Why is market research important? Here are 7 reasons

Doing your own market research on a regular basis is essential for keeping up with current market trends and maintaining a competitive edge. Whether you are starting a new business, expanding, or developing new products, conducting market research is essential. It helps you to understand your target market, increase sales, and spearhead business growth. In this article, we share 7 reasons why you should be investing in market research.

Use Netigate to send your market research surveys.

1. Identify new customers

In order to identify potential new customers, you must first understand who your customers are. You will also need to know key demographics. One way to gather this information effectively is to create customer surveys that capture these details.

When looking at your product or service, it’s important to consider questions such as:

• Who will use your product or service?
• What is the age range of your customers?
• What is their income level, marital status, and geographical location?

Using market research to understand these factors will enable you to target customers more effectively.

2. Get to know your existing customers

Similar to the above point, you should also take the time to understand who your existing customers are. Utilizing customer survey software can help you collect valuable feedback from your current customer base. Here are some questions to ask:

• Why do your customers choose your products over your competition?
• How do your customers use your products?
• How do your products solve a challenge?
• Who or what influences their purchase decisions?
• What do your customers enjoy doing, watching, and reading?

Understanding how your existing customers use your products as well as what challenges your products solve will help businesses improve their products as well as identify upsell opportunities with existing customers.

3. Set realistic targets for your business

Now that you are armed with information about your target customers and existing customers, you can use this data to set achievable and realistic goals for continuous improvement and business growth.

Being customer-centric in your approach is essential in today’s business climate. The most common approach in market research is to use an STP model: Segmentation – Targeting – Positioning.

Segmentation: Who will your product appeal to in terms of demographic, location, or other factors?

Targeting: How can you target and reach those sectors that your products appeal to?

Positioning: How can you position yourself in front of your competitors as your target market’s choice?

4. Develop new and effective strategies 

Data from market research will help you to make more informed decisions. For example, relating to pricing, distribution channels, marketing mediums, or to identify opportunities to introduce a new product or service. These results will also help you to make more informed decisions about your existing operations and activities.

• Should you expand or reduce?
• Is there room in your current operations to diversify?
• Are you targeting the right audience with your marketing activities

Casio used market research to get better insights on customers & resellers and adjusted the marketing strategies to be more effective.

5. Solve your biggest business challenges

If you have already identified a problem in your business, conducting market research will help you determine the source of the issue. For example, you can determine if a new competitor has entered the market or if brand awareness has fallen short, causing a decrease in sales.

There are several types of market research that can help you identify different shortcomings: brand research, consumer research, product development and usability testing, consumer research, and many other areas.

Get started with our free market research survey templates.

6. Investigate expansion opportunities

Market research helps you identify areas for possible business expansion. It allows you to test markets to determine if there is demand for a new product or service. For instance, analyzing customer engagement can reveal which demographics are actively seeking more flexible data plans or enhanced customer support.

This insight could guide your expansion strategy by focusing on launching targeted services that resonate with highly engaged customer groups. You can also conduct market research to determine the best location for opening a new store or service center, ensuring you are present where potential customers need you most.

Finally, it’s valuable to engage with industry experts and leaders. Attending relevant events can provide insights into best practices and emerging innovations in customer experience. For a curated list of upcoming opportunities, take a look at our guide to Customer Experience Conferences. These events offer unique networking and learning experiences essential for informed market research.

7. Identify how to expand your offering

Market research can help you discover new markets that are underserved or experiencing increased demand. For example, you may identify an emerging trend in customer experience in telecommunications, such as a growing preference for self-service tools and digital support options. By understanding this shift, you could expand your offering to include user-friendly online platforms or AI-powered chatbots to improve customer experience. These enhancements could position your business ahead of competitors, catering to customer expectations and fostering greater loyalty.

All in all, market research isn’t just for new startup businesses. Businesses of all shapes, sizes, scope, industry, and experience levels can benefit from market research. Market research can help you to learn about new and existing customers, identify issues and solve problems, and even help explore new opportunities that pave the way for business growth.