Market Research – Benefits, Methods and Analysis

Market Research is an exhaustive organized process where informative and relevant data is collected for a market/ product or a service. This data is used to study and analyse current market scenario and build future projections which can be used for business planning and strategic moves.

Market Research: Benefits

– Assists in future planning of the business. E.g.

  • Should the company expand its product line
  • Will the product be profitable

– Makes Decision Process easier

– Gives factual information (thus breaking business myths/ and individual perceptions)

– Reduces risks

– Assists in identifying competitive edge

Small or big all enterprises can and should take strategic decisions after conducting a market research in the related field.

Market Research: Methods

There are broadly two types of research

1. Quantitative Research

In this process numerical data is generated which measures the market’s phenomena and demands. This is used for statistical analysis using various mathematical and computational techniques. It quantifies attitudes/opinions/behaviour on a sample and is then extrapolated for the full sample. This is usually conducted through surveys and questionnaire.

2. Qualitative Research

In this more insights and understanding is measured for the topic. It explores various options and gathers opinions. This kind of data is collected through interviews, group discussions etc. The insights are then used to explore various business decisions.

Market Research: Analysis

This is the trickiest part as data collected has to be strategically used in gaining intellectual analysis. Business experts and market research analysts are very well acquainted to do this work.

It is very exhaustive work and various techniques & tools are used to get useful conclusions. Interestingly the same data can be used to make different inferences depending on the research needs and goals. Some common data analysis types are briefed –

Data mining – this technique focuses on modeling and discovery of knowledge discovery for predictive purposes. This method is not useful for descriptive purposes.

Business Intelligence – this technique focuses on business related information covering data analysis that relies on data aggregation.

Statistical applications – it can be

  • Descriptive statistics
  • Exploratory data analysis also called EDA (discover new features)
  • Confirmatory data analysis also known as CDA (confirms the existing hypotheses about the data)
  • Predictive analytics focuses on application of statistical models for predictive forecasting or classification e.g. market growth in 2022- with data available for 2015
  • Text analytics uses statistical, linguistic, & other methods to pull out data and classify the information received from text sources.

This analysis is then constructively used in the business planning bringing a profitable inclination towards the decisions taken. Business planning plays a major role which reflects the survival of the business.

3 Questions to Identify Roadblocks to Business Growth (and How Strategy Can Clear Them)

What challenges you most about your management and leadership role as business owner? Do you think about it? Our observations suggest too many business owners work according to learned practices which they do not renew. The result is company financial performance staying well below potential. Good and reasonable performance can become a hindrance to excellent and exceptional results. It’s easy to think ‘we are doing OK, there’s no need to change.’ Consider your response to any of the following questions:

• Please explain your marketing strategy and how all the methods tie together.

• How does your business use strategic planning?

• Describe your long-term strategic plan.

• Do you have an effective written business plan or marketing plan?

• What are the key elements of your staff training and development program?

The first step to facing uncertainty and challenges is to admit there are potential roadblocks to creating business growth. The second is perhaps admitting ‘I need help to remove the roadblocks’. If you take the second step to seek help, you are in the top 25% of business owners. Most resist help. A recent classroom experience at a prominent Australian University highlights this. A working student from India observed Australian business owners seem to be very independent and commonly have the view it will all work out in the end. ‘She’ll be right mate’ still prevails. This attitude may cost your business significant profit performance.

There is a key understanding every business owner needs to grasp if consistent growth is to become normal. We all have blind spots and beliefs we hold onto and thereby restrict success, breakthrough and improvement.

Will we confront and remedy our blind spots? Gaps in vision, strategy planning, marketing plans, leadership and management practice, our experience and even how we view our own industry or product groupings can form craters of restriction.

Let me suggest 3 questions every business owner could answer to start to identify gaps and reveal blind spots. You may find the questions confronting. None of the answers are necessarily easy to find, let alone the solutions simple to implement and establish in your business. Don’t put aside the questions if you are overwhelmed by the multi-faceted specifics required to instigate change and create growth. Consider the exacting specifics of research and change required in industries such as airlines, development technology, communications, security, automation, medical practice and more, where blind spots or neglecting systems can cost lives.

Q1. What time, energy and money are you prepared to invest in research, relationships and skill acquisition to begin or accelerate business growth?

