Entrepreneurship is a lot about risk-taking, and you can mitigate risks using actual data. Probably, the most important reason why market research is important. 

Every time entrepreneurs fail, they contemplate if there could have been a better way. But the thing is — most get blinded by their ‘big idea’ and fail to understand the market. In fact, 42% of startups fail due to low market demand.

Market research helps you determine if there’s demand for your product, understand your customers, competitors, and more. 

When done well, it provides you with sufficient information to plan and execute your business ideas. It allows you to validate your hypothesis, avoid rash decisions, and pave the way for success.

1. Helps you become customer-centric. 

As per a Deloitte report, customer-centric businesses are 60% more profitable than others. 

In other words, you are doomed to fail if you don’t talk about your customers and their needs, as was the case for Quibi, a mobile-first streaming startup that shut down within a year. Quibi failed to understand that no one would pay for a service in a world of free platforms like TikTok, yet they continued pushing harder with irrelevant marketing and failed in the end. 

They might have had a chance if the Quibi executives understood why market research is important, analyzed consumer behavior and built a consumer-first service. Market research saves your business from such mistakes by giving you access to data – a challenge for over 50% of business owners.

Bar graph showing business challenges which demonstrates why market research is important.
Source: Business2Community

Performing in-depth market research helps you get inside your customer’s shoes and identify the real problems. It gives you insights into consumer behavior, trends, and actual industry problems. As a result, this data helps you build something customers need, making you more relatable and appealing.

2. Makes your marketing data-driven. 

Another benefit of performing market research is that it allows you to gather data for improving marketing effectiveness. Specifically, it helps your messaging become more relevant by using segmentation, targeting, and positioning.

stp-marketing-approach
Source: Yieldify

Segmentation is when you divide your audience based on their needs, online behavior, and preferences. Positioning is how you form your messaging based on the segments,, and targeting is reaching out to the right people at the right time.

The approach allows you to become highly effective at offering personalized experiences. 

If you want to get better at marketing, you should take a data-driven approach. Gather consumer data using a reviews-driven market research strategy and use the insights to improve your marketing. 

3. Helps identify growth opportunities. 

To remain competitive, you must always research the market you are in or are about to enter by looking at industry trends, your competitors, your target audience, and their opinions. Analyzing this information will give you critical insights to outline your trajectory.

The ultimate goal is to identify customer opinions about existing solutions.

You can use these insights for developing a new product line or unearthing potential growth opportunities. Also, reviews can be a great place to kick-start product discovery based on underserved consumer segments.

Discovering underserved consumer segments paves the way for success as an entrepreneur. With a little research, you can find gaps ignored by other businesses.

By way of example, targeting underserved consumers helped War Paint build a successful cosmetics brand for men.

They found an underserved niche, launched a brand line and sold over 50,000 units in a short period. All thanks to a little market research.

4. Prepares you for competition. 

One of the most critical elements of startup success is understanding who you are competing with. Many business owners make the mistake of ignoring competition, which can be a path to failure.

Companies like Kodak and Nokia made the mistake of ignoring competition (and innovation) for a long time, and we all know what happened to them.

Related: Brand Repositioning Injects Life into Your Business

Market research tells you about your competition, their offerings, and if they’re serving a need well. When you understand the context and landscape well, you can discover opportunities and threats well in advance.

Knowing your competitors helps you chart your action plan based on SWOT analysis. This roadmap enables you to become a better solution and increase your market share.

5. Lowers business risks. 

Market research gives you access to data, which is critical for informed decision-making.

Being informed and prepared helps you achieve your goal and vision faster and reduce risks. When you’re prepared and well-informed, you save a lot of money that otherwise would be wasted experimenting with untested ideas or making a costly marketing mistake. 

Market research helps you find reliable answers to critical business questions, like: 

  • Is there an actual demand or desire for a product or a service? 
  • How many people will be interested in paying for your product? 
  • What is the perfect target audience, what do they expect, where do they live, their internal drives, etc.? 
  • What is the price point a customer will happily accept? 

Such answers are helpful in making informed decisions at every stage of building and growing a business. The information also helps build a framework to stay relevant and valuable at every step of the user journey, improving chances of success.

FAQs

What are the main types of market research?

There are four types of market research such as primary research, secondary research, qualitative research, and quantitative research. The classification is based on the source used for gathering the information and the type of information collection. 

What is online market research?

Online market research is a type of secondary research where you use digital mediums to collect information about your audience, customers, and competitors. This is a useful tactic to start gathering useful data with a limited budget for branding, marketing and other purposes. 

Does market research work for a small business?

Yes. Market research is crucial for the success of any business, big or small. A small business can use the insights from market research for branding, marketing, product research, delighting customers, or growing their business. 

Start market research using customer reviews. 

If you’ve come this far reading the reasons why market research is important, you seem pretty serious. So, why not commit yourself to starting market research for your startup and discover the benefits first-hand?

If you have never done market research for your business, then don’t worry, getting started is easier than you think.

When you’re ready to automate the process, then reach out to us! We would love to help you discover the profitable gaps in your market!

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