The Importance of Market Research

“Research is formalized curiosity. It is poking and prying with a purpose. ”

Zora Neale Hurston, American author

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Scene 1 : A couple of years ago

You or your visionary team have a great idea for a new product!! It ‘feels’ like the answer to everyone’s problems! It will definitely be a big hit! So you get your creative heads, product designers, technical staff and experts all into a tizzy! The product must be ready in next 6 months! After hours and hours of hard work, there it is – to take the consumers by storm. You launch it with big fanfare!!

Scene 2 : Cut to the present

The ‘great’ and promising product was ‘great’ only on the drawing board! Your negative inventory is piling up; there are just not enough takers!

What went wrong?

The consumers just didn’t connect with the product or the price point was wrong or the brand personality did not appeal or the communication was not clear or the distribution was poor or the value-proposition was not meaningful!! There are a number of things that can have a very different response in the market, than you had imagined it.

But it’s too late now…Too much water has already run under the bridge and enough time, effort and money already wasted. You had been banking on this one great idea and suddenly you see your vision falling apart!

Wish you had known this before!

Many a great idea and innovative businesses have failed because the entrepreneurs simply relied on their gut… and wondered later – what went wrong.

The answer is simple: They just didn’t bother to validate their assumptions beforehand.

Who needs market research?

Any and every organization, whether an existing business that is looking at launching a new product or a startup that is banking on that one great idea, needs to do a thorough analysis of what the market needs, and at what price-point and how that can be effectively positioned & marketed. I.e. every company introducing anything new in the market needs to validate all the aspects of the business on which ‘someone’ [either you or a team] has made some assumptions on what the outcome will be. [E.g. if you think the product will have 3% conversions at Rs. 100 per piece from those who see the add, and 15% conversions at Rs.50 per piece, that’s an assumption that needs to be tested].

Market research is that important tool that can equip the organization with data/information that can help them to determine the strategy and reduce the risks. It can help them make informed and well-calculated decisions.

It can help you gain valuable insight into what the consumer wants – type of product, pricing, value proposition, communication clarity, brand personality, etc.

Why should you do Market Research?

More specifically, good market research allows you to:

  • Have a handle on the customer needs
  • Be equipped with market trends
  • Plan how to position your product/service
  • Be on the lookout for warning signals, so you can take corrective measures before it is too late etc.

If you are looking for investors to fund your business, market research based plans have a better chance of being considered seriously than plans that are based on pure gut feel and no market research. Market research does NOT have to be a formal research done through an agency. Just talking to a reasonable number of customers is also a fair market research. [E.g. if you are selling ERP solutions for travel agents, then talk to at least 100 of them in the segment you want to tap. If you are selling an enterprise solution to very large enterprises, then talking to 4-5 might be enough as access to more will be difficult. However, if you are doing a mobile app, then testing it with may be a 1000 or more people might be possible, and therefore expected].

How should you do it?

Market research is nothing but an information gathering exercise. In a raw form, it could mean conducting feedback/informal chats to connect with your customers or potential customers. You could conduct interviews, quizzes, surveys, questionnaires and the like.

In more formal and professional ways, you could hire experts who conduct detailed research, follow media reports and use marketing information systems to capture and analyze key data.

Research could be qualitative as well as quantitative. The more accurate the data, the better position you are in to understand what the market needs.

When should you do it?

As suggested earlier, market research should definitely be done prior to launching a new venture or product or before changing some aspect of the business – e.g. changing a feature or a service or the pricing.

In fact, it should be an ongoing process built into your organization’s ethos and work culture, such that there is a constant flow of information about how you are placed in the competitive market. Since technology has made the world shrink and the communication open, market trends, needs and scenarios are changing very fast.

Time and effort invested in adequate market research will help take proactive steps rather than reactive ‘stay afloat’ decisions, and remain at the top of the game.

Long-term success-oriented approach to business

With market research, your business will focus on your customers.

It will help you to prioritize and select growth oriented practical and achievable opportunities, help identify the target market for your future endeavours and regularly monitor your positioning, helping you to create and recreate your brand image in your campaigns as per the changing requirements.

This article and image were originally published in Sheroes. Read the article here.

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Author: Prajakt Raut

Prajakt Raut is the founder of Applyifi.com, and author of the book for startups - ‘Starting Up & Fund Raising’ Prajakt personal goal in life is to encourage and assist a 100,000 people to become entrepreneurs. _____________ Prajakt is the founder of Applyifi - an online platform that provides startups a 36-point scorecard and assessment report on the venture's investment readiness [www.applyifi.com], and helps them improve their odds of getting funded. Prajakt is also the founding partner of The Growth Labs, a platform where growth-stage companies get sharp, incisive advice from senior professionals and experienced entrepreneurs. [www.thegrowthlabs.in] Before starting Applyifi, Prajakt was the head of operations at IAN, founding member of a leading incubator, and the Asia-Director for TiE (2004 - 2007). Previously Prajakt had co-founded Orange Cross, a healthcare services company, and was part of the founding team member of Idealake Technologies. While in college Prajakt had founded a printing business and has spent over 10 years working in leading advertising agencies. Prajakt’s book, ‘Starting Up & Fund Raising’, helps startups understand an investor’s perspective, and helps them improve their odds of getting funded. The book also helps entrepreneurs understand the building blocks of a business.

1 thought on “The Importance of Market Research”

  1. Very true – market research, quite the skeleton to support all that goes to dress up your product…..having said that, would like to add that just in case you got into your magnificent dream and went chugging along that road to build your very own product that you thought will change dynamics for you and for customers in that industry, you might still want to stick awhile and that thing called “improvisation” and “innovation” might just save you from fading into oblivion! (But of course there needs to be a time line for such testing and tweaking your prototype to retrofit it back to what the customer or the market needs, and that for sure might turn out to be a million $ question after all!

    But nevertheless, all said and done, while nothing can possibly substitute a thorough market research, so also a gut feel or instinct based on identifying the void in the market space that your product will operate in or that instinct where in you believe to create a niche for yourself, will probably still keep you afloat for that period of time until your improvised product gets to creating its market share.

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