Any change or adjustment will upset routines, historical practices, processes and systems, or the current lack of them. This is often the reason change and improvement is avoided. It disturbs routines, the status quo and demands careful change management. The easier part is usually discovering what is required but the high level challenge is in execution and implementation of the business plans to be introduced.

We’ve observed so many businesses try to create a strategic plan using basic goal-setting practices, but the day-to-day pressures pull staff back to operational and more urgent matters. There is no overriding business plan in place to maintain accountability and ensure target achievement. Strategic planning is not only the realm of large companies.

Q2. How will the required changes be achieved and what process will be used to advance all facets of a new business plan?

A Harvard Business School study found that 70 to 80 per cent of small businesses fail to see the projected return on investments due to the inflexibility or lack of strategy. Many small to medium business owners ignore or resist strategic planning for growth because it’s too hard or perceived as irrelevant. Hence, there is no certainty of business practices or clarity of company purpose beyond basic revenue generation and continued existence.

A successful business plan begins where we are and moves us towards where we want to be. Strong implementation and execution must articulate how we are going to move there. Clarifying goals and expectations is part of the process and ideally should be in light of relevant product and market life cycles. Plans start with small, deliberate steps for what’s important now and then create projects with longer-term specific action plans. Maintaining team focus on the desired outcome will then happen.

Q3. When was the last occasion your senior team members spent dedicated time with you as business owner to grapple with the high level thinking, leadership and creativity needed to see a breakthrough into new ways of running the business?

We worked with a company that supplied and installed a hi-tech product with increasing demand. The company had a staff of 10 people and the business was growing quickly. The director of this company argued in an elevated tone that he needed no one’s help, he was self-sufficient and no person can change how they operate. He was certainly right about himself. Discussions with staff showed he was blind to the true needs in the business and most staff were cruising well below capacity. A strategic plan would have accelerated the business into exceptional growth.

Robert S. Kaplan and David P. Norton, authors of The Strategy-Focused Organization, identified in larger businesses, 85 per cent of executive teams spend less than one hour per month discussing business strategy. Too many SMEs never even mention a strategic plan. To lead a business into high-level thinking, leadership and creativity the key team must be reading, studying and keeping up to date with what is happening in their industry and business at large.

“Pay special attention to evidence that contradicts your beliefs” – Charles Darwin

Decide to push through those long-held beliefs screaming at you ‘it’s the only way something can work’. Remove the roadblocks, fill in the gaps and move forwards with certainty and clarity.

Steps to Starting a Small Business – Market Research

Getting enough information on your target market of potential customers is vital to starting a business that will produce income. Making guesses on what the customer really wants will not bring you very far, so it’s important to do some digging and get the answers directly from them through market research which is an important steps to starting a small business.

Some of the following questions to ask in order to device effective strategies:

  • Who is going to buy your product or service?
  • What kind of people are they? (buyer, influencer or end user)
  • How big is the market? (Competitor’s annual sales would give you an estimate)
  • How will market trends going to affect your business?
  • Does your business has any unique selling point?
  • Is the need for your product or service currently not being met?
  • Is the market already saturated?

Why do it?

You will not be able to sell something or services that has no demand. Knowing what the market is looking for and so that you can present it in a new twist, drives the need for a market research. The advantage of small businesses is that they are close to their customer and can easily get information on their purchasing habits.

How to do it?

Most of the big companies spend huge amounts of money on elaborate surveys from renowned researchers to determine if their products or services will appeal to customers at a price they are willing to pay. But for small business owners on a tight budget, there are other means to collect the key data needed without having to spend a fortune.

3 ways to collect information:

  • Get business school students to collect data at the mall.
  • Look for financial data and statistics in local library.
  • Join trade association not only to access market research they have conducted but do the networking there as well.

Do I need any ongoing market research while running the business?

Yes, this is how you gather information to evolve and adapt to the changes in market trends.

3 types of methods:

  • Keep a close watch on what your competitor is doing.
  • Install point-of-sales software to track sales or services trend.
  • Put up customer suggestion box where they can write suggestions.

Every business needs to conduct market research, it is a crucial steps to starting a small business, and tight budgets are no excuse for omitting a research plan. By starting out with some easily accessible resources, you can begin to develop better marketing strategies that can position you for market growth.