate steps necessary to keep him happy. That explains why it has lately become one of the most important components of a successful business entity.