Importance of Market Research
Market Research is the process of acquiring information (data) from different facets of the business with an aim of helping the business achieve its goals be it profit maximization, risk assessment, increase in revenue, and increase market share among others. The Research can be qualitative; interviews, focus groups, ethnographic research, case study research among others. Or it could quantitative; survey research, correlational research, causal-comparative research, experimental research among others. The benefits of conducting business research especially in Kenya include:
To identify Opportunities and Threats
Kenya is full of opportunities. With a population of 50 million plus and employment rates of less than 10%, the buying power is apt and one can build all sorts of business by leveraging this market. The market is tech survey and education levels are above 75% which means online business have an opportunity to thrive as well. But then business have failed over and over when they tried to build business in the country. Why would this be? Lack of Market Research.
Market research is an inevitable part of any investor who loves their money and are pragmatic in their approach towards business. And it doesn’t have to be an expensive process, look at how much you are willing to invest and take a small portion of it, say 5%, and invest in business research. Do not lose 100% of your money trying to save 5%, wise up.
Track Competition in the business sector (Blue Ocean Strategy)
Competition is always lurking in the shadows and creeping up on your business. If history is anything to go by, every company every so often faces competition so big it threatens to wipe it off the industry. However, we can choose to analyze competition and better their offers or we can choose to look at things differently. The Blue Ocean Strategy calls for creating of your own demand so as to make competition irrelevant. Red Ocean is when you face the competition head on and try to become more efficient than they are. This strategy is not sustainable as at some point, someone is going to better your moves.
In Blue Ocean, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. The table below highlights the difference between Blue Ocean and Red Ocean Strategies:
In the book The 48 Laws of Power, Robert Greene highlights the importance reputation. Law number 5 states: so much depends on reputation, guard it with your life. How your clients perceive you is going to determine whether they are willing to do business with you or not. It therefore crucial to keep tabs with your reputation and ensure it reflects your values and helps you deliver value. To this end, you need to conduct reputation analysis and study your customer behavior. As much as it is important to interview and send out questionnaires to your clients, it’s more valuable to monitor their behavior. Remember, words are cheap and it’s by studying their behavior that rubber meets the road.
Make guided investment decisions
You want to always use your resources prudently in order to maximize on the gains. To do this, you will have to conduct a Market Research and understand which opportunity suits you best. There may be several opportunities out there, but few suit the resources and your personality. There are several ways used to estimate future cash flows likely from a certain investment:
- Payback Period
- Discounted Payback Period
- Net Present Value
- Accounting Rate of Return
- Internal Rate of Return and
- Profitability Index
To accurately use these methods in estimating cash flows, you’ll need a bit of research and benchmarking in order to come as close as possible to the accurate estimates. Again, here as well, Market Research is indispensable.
Stay up to date with Market Tastes and Preferences
Consumer tastes and preferences shift every now and then. As someone grows and technology changes the way we do things, we tend to change the definition of what we like and we don’t. For this reason, it’s important for businesses to keep abreast with these changes in order to ensure the relevance of their products and services. As a business, you should always aim at selling what the consumer wants and is ready to pay for and not what you know how to produce.
The world is changing and with the way we approach and do business. Innovation is more and more becoming the center piece of how we keep up with the changes. How value is delivered is defining whether a consumer will buy your product and not the competitors. To keep up with innovations and sometimes even stay ahead, one needs to have their ears on the ground. The ground is the Market.
Increase your customer base
As the phrase goes, you are either growing or dying. If your customer numbers are not growing, it means you need to start investing on Market Research ASAP. To increase the customer base you need to investigate how the competitors are doing it so you can learn have a similar approach or learn from them and implement a totally unique approach which may end up giving you an advantage in the market. Again, to achieve that, you’ll need to do thorough Market Research. Even when you depend on advertising, you’ll need to know which advertisement means provides the highest ROI so you can then maximize on the value of every shilling you spend.
Understand Customers Better
Consumer sentiments is a very important part of Market Research. When you release a product into the market, you want to understand what the market thinks of it. This is key as it will give the organization direction on what next step to take insofar as the product is concerned. You may need to make some changes on the product or you may need to reduce the pricing or even pull the product out of the market completely depending on what the consumer thinks about it.