The Importance of Market Research in the Business Planning Process
Market research is the process of gathering valuable information about your target market and identifying the needs and preferences of potential customers. This research is most important during the initial business planning process, prior to launching. It is also appropriate for existing businesses as they evolve and look to grow.
However, proper market research can take considerable time and investment. So, before taking this on, it is best to fully understand the value and importance in the business planning process.
Clearly Identifying Markets
Identifying markets primarily focuses on two things: locations and people. Location analysis is an important aspect of any business that will have a physical presence such as retail stores, office spaces, or warehouses. This is most obvious for businesses that aim to serve the local public such as restaurants and other types of retail. However, it is just as relevant for professional offices, which will need to locate where they can attract the right talent at the right price among other considerations. In the case of warehouses they will need to be cognizant of things like access to affordable employees and ease of transportation.
Though location is a vital consideration for many businesses, it is not pertinent to all. Regardless of whether the physical location is relevant to you, market research will allow you to identify your target markets. A target market is a group of consumers who share certain similarities such as geographical location, interests, and demographics such as gender, race, and income. The power of the internet often allows geographical location to be quite broad. Especially with the number of online-only businesses growing exponentially.
Foundation for Business
Identifying and understanding your location, if relevant, and your target markets are two of the main building blocks of your business. There are many other foundational aspects of your business that are determined through market research. It allows you to make informed decisions about setting your price, how you will distribute your product, and whether there is a market for your offering at all. These are all vital considerations that can make or break your business.
By identifying your target markets, you are also identifying who, and where, your customers are not. Many companies who don’t conduct thorough market research end up reaching this point through trial and error. This process of trial and error is both costly and time consuming. Being able to focus your marketing efforts from the beginning can significantly increase your return on investment and the rate at which you will grow.
Once you are confident there is a market for your product and you know who the target market is, you need a clear plan for how your product will reach consumers. This is known as the distribution channel. This is relevant to service-based businesses as well, though their channels are typically less complex and easier to access.
Competition & Market
Regardless of how incredible your idea is, there may very well be companies offering the same or similar product or service. Throughout the market research process, you will identify key competitors in your space. With these identified you will be able to decide how you will differentiate what you offer. It could be through changes to the product or service itself, how it’s marketed, pricing, customer service, or other aspects.
Further, understanding your competitors will help you set your price. There are many factors that will go into determining your price, but competitor pricing is one of them. It will demonstrate the baseline or threshold for what your target market will tolerate. This will determine if you want to focus on competitive pricing – setting your price based on what your competition charges – or turn to another pricing strategy.
Market research enables you to get much more insight when making crucial decisions about your product strategy and business. This provides you with a clear path forward, one that focuses on avoiding potential missteps. You can never foresee or avoid all challenges in business but ultimately, thorough market research is one of the best ways to mitigate risks and ensure business success.
Given the importance of market research to the overall potential for success for your business, Joorney offers premium market research as part of our Advisory Services. Our vital insights have allowed our clients to streamline their marketing by better understanding their target markets, launch products that truly stood out against the competition, get a deep scope of competitor pricing to determine their strategies, analyze distribution channels to ultimately decide on go-to-market strategies for B2B channels, analyze import and export data to understand volume, potential and opportunities, and so much more.
Our market research package allows you to not only fully understand the competition, your industry, and customers, but we also help you better understand your own business. This outside perspective has allowed many of our clients to capitalize on their strengths, improve upon weak areas, envision opportunities they hadn’t previously considered, and plan for potential risks. Whether you’re just starting out or established and looking to grow, our market research insights will give your business the foundation it needs to truly thrive.