Is Market Resarch an Important Part of Your Ongoing Business Strategy?
Market Research is something that most businesses do when they start up. However, many companies are unaware that market research should be an ongoing part of their strategic plan. Depending on the nature of each business, the market research needs will vary. A seasonal tourism business may need to do market research on a regular basis, while market research needs for a university may be less frequent at every 2-3 years. As each industry evolves, it's important to keep up with the changes and stay innovative.
Market research is a valuable tool to find out information about your potential customers, and also your competition. It's important to know who has the need for your product or service, how much they are willing to spend, and who else offers similar services. This information will help you stay ahead in the game, keep an eye on competitors, and offer necessary products and services that relate to the market's needs and desires. In addition, the research can help you determine how much people are willing to spend, how often they will utilize the product or service, and what specifics they are looking for in the industry.
There are two types of market research: primary and secondary.
Primary research is new research that is conducted specifically for your company. This can be time consuming and costly, but will uncover accurate information directly relating to your target market. For example: If I was starting up a sushi restaurant in Vancouver, I would want to find out first if there was a desire for a sushi restaurant in my specific area of interest. While the demographic information (age, gender, income, etc.) for my area may be readily available, I might want more information about my target market, like how often they eat out, what type of food they prefer, how much they are willing to spend, and so on. This will help me determine if I have chosen the right type of restaurant or the right area to start up in. Further down the road, I could complete new primary market research, or choose to use secondary research data for my updated business strategy.
Secondary research is readily available. This information has already been conducted and is in the form of statistics, surveys, charts, etc. One potential pitfall of secondary research is that the demographics may not transfer over to the exact target market you are researching. Using the same sushi restaurant example, I might wonder how often the average person in a certain area Vancouver eats out. Perhaps I can get a good estimate from existing data, but the information might not relate exactly to a different neighbourhood.
While both types of research can have potential pitfalls, both have their benefits and can be extremely effective, depending on the type of information needed.
While some companies have the knowledge and resources to compile their own market research, some lack the in-house resources to complete the market research themselves. This is one area where management consulting companies, such as SME Strategy, can offer assistance and expertise. Outsourcing strategic planning to companies with specialized employees can be a great option when faced with occasional strategic and market research, as consultants can guide your team through various exercises, such as a PESTLE trend analysis to get the process started.
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