Market research can make your business more profitable. It collects and analyzes information about consumers, competitors, and the effectiveness of marketing plans.
While market research is significant for business operations, it is also essential for established businesses to increase profits. It is detailed information about the market, the target group (customers), and the competition that allows the development of a good organizational plan.
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How do companies use market research?
Business owners use market research to:
- Determine the feasibility of new companies. Market research is a fundamental part of a business plan for an ongoing business. Suppose it does not indicate a demand for the product or service. In that case, the proposed company will likely fail to be viable.
- Test interest in new products or services to respond to customer needs.
- Find and develop new markets. Monitor industry and economic trends and develop strategies to adapt the business to changing environments.
- Determine the best product placement – when, where, and how to distribute a product or service.
- Improve aspects of their customers, such as customer service.
- Keep an eye on the competition – check competitor ads, websites, social media campaigns, etc., to see how they might capture some of your market shares.
- Develop competitive strategies – for example, setting competitive prices for products or services or determining how your products/services and customer service compare to the competition.
- Develop the best strategies for promotion – how to get the message out to the target audience through branding, traditional advertising, social media, etc.
How is market research conducted?
There are several ways that is conducted, including:
- Customer Surveys – These are conducted in various ways, including online, simple interviews, “Satisfaction Experiments,” and telephone calls. Traditional phone surveys are discounted due to cost and low response rates (most people find them annoying). Many companies offer brief feedback to customers in a prominent place on the grounds (or with invoices ) so that customers can record their comments.
- Web-savvy companies use their online presence to conduct market research by encouraging customer interviews on company websites and social media (a short online questionnaire about products and services is a simple, inexpensive, and effective way to survey customers. survey is usable from mobile phones). Social media, such as Facebook, Twitter, LinkedIn, etc., offer a dialogue between you and customers so that you can get immediate feedback on product and service offers and that your customers feel like you value their opinions. Unfortunately, social media campaigns can also backfire. Statistically, people are more likely to post negative comments or reviews than positive ones. Poor customer service and negative product reviews can lead to widespread criticism on social media and be disastrous for a business.
- Product testing or usability studies – Provide samples of new products to customers in a live setting and gauge response. Direct customer feedback can be used to make changes to the product as needed or determine optimal pricing. Spare parts are ideal for food companies that want to test new menus.
Focus: This is a structured meeting with groups of people where written content or Q & discussions with the moderator take place. Focusing can gather helpful information, but challenging to organize and expensive market research for small businesses. Emphasis is increasingly placed online. Why Companies Should Undertake Policy and Regulatory Research Before Entering New Markets
Direct observation: This involves watching or videotaping customers in a natural setting (such as a shopping mall) to see how they respond to displays of products or services. Note that for privacy reasons, direct video observation can only be conducted in public settings unless the person being surveyed is aware of being recorded on video. Direct observation has the advantage that the customer behaves naturally (rather than possibly acting on purpose as they might with other forms of surveying). Still, it is very time-consuming market research.
While it is common for businesses to hire a market research firm to conduct market research for them, small business owners can do their own. For an explanation of the basics of market research and tips for designing your surveys and questionnaires.
Examples of changes driven by market research
McDonald’s is
After several quarters of declining sales, McDonald’s management decided in 2015 that significant changes were necessary to counter the public perception of McDonald’s products as unhealthy. Based on market research, the company changed the menu and no longer sells chicken products containing human antibiotics or other ingredients such as phosphates and maltodextrin. Other changes include adding more salad choices and healthier desserts, including applesauce.
Lego
For years, Lego was a hugely successful product with young boys but was popular with only 10% of female children. In response, Lego conducted an extensive four-year market research campaign with over 3,500 young girls, resulting in a new product line with vibrant colors and different images. The latest products were very successful, and the percentage of female Lego users increased significantly.
Conclusion
Market research is a valuable tool for businesses of all sizes because it helps them to determine their target market, understand their competition, and identify growth opportunities. The market research also helps businesses develop strategies to stay competitive and increase profitability. Companies can make informed decisions to drive their business forward by understanding the market.