Do you ever stop to consider just how many questions you have to ask to run a successful business?
There’s just so much going on. In any complex system, however, there are patterns. That’s why market research itself is an 80 billion dollar industry. It’s market research that turns a load of questions into a coherent business strategy.
Don’t take our word for it. Here are ten reasons market research is essential to success.
1. Understanding Your Customers
Businesses live or die by how well they understand their customers.
As customers and their needs are the absolute lifeblood of a business, it follows that a company needs to know everything about its customers that it can. That’s where market research comes in, providing info about customer habits and needs, which can be used to chart a course.
This is particularly important when it comes to silent majority customers—those who buy but might not otherwise share their opinions and purchasing habits in a public space.
2. Understanding the Competition
In a vacuum, understanding your customers would be enough.
Yet the pressure of a competitive marketplace is what really decides which companies have staying power. With bloodthirsty competition and customers empowered to make choices with their wallet, you need to know how to edge out the competition.
Market research can identify trends among competitors, from the kind of products they’re putting out to their popularity in the niche. You can, in effect, use the successes and failures of other companies in your industry as though they were your own experiences through market research.
3. Responding to Social Pressures
Social pressures have always been one of the great yet under-analyzed areas of business strategy. From anti-smoking sentiment to the eco concerns of today, social groundswell can decide the fate of entire industries.
Market research can detect these social pressures as they emerge, whether it’s the desire for ethically-sourced goods, companies that give back to the community, or business choices that minimize environmental impact.
4. Minimizing Risk
It’s the paradox of doing business: risk is necessary for innovation, but it’s also, well a risk.
As a good gambler knows, the secret lies in minimizing risk, not eliminating it. That requires the kind of knowledge that market research provides, allowing you to make informed moves that are bold yet risk-managed.
The more comprehensive your market research, the more confidence you can have in your decisions. You’ll know they come from a well-informed place that reflects the realities of your marketplace.
5. Regulating Cash Flow
Predictable cash flow is a company’s safety net—this is the bottom line a business can always fall back on as a certainty. Unpredictable cash flow is the mark of a disorganized business.
One of the easiest ways to predict your cash flow is by market research. If you can establish how many customers are out there, what they buy, and when, then you have everything you need to know to project sales and supply figures.
6. Launching New Products
Introducing new products is a scary time for a company. Success is never guaranteed, which cranks up the risk and could mean wasting a lot of money.
This is one area in which custom consulting can make all the difference, providing market research that reflects real trends in the marketplace and relates them to your specific circumstances.
If you can increase your chances that a product launch will be a success, then you’re protecting your business at one of its most vulnerable moments. With that confidence, you can launch new products more often and even take greater risks.
7. Proactive Planning
Decisive, proactive planning is the secret to any strategy, in business or elsewhere.
Reacting puts you on the back foot, whereas proactive behaviors can steer the marketplace and turn you into an industry leader. It’s also what protects you from having to play catch-up with your competitors. The initiative should lie with your company, not theirs.
Market research allows your company to remain proactive. Market research acts as a map of the wilderness. Instead of wandering lost and making reactive moves, you can plan your destination and route upfront, giving you the initiative.
8. Trend Identification
Trends shape industries like oceans shape a coastline. Sometimes it’s a slow process. Sometimes, new trends batter an industry, forcing it to change almost overnight.
One way of managing that risk we talked about earlier is to stay ahead of trends. Once again, it’s about being proactive. With trends capable of introducing sea changes in your industry, you need to know about them to stay afloat.
9. Evaluating Success
Success isn’t an endpoint in business. On the contrary, it’s a foundation for the future. Analyzing success is how you turn it from a lucky break into a habit.
Market research allows you to evaluate and contextualize your successes and use them as the building blocks for future projects—with the end goal of replicating those successes.
With market research, you can find out exactly why your product launch or marketing project succeeded. You can then use these data points when putting together future projects.
10. Staying Relevant
The curse of a successful business is that it becomes easy to rest on your laurels. After all, if it worked last year, so it’ll work this year, right?
The reality, of course, is that market trends shift faster than ever before thanks to social media and the general acceleration of culture. It’s not just about the moment-to-moment trends we discussed earlier, either. Everything that can change about a marketplace eventually will.
Businesses that stand the test of time know that, and they stay on top by keeping in step with the zeitgeist via market research.
Finding Success Through Market Research
These ten reasons show why market research is essential to business, from its early days through to its long-term success. If you want your business to stick around, then market research is essential to your survival.
Looking for more great market research and business advice? Be sure to check back often in the Marketing section of our Everything Entrepreneur Blog.