Risks of Not Doing Thorough Market Research
Customer buying habits, needs and motivations are in many ways measurable, not mysterious. Today’s companies have more tools than ever to ground their innovative ideas with real market information — information revealing the feasibility of a new product or service as well as its roadmap to implementation.
Understanding the importance of market intelligence is the difference between strategic, competitive organizations turning their ideas into profit and those playing a continual guessing game. Before committing substantial resources — indeed, the future of your business — into the launch of a new product, service or branding endeavor, you must conduct intensive research into how customers will respond to that endeavor. Targeted market intelligence is how.
What Is Market Research?
Simply put, market research is when an organization identifies a specific set of information or questions they need to have answered to implement a successful and profitable business change.
This is a broad definition, and purposefully so. Market research is an expansive activity with numerous methodologies that can help a business do everything from launching new product packaging to picking music for commercials to converting customers away from the competition. Yet the purpose of performing market research is the same — to research and analyze the variables of a target goal or question, then create a business strategy informed by findings that’ll pave the way to that goal’s realization.
Using the benefits of market research, a company can better interpret:
- Customers, current or prospective.
- Markets, new or established, domestic or abroad.
- Competition, prevailing or up-and-coming.
- Products or services presently offered or in-the-works.
- Technology, public or private, emerging or existing.
- Entire industries, accounting for many of the variables above.
What Goes Into Thorough Market Research?
While the goals behind conducting market research vary for each enterprise, its overall process holds the same core steps:
- Outline the enterprise goals: Every good market research initiative begins by identifying your market research needs and goals. Organizations need to determine what information they truly require to answer a question, clarify indecision or better understand a business concept. Once compiled, that information helps build the roadmap for your market research methodologies.
- Bring in stakeholders: Identify the individuals and teams who have an interest in achieving a specific enterprise goal. Consider stakeholders those conducting the research as well as those who must receive, interpret and implement market research findings within their own domains to achieve that enterprise goal.
- Review budget allotment: Budget allowance influences what kinds of market intelligence methodologies can be conducted practically, as well as the length of analysis and additional resources or outside consultants to bring onboard.
- Identify necessary facilities and additional resources: Can market analysis be performed completely in-house, using internal information like company sales reports or accounting ledgers? Will surveys need to be drafted and disseminated? Do actual customers or the general public need to be brought in for a live focus group? Account for all facility and technical resources as early as possible.
- Conduct the research: Perform the market research methodology that gives the best chance to extract relevant, goal-solving information.
- Interpret results to make a business decision: Market research can unearth reams of quantitative and qualitative data your key stakeholders then chisel into actionable, effective enterprise solutions, levering market intelligence for its true function — better-run businesses.
What Industries Use Thorough Market Research?
It’s no exaggeration to say in today’s commercial world, nearly all industries deploy thorough market intelligence to their advantage. However, a handful of sectors see strategic gains in conducting continual benchmarking, monitorization and market entry or defense research:
1. Consumer Goods
From shoes to showerheads, smartphones to hair-styling products, everyday commercial goods make the consumer’s life tick. Retailers glean the vast benefits of market research to assist with new product testing, development, consumer segmentation, distribution benchmarking and more retail-centered market strategies.
The pharmaceutical industry is a heavily regulated, cost-competitive sector that undergoes near-constant evolution. Pharmaceutical companies keep pace by performing keen healthcare market intelligence studies into operational profitability and cost advantages, consumer beliefs, new treatment commercialization plans, current treatment and drug therapy development and by maintaining competitor profiles.
Our lives are increasingly dependent upon and tethered to software and hardware. This Internet of Things (IoT) reality drives the hyper-competitive tech industry to perform fluid research and development (R&D) initiatives, conduct pricing analyses, monitor product warranty and servicing metrics, understand their brand’s public perception, optimize consumer retention and user experience (UX) and much more.
4. Banking and Finance
Advances in financial technology, also called fintech, and other industry disruptors have catapulted financial service companies into a new era of competitive undertakings. Differentiation in banking and finance has never been more essential, with market research and intelligence providing service and operational advantages for retail and corporate banks, lending institutions, insurance providers, investment firms and more.
Industrial and commercial manufacturing companies navigate an increasingly complex and profit-volatile industry. From performing threat assessments on domestic and international competition and profiling changing consumer material tastes to undergoing supply chain, production and distribution analyses, the disadvantages of not doing proper market research could spell life or death for those in this industry.
From petroleum-based oil and natural gas to the rapidly advancing renewables market, the energy sector carries both traditional and alternative offerings set to define how future societies run. Energy companies have a long list of reasons for conducting marketing research, beginning with understanding shifting consumer energy attitudes and tastes to developing profitable go-to-market strategies, fuel sourcing supply chains, brand and product evolution and much more.
7. Food and Beverages
The sheer variety of packaged foods and beverages available to today’s consumer alone warrants thorough market research. From individual convenience stores conducting layout analyses to see which shelving designs boost average basket sales to the beverage and snack manufacturers expanding their own consumer taste R&D studies, there’s no shortage of opportunities for market intelligence in the food industry.
Primary Versus Secondary Market Intelligence
While there are many market research methodologies for organizations to adopt, there are only two general categories those methods fall into — primary research or secondary research.
1. Primary Market Intelligence
Primary market research is studies or reports created by your organization, for your organization, using propriety information and specific research criteria aimed at addressing a focused business goal.
Proprietary information is the basis for overall analysis, allowing an organization to get precise, pinpointed answers on products, services, sales cycles, profitability and more. Examples of primary market intelligence research include:
- A mining equipment manufacturer conducting efficiency and output assessments on all its plants.
- An outdoor apparel label reviewing quarterly sales reports to identify the most successful product lines.
- An all-natural cosmetics company determining which new logo idea is most appealing to its customers.
2. Secondary Market Intelligence
As the name suggests, secondary research is non-proprietary, non-customized pieces of broad market research and industry analysis. It focuses not on a particular business’ products, services or brand perceptions, but instead on the larger trends and variables affecting an industry.
Trade associations, the government and third-party groups interested in industry activities are most often responsible for publishing secondary market research. Common secondary market intelligence examples might include:
- A report on Millennial smartphone browsing habits published by the Mobile Marketing Association.
- Public transportation ridership data produced by the U.S. Bureau of Transportation Statistics.
- Data on the top leisure spending habits in your state according to income bracket, published by the Pew Research Center.
What Are the Types of Market Research Intelligence?
Organizations have many options at their disposal to conduct thorough primary and secondary market research.
1. Consumer Brand Awareness Research
Brand awareness encompasses how widely recognizable your business is to target customers, as well as prospective consumers and desired markets. It’s an important tenet of a business’ overall marketing strategy and business growth likelihood since poor brand awareness correlates with smaller market shares and diminished growth outcomes.
Consumer brand awareness research identifies variables like:
- Brand identity: The words, phrases, descriptors and associations the general public ties to your company, positive or negative.
- Brand recognition: How quickly a consumer matches branded collateral — logos, color schemes, audio branding sounds, and more — to your business.
- Brand recall: The ability for the average consumer to name your products, business or collateral when discussing your industry.
2. Market Segmentation
Customer and market segmentation allow organizations to understand their customers better — plus identify segments with higher profit potential. Surveys and interviews with current and prospective consumers give insights into the values, habits, preferences, likes and dislikes of target populations, enabling an organization to morph their products or services to meet these motivations.
3. Research and Development (R&D)
R&D market research encompasses all the ways an organization tweaks and tailors their products according to market segmentation demands, cost-profit calculations and their overall brand identity. It allows a company to produce a superior product at a superior price point without sacrificing basic, profitable operational efficiencies.
R&D market research incorporates activities like:
- UX design
- Packaging design and testing
- Product features and enhancements
- Actual product testing
- Product launch or re-launch improvements
- Post-launch product support
4. Advertising and Marketing Intelligence
Marketing research is pivotal to understanding what advertising channels, messages and platforms are your strongest, meaning they connect with audiences, generate the most leads, nurture the most loyalty and imbue the most brand identity. Advertising market intelligence lets you create campaigns and marketing tactics with proven, positive customer impact, saving significant time and resources.
5. Satisfaction and Loyalty Testing
Satisfaction and consumer loyalty are coveted — and measurable — markers that a consumer will return to your brand, time and time again. Loyal customers are also more likely to recommend your products or services to others, browse your website, make repeat purchases, interact with your social accounts, give positive online reviews and be open to cross or up-selling opportunities.
You can measure customer satisfaction and loyalty using surveys, focus groups and interviews identifying:
- Brand trust: How much consumers view your company as authentic, admirable, socially conscious and committed to its customers.
- Brand messaging: Are current advertising and marketing methods imbuing customers with the “personality” you want to be known for?
- Product or service appeal: Understanding what’s most important to the satisfaction of your customer — be that price, convenience, status, trendiness, safety or something entirely unique.
6. Market Pricing
Successful market pricing allows you to pinpoint how much target consumer segments would pay for a particular product with particular features. It involves a complementary blend of both primary and secondary research methods:
- Primary market-pricing intelligence gleans what aspects of your products, services or branding customers respond best to, and will, therefore, pay a premium to experience.
- Secondary market-pricing intelligence reveals what industry competitors charge for similar products or services, as well as generalized shifts in consumer tastes and values which inform product pricing. For example, the growing desire to be an eco-conscious consumer means certain segments will pay a dollar or two more for “green” goods compared to cheaper, non-green merchandise.
Top Marketing Research Methods for Businesses
The way an enterprise chooses to collect information, conduct research and compile data is known as its marketing research methodology. What type of methodology an organization adopts — as well as if it’s primary or secondary leaning — is a direct reflection of the strategic business decisions it wants insights into.
Organizations can conduct their market data collection using any of the following approaches:
1. Experimental Studies
Controlled experiments let researchers manipulate specific product, service, advertising or environmental variables, then measure how those manipulations affect the whole. This approach works particularly well during product R&D or pre-launch preparations and for advertising and market intelligence research.
For example, researchers can present multiple versions a piece of software or variations of a commercial, then let test participants fill out response surveys. Overall, measuring such variable differences in controlled settings helps signal what works well for a product or brand and what doesn’t.
Experimental market research can be done in two settings:
- Laboratory studies: Laboratory-tested market intelligence allows researchers to control nearly all product and environmental variables, therefore unearthing more quantitative, consistent findings. It works particularly well for commercial products, technology, food and beverages and is most often done with the assistance of a third-party research firm.
- Field studies: Field-testing market research takes place in real-life environments, such as in a retail store, manufacturing plant or an entire city. It’s great to test actual market conditions and feasibility of certain products, services or branding mechanisms, as well as experiment with price points and buyer intent before applying to larger settings.
2. Focus Groups
Focus groups are large, group interviews made up of pre-screened, volunteer consumers in target segments or relevant subject matter experts. Focus groups are a primary market research methodology ideal for extracting subjective or qualitative information about a brand or good — information that cannot be replicated in a trial-and-error lab setting.
Focus groups can be split into two categories:
- Quantitative-centered focus groups, where group members receive pre-written surveys or tests with standardized, numeric-based questions evaluated together after completing.
- Qualitative-centered focus groups, where group members are asked open-ended questions or given open-ended tasks for researchers to glean more subjective reactions and insights.
3. Primary Interviews
Primary interviews are one-on-one interviews conducted directly between researchers and a pre-screened candidate online, over the phone or face-to-face. That candidate has been selected for their congruence to your target consumer segments because they fit a market demographic or because they’re a subject matter expert who can lend interesting insights on market criteria.
4. UX Groups
User-experience groups are a subcategory of focus groups relevant for software, technology and some physical products. Members of UX groups are tasked with actually using a new product, often during the R&D phase. Using a mix of surveys, journals, individual and group interviews, researchers amass quantitative and qualitative data on the appeal of a product, from its user-friendliness to its actual task-enhancing ratings.
Market intelligence benchmarking allows an organization to identify and measure targeted key performance indicators (KPIs) within their operations, then compare those to competitors. Nearly all businesses benchmark, but not all leverage benchmarked data into formal business growth plans to account for:
- Organizational structure comparisons
- Improved supply chain management
- Enhanced retail experiences and initiatives
- Refreshed sales strategies
- Overall cost reductions and maximized profitability
6. Internal Analyses
Completely internal market research turns a company’s attention inwards. It elevates static enterprise information into compelling and actionable ideas, ensuring your organization doesn’t collect data for the sake of collecting data — it wields it as a tool for innovation.
Internal data analyses can uncover trends and insights from:
- Sales data
- Product line data
- Accounting and financial planning spreadsheets
- Website and social media platform traffic
- Content-marketing analytics
7. External Analyses
Pure external analysis lets businesses understand the broader context behind an industry question or concern. Using only government publications, industry trade research and commercially available data, external analysis can review topics like:
- Regional or national market conditions, for risk-adjusted entry and defense.
- Emerging industry technology.
- Growing consumer trends, fears or behaviors related to their industry.
- Overall market or industry threats and disruptions.
Disadvantages of Not Doing Market Research
The importance of conducting market research goes beyond a few feel-good assessments. Market intelligence hands organizations a blueprint for creating the best version of themselves. Market research offers many benefits, and neglecting to do market research can hurt your company in several ways:
1. Never Learning Your Competitive Advantages
Businesses that know their strengths, capabilities and pain points are far better equipped to make strength-maximizing, risk-mitigating business decisions. It’s a form of self-awareness critical to creating strategic growth outcomes.
Market intelligence allows organizations to craft nearly every operation to their competitive advantage. It spotlights what processes or activities are currently on-brand, lean and successful while also identifying things your competitors might be doing you can integrate, siphoning customers, expanding your market share and furthering your competitive momentum along the way.
2. Forgoing Customer-Centric Marketing Models
Market intelligence lets organizations know what makes their customers tick. When done consistently, thorough customer and market segmentation become both an art and a science. Through customer-focused market research using focus groups, surveys, interviews, field studies and more, companies can glean new sales strategies, devise more impactful brand messages and advertisements and overall make keener investments into customer-facing platforms and touch points.
3. Increasing Strategic, Operational Risk
Instead of making decisions in the dark, performing market research grounds business decisions and reduces the chance of plans going awry. Organizations have precise insights into what works and what doesn’t, both internally and externally. Backed by this information, they can tweak processes and allocate resources to:
- Improve budget cycles
- Enhance decision-making ROI
- Speed up product or service times to market
- Develop stronger market entry or product launch strategies
4. Can’t Make Data-Backed Enterprise Decisions
Just because something has a number to it doesn’t mean it’s infallible. Yet data-backed enterprise decisions inspire more confidence since they’re composed of real-world, reliable data. Stakeholders, therefore, have more confidence in making business decisions, decisions which:
- Contain more preemptive, not reactive, plans, patterns and activities.
- Better predict the competition’s motivations and behaviors.
- Better predict customer’s motivations and behaviors.
- Mitigate risk and respond more effectively when market anomalies do occur.
5. Leaves Business Stones Unturned
It’s impossible for businesses to control every variable across all the inevitable changes in consumer expectations, technology, facilities, product and service lines, marketplace health and general society. With market research, though, business leaders can rest assured their organizations have done due diligence, keeping a pulse on these things as they happen — not after the fact.
What’s more, this “pulse” is scientifically validated, analyzed and put into effect in equally measurable installments — no cut corners, no sloppy implementation. Simply a well-run business crossing and T’s and dotting I’s before making significant strategic moves.
Gain the Advantages of Thorough Market Research With Proactive Worldwide
When an organization seeks new ways to be the best version of itself, Proactive Worldwide provides answers through globally renowned market strategy and analysis services committed to your exact goals.
Proactive Worldwide provides enterprise intelligence services and consulting in three core domains:
- Intelligence-Based Strategic Planning Services
- Competitive and Market Intelligence Consulting
- Customer Insights Research and Reports
Contact us today to see how intelligent market research can propel your organization to be where it should.