Importance of Market Research

Today most expensive and precious item in the market is not a diamond, not even a gold platted car nor an expensive house but the Information.

Information at right time and at right place can do wonders. The very source of information is research. When relevant data is taken out of terabytes of old and new data, it is analysed and when findings are put on manger’s table to take decision for an enterprise, then one can understand the importance of information and utility of research.

Every firm develops a product to cater to some unmet need or to solve some problem faced by people or by companies. Lot of time, effort and cost goes into a product development; hence it becomes imperative that product sell in the market and help company not only break even but also to be profitable. In order to make sure that there is a demand of the product within a particular segment of customer, companies carry out market research.

Market research removes ambiguity around the product and gives direction to the development and sales team. Its importance can be demonstrated by the following outcomes of the research:

a)     Demand of the product: Market research reveals the level of acceptance or rejection of the product in market. It tells whether the need that product is intended to resolve exists or not and whether the customer is willing to pay for the product or not.

b)    Target Customer: After doing market research firm gets lot of insight about customer’s buying and decision making behaviour. By asking apt questions firm can collect primary data that can reveal various factors that affect customer’s buying decision; incorporating those factors in product, firm can create value for the customer and can do better than the competitors. It also helps firm to choose its target segment of customer and device marketing plan keeping face of customer in mind.

c)     Competitors: Market research makes firm aware of the substitutes, of the product, available in the market. It helps firm doing analysis of competitor’s Strength, Weakness, Opportunities available and Threats and hence helps in developing strategy to tackle competition better.

d)    Substitutes: Sometimes firm can’t see their competitors. Biggest threat to Cannon is not a camera from Nikon or Sony, but it’s an iPhone or Nexus Smartphone that contain camera of competitive quality. Hence through market research firm comes to know about hidden competitors. 

e)     Points of Parity and Differentiation: A product must maintain the balance between the points of parity and differentiation in product. It must not only have the features to cater a particular need of the customer but also have the features to create customer delight or value. Market research helps firm to list down possible ingredients of the product and then to include/exclude each one them depending upon budget and research result.

f)      Risk involved in the launch: Market research gives complete picture of the market situation. On the basis of research results analyst can predict whether economic condition of the country, govt regulations, political scenario etc are suitable for the product or not.

g)     Positioning of the product: Research results can help firm to develop the positioning strategy for the product. Positioning helps in creating perspective of product in the mind of the customer; so firm can zero on that one factor or set of factors that will create positive impact about the product in the mind of the customer. For example firm can run regression to find out, on the basis of primary research data, factors on which customer’s purchase decision depends?

h)    Marketing Mix: Firm can carry out a market research to know the kind of packing customer likes, media to which user is closest to, price on which customer is willing to buy the product, desired modifications, medium from where customer is comfortable buying that product etc . Result of this research can help firms to create a stupendous market mix and create value to the customer.

i)       Communication Strategy: If research reveals the medium where majority of users are active then marketing dept of the firm can allocate maximum funds from promotion budget to that communication media. For example if users in the city are not fond of television but use Facebook, Twitter and Emails, then firm will focus more on social media marketing rather than print media or TV advertisements. Insights into customer behaviour may also help firm to form an effective communication message. For ex: If customers of the product are women then tone of the promotional message will be different from the tone of message meant for male customers.

j)       Difference between buying pattern of the regions: It is said that culture of country like India changes every 100 km. Culture of a place can have large impact on decision making and purchasing pattern of the customer residing in that place. If firm has purchasing patterns of different states in India then it can compare those purchasing patterns and results of this research might lead to different marketing mix, positioning, promotion strategy for each place.

k)     Monitoring the strategy after product is launched: Firm can carry out research even after product is launched, to track the performance of the product in market. For example feedback form that we fill on various food outlets, cinema hall etc helps to capture the satisfaction level of the customer. Result of such research can help firm to make necessary changes in product features, marketing mix etc on time. Such results can save lot of money for a company and can motivate it to come up with new feature that can help in sustainability of the product in the market.

 Keeping points, mentioned above, in mind one can conclude that market research is very important for the overall strategy of the product and that companies have all the incentives to carry out market research for the product.