Why A Market Research Is Important For Every Business

Businesses are increasingly having difficulties in growing in their local markets which can be due to the competition a mature market can bring. With several elephants in a room as we may refer to such a situation that normally comes with the competition in mature markets, businesses now turn to alternative markets, or emerging markets which are growing at a very fast pace. Now businesses are scoping for markets not only in South East Asia, India but also in Africa where demand has been increasing tremendously. 

A market research is very critical for the success of any business stepping in a new market for the first time. Market research can offer a considerable amount of valuable information that can be obtained from a target market. The mistake many businesses make when stepping into a new market is, their decisions are based on assumptions. Without thorough market research, they fail to get the taste of the market and fail to get their message right. We normally describe it as “stepping into a new market blindly”, and when you are blindfolded with “assumptions”, you are merely preparing to fail.

If you are looking to take advantage of growth abroad, we always emphasize for businesses to research, research, and do endless research in every market they are in or planning to move into. With perfect research, you are able to understand the functionalities of a market, have an insight into the characteristics of the market, easily point out the opportunities to take advantage of, understand the taste of the market, and even prepare a superb market entry strategy.  In the subsequent paragraphs, you will be able to learn and understand why a market research is never a good idea to be neglected.

The Characteristics of the Market

There is nothing better in business than knowing your market inside out. Dissecting the characteristics of a market can lead you to valuable information that can help to shape your success in that market. The characteristics of a market define the customers, break the market into groups, and tells you everything you need to know about the customers. Understanding the characteristics of the market will expose you to what motivates buying decisions, best market locations, to the products or services to offer the market, determining your pricing, and the bestselling strategy.

This is because, the market characteristics cover aspects of the market statistics such as the population, demographics, age, gender, race, education, employment levels, per capita income, and many other information that can be used for effective decision making.

Understanding the major characteristics of the market can help in two ways;

The market segmentation studies

The information obtained from the market characteristics is the gateway for segmentation studies. The data obtained can provide valuable information used for market segmentation. The market characteristics answer questions like the population size of the market, Who are the customers? What is the age bracket? What percentages are male and female? What are their incomes? What are their hobbies and interests? Where do they live? A detailed market characteristic can help you place your customers in groups and serve them from different approaches that can best suit their needs.

Able to understand the Purchasing power and the buying habits of the customers.

Market characteristics can uncover the financial capabilities or the economic characteristics of the business target market. With this information, it is possible to estimate the average amount spent on purchases similar to your business offerings.  Understanding the markets’ financial needs is easily achievable. With the information from the market characteristics, you can determine when and where the buyers spend their money. Answers to questions like; what does the customer do with the product or services? How often do they need the product? How much can they be willing to pay? What methods of payments are largely used, what are the credit ratings of the customers? Will the customers be willing to pay more or less? can be known.

An Understanding of how business works in a target Market

When an in-depth market research is carried out before any market entry, It is possible to have a fundamental understanding of how business runs in such a market. As many may think businesses can successfully run under the normal business norms all across the world but you must be short-sighted as you may be surprised it is not the case for every market. Things may be done in a whole different way in different markets and with different approaches. This just further justify why a market research can be very important as to understanding the business fundamentals in different markets.

When stepping into a new market, it is very important to understand how decisions are being made and who makes them. By this, I imply regulatory obligations, requirements, and how they work? A complete market research should be able to tell you what influences the market?  Who are the key players with the final say in your industry? How does your competition get along with these decision-makers? Such information can be obtained from a thorough market research.

An Understanding of the Psychological Aspect of the Market

Market research opens up the perceived values and opinions of the customers towards the market offerings. It is easy to get first-hand information on how consumers react or look at the products or services in the sector. Also, information about how the market compares the business to other companies. With this information, you can be able to understand what the market or the consumers consider important, what shapes the decisions of the customer before a purchase is made, Who makes the buying decision, are the market needs being met? What does the consumer consider as the best product or service? What media outlet appeals to or through which the customer is exposed to? What is the customer actually out for? Valid answers to these questions will only provide valuable information that can be used to better serve the market.

Understanding the Competition In a New Market

Detailed market research will not only provide you with all the information you need to know about your customers, but also important information about your competition in the market. Market research will provide you with information about other companies dealing with the same products or services as your business. You will be able to know your competitors place in the market, what percentage of the market share do they control? What are their strengths and weaknesses? Do they import their products or they are local manufacturers? What are the similarities and differences between the competitors in the market? Do they communicate their services or products to the market in familiar ways? Who are their current customers? With a thorough market research, you can easily know if your competitors are profitable or not, their sales volume and who the leaders are in the market. These are key information that is crucial for management in every business for strategic decision making.

Other important information a market research can uncover may include;

Political and Economical conditions

The political and economical circumstances in a market can greatly influence the performance and operation of a company. The question is how will these circumstances influence a business in the area? Will it be a positive influence or a negative one? A market research can even go further to unveil the current and future population trends, the socio-economic circumstances, and the effects of the political and economic rules on the economy. Do all these circumstances breed a favorable ground for business? What is the growth rate for the economy? Key questions a detailed market research can provide valuable answers.

Language

The dialect, slangs, common language between markets can be very different and interpreted differently. During a market research, it is but normal to get some insight into the language in the target market. It is very important to communicate your brand in a very positive way. Your company name may be interpreted as something else in a different language. An example can be seen with Osram, a lightbulb business failing in Poland with no idea at the time as the name Osram in Polish means “poo on something”.

Culture

A market research can even go a long way to expose some cultural values which without knowledge of, can ruin your success in a new market. Some practices can be offensive in some cultures. Which is why you must be an open book towards learning about the cultures and values of a target market?

Lagal and regulatory standings

Market research are required to cover the tariff structures of a market, The procedures of obtaining a business permit, provide information about any restrictions in the industry and some key financial regulations. Such information will guide you to operate within the law in the market and prevent any wrong doings.

EndNote

A market research is the key to any business to unlock any market if all indications are promising. Neglecting a market research can be a very bad idea for any business considering to enter a market for the first time. The information obtained from a market research can help you to make a decision if to venture into a new market or not. It can even guarantee your success in a new market as key marketing decisions can be made from the information obtained from a market research. Under no circumstances should a business relent its research and development efforts, be it in a new market or existing ones.