Importance of Market Research
Kumar R. Sarangee, Associate Professor of Marketing, presents the essential investigative questions that you should ask yourself when conducting market research.
One of the most important and obvious activities for entrepreneurs is market research since it reveals several important things such as who your customers are and whether they have a need for your product. However, it is often ignored or not done appropriately because of various reasons including constraints related to funds, manpower and time urgency. This leads to an incomplete understanding of the market due to limited direct experience with potential customers. Thus it is essential for entrepreneurs to do market research. However, two critical issues need to be addressed here:
(a) what should entrepreneurs look to achieve through market research, and
(b) what are some market research techniques that are appropriate for this endeavor?
Some key market research questions for entrepreneurs could be the following:
1. Is the business model/concept viable and appropriate?
2. What are the different risks involved in the venture? How can you better understand and minimize these risks?
3. Who are our customers and competitors? What should we know about them?
4. What is the size, growth, and dynamics of our market?
5. Is there a customer need for this product/service? Is it unmet or addressed sub-optimally?
6. Does our product/service meet these needs and address them fully? How does it compare to competitive offerings?
7. Is our value proposition attractive for our customer?
8. Will the sales cycle be so long that building the business becomes impractical?
Fortunately, there are several market research techniques that entrepreneurs can utilize in order to answer these relevant questions. These include: utilizing available secondary data, ethnography or observing customers, voice of the customer interviews, interviews with industry and functional experts, focus groups and concept testing surveys. These techniques if conducted properly will enable entrepreneurs to better understand the market, validate customer need, confirm their product’s utility as well as their business model, thereby enhancing their chances of success.