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July 22, 2021

Market Research: Why First Steps Matter

By Jeff Vining, Director of Research and Market Analysis

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“New business applications jumped 24 percent in 2020, the biggest surge in history, and they remain at a much higher level than pre-crisis.” – Washington Post

Industries and businesses change rapidly. Whether it is in the high-tech space, traditional IT, or another field, all companies facing changing market forces need to be creative and turn their ideas into tangible campaigns, strategies, and content. The goal of market research is to equip businesses with the data they need to improve decision-making. 

Market Research Hinges on Intelligent Questions

An essential prerequisite for success is to identify and address knowledge gaps. In other words, define questions to be answered. In both quantitative and qualitative research, the right question must be clearly defined as part of an iterative process. So to direct the research to determine the why, the how, and the what as it forms the types of information to be collected and analyzed. In this context, a purpose exists: that helps businesses with their decision-making.

Simply put, market research can serve as the foundation for actionable insights to solve business challenges or influence marketing strategies. 

Research Focuses on Markets

Uber revolutionized the transportation industry using crowdsourcing and mobile computing to successfully challenge long-standing market assumptions about taxi services. Uber illustrates why market research can be beneficial. They closed their knowledge gap by learning the market was ready for splitting costs among riders to reduce wait times. In doing so, they also identified new business opportunities for entrepreneurs, executives, and investors.

Research Decodes the Competition

If B2B companies in a high-tech space want to have any chance of success, they need to learn the market, size, competitors, and buyer behavior. Knowing what's affecting these factors is essential for keeping up with current market conditions and maintaining a competitive position. Performing market research is essential because it helps businesses connect with customers, define target markets, develop effective growth strategies, increase sales, set realistic targets, and solve business problems.

Research is Not a Budget Exercise

As digital technology becomes more accessible and commercialized, data becomes more prevalent. Big data can support market research, but only if researchers embrace the basics of understanding what to research. The real value comes from an accurate interpretation of multiple sources to better understand today's and tomorrow's markets. 

Yet surprisingly, market research is one of the first things that businesses will reduce from their marketing budgets with the mistaken belief that alternatives, like paid market reports, are good enough to define markets, develop strategies, and increase sales. Certainly, a business can purchase market reports conducted by researchers on broad market conditions but these reports may not always answer the nuanced or special questions of a business.

Research Drives Future Planning

Market research and sizing is an ongoing activity that affects everyone in the company – budget planners, sales teams, support staff, and others within the business – because it helps them anticipate growth and understand the value proposition. Effective market research also draws in investors. In today’s data-driven world, investors want to know how a business or company ranks in terms of market share and competitors. 

After all, when any successful product or service resonates in the market, the market changes in unanticipated ways. Recall Netflix’s low-cost video streaming service that originally competed with video rental stores. Now due to Netflix's success, Apple, Amazon, and many others produce and distribute their own content.

Research Requires Context

Market research identifies and solves many different questions a company may discover. The same goes for research. Conducting cookie-cutter research without context for what type of research is to be conducted (competitive analysis, market penetration, etc.) or how it can be used to answer a question (competitors' strengths and weaknesses vs. consumer opinions) will fall short of expectations.

Wrong: What are the effects of mobile devices on people’s shopping habits?

Right: How are mobile devices transforming the retail industry? 

The first research question mischaracterizes the gap in knowledge to be addressed. This gap needs to be filled in by asking more discovery-oriented questions to determine the right context that can then indicate or lead the research endeavor. The research question to be answered is not about how shoppers use their mobile devices in stores. It is about how retailers adapt to mobile commerce in terms of contact centers, customer engagement, and mobile marketing. 

By identifying and addressