3.2.1 The role of market research and the methods used
Market research definitely comes under the “boring but important” category. The more a business knows about potential consumers, competitors and the market the greater the chance of success.
Market research allows a company to explore a target market and get opinions and other feedback from consumers about their interest in the product or service. Crucially market research can guide a business to the products and strategy that is most likely to be successful. Without accurate market research data, businesses will have to base their decisions on instincts or guesswork, a high risk strategy.
Market orientation is an approach that focuses on identifying the needs and wants of consumers and creating products that satisfy them. Essentially, finding out what customers want and giving it to them. The opposite is a product oriented or a “take it or leave it” approach, where a business focuses on making the best product, but does not consider consumer needs.
Most businesses aim to take a market-oriented approach. If a business finds out what consumers want, then builds a product or service to fulfill those needs, it is much more likely to have higher sales. A market-oriented approach, therefore, lowers the risk of failure when launching or updating a product or service.
So what do businesses use market research information for?
Firstly, identifying customer needs. What do consumers want? The more accurately a business understands customer needs the more likely they are to make a product or service to satisfy those needs and generate higher sales.
A business must also consider the current and future size of the market. How many potential customers are there? This is crucial in making decisions over developing a new product or choosing between a number of different options for offering new services.
How strong are the competition? Business can learn from the strengths of competitors when designing their own products, but also improve on competitor’s products offering by improving in areas where competitors are weak.
What marketing strategy to use? Business must figure out the most effective way of connecting with consumers, pricing their products and persuading them to buy, based on current market research.
Market research is also crucial for analysing consumers views about a business’s existing products. Furthermore, market research can help predict future trends and changes in consumer spending.
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