Market research is the process of gathering and analyzing information about a market, product, or service in order to gain insight into customers, competitors, and the market itself. It helps companies to identify potential opportunities and threats, better understand their customers and the competitive landscape, and make informed decisions.
Market research can be conducted in-house or by a third-party company that specializes in market research, and can be done through surveys, product testing, interviews, and focus groups. The process involves collecting and interpreting data during product development or marketing to help businesses make informed decisions.
Market research is a critical tool that companies use to understand what consumers want, develop products that those consumers will use, and maintain a competitive advantage over other companies in their industry.
But when do you need market research for your business? The answer is: whenever you want to make a decision that affects your customers or the market.
Here are some common scenarios where market research can be useful:
- Before launching a new product or service: Market research can help you determine the viability of a new product or service by evaluating the demand, preferences, and needs of your target market. You can also test your product or service with potential customers to get feedback on its features, benefits, pricing, and positioning. Market research can help you avoid costly mistakes and optimize your product or service for success.
- Before entering a new market: Market research can help you assess the opportunities and challenges of entering a new market by analyzing the size, growth, trends, segments, and competitors of that market. You can also learn about the cultural, legal, political, and economic factors that may affect your business in that market. Market research can help you tailor your marketing strategy and tactics to the specific needs and expectations of your new market.
- Before launching a new marketing campaign: Market research can help you design and execute a marketing campaign that resonates with your target audience and achieves your goals. You can use market research to identify the best channels, messages, formats, and offers for your campaign. You can also measure the effectiveness of your campaign by tracking key performance indicators (KPIs) such as awareness, reach, engagement, conversion, retention, and loyalty.
- Before making changes to your existing product or service: Market research can help you evaluate the impact of making changes to your existing product or service by gathering feedback from your current customers and potential customers. You can use market research to test different versions of your product or service and compare their results. Market research can help you improve your customer satisfaction, retention, and loyalty by addressing their pain points and enhancing their value proposition.
- Before making changes to your pricing strategy: Market research can help you determine the optimal price for your product or service by analyzing the price sensitivity, elasticity, and willingness to pay of your customers. You can also use market research to monitor the prices of your competitors and the perceived value of your product or service in the market. Market research can help you maximize your revenue and profit by finding the best balance between price and demand.
As you can see, market research is essential for any business that wants to succeed in today’s competitive and dynamic environment. Market research can help you make better decisions based on data rather than assumptions or intuition. Market research can also help you gain a deeper understanding of your customers and the market, which can lead to more innovation and growth.
Here are some examples of how market research helped some companies succeed:
- LEGO: The toy company used market research to understand why girls were not interested in their products. They found out that girls preferred more realistic and detailed sets, with more colors and stories. They also wanted to build and play at the same time, rather than just following instructions. Based on these insights, LEGO launched LEGO Friends, a line of products designed specifically for girls, which became a huge success.
- Apple: The tech giant used market research to create the iPod, the iPhone, and the iPad. They conducted surveys, interviews, and focus groups to identify the needs, preferences, and frustrations of their potential customers. They also tested their prototypes with users to get feedback on their design, functionality, and usability. Based on these insights, Apple created products that revolutionized the music, phone, and tablet markets.
- Nest: The smart home company used market research to reinvent several products normally found in the home, such as thermostats, smoke detectors, and cameras. They conducted surveys, interviews, and ethnographic studies to understand how people interacted with these products and what problems they faced. They also tested their products with users to get feedback on their features, benefits, and value proposition. Based on these insights, Nest created products that were easy to use, energy-efficient, and connected.
- McDonald’s: The fast food chain used market research to adapt to changing consumer preferences and expectations. They conducted surveys, interviews, and focus groups to understand what customers wanted from their menu, service, and experience. They also tested their new products, promotions, and initiatives with customers to get feedback on their appeal, satisfaction, and loyalty. Based on these insights, McDonald’s introduced healthier options, customized orders, digital kiosks, delivery services, and loyalty programs.
- Verizon: The telecom company used market research to improve its customer service and retention. They conducted surveys, interviews, and mystery shopping to understand what customers valued most from their service provider and what pain points they had. They also tested their new service offerings, pricing plans, and communication strategies with customers to get feedback on their satisfaction, retention, and advocacy. Based on these insights, Verizon improved its network quality, customer support, billing transparency, and loyalty rewards.