Written BY: Alex Pirouz
The importance of market research is often overlooked and underestimated by entrepreneurs when starting a business. Some think just because they are starting their first venture often fairly small to begin with, taking action and getting started is far greater than doing market research.
Some of the main reasons for this are due to a lack of business acumen, a belief that market research is too expensive, it requires too much time, it’s too hard and that it should only be conducted if you are starting a big corporation.
Even though big corporations such as Fitness First, McDonald's, General Pants Co, Coca Cola, Glue Store and Subway don’t share how they obtain there market research rest assured they would not have expanded so large through sheer luck.
Not doing market research will place entrepreneurs in a space where the majority of their success will be dependent on luck rather than market strategy. Some of the main dangers of not doing market research are:
• Potential Investors will not invest in the venture if the entrepreneur is unable to provide adequate research and facts about their industry
• The cost per client acquisition of the company will be expensive and unmeasurable
• The failure to deliver what customers are looking
• Lack of knowledge as to the market needs and wants in their product/service
Doing market research is fairly easy; it just requires time and patience. Below are a few tips and some facts entrepreneurs need to know before going out into the field to gather data.
When conducting market research you may want to find out:
• the profitability of your product or service
• the type of location where you need to place your business
• the demographic profile of your target market
• current prices of similar products
• saturation of the industry
• the age brackets of potential consumers
• Customers expectations in your industry
To gather an overall scope on your industry it is advised to study your potential customers, the competition and the environment.
In summary, before you invest in business and spend your hard-earned money on a new venture, consider conducting market research first. Doing so will allow you to discover:
• The feasibility of your business
• The marketability of your product or service
• The size, need, lifestyle and preferences of your target market
• The correct niche and positioning of your business
• The required resources to play competitively in the market
• The possible obstacles you will encounter when your business is launched
Market research will not only save you months of headache but will help structure your business plan. Going into business without researching a particular target market is like going through a maze blindfolded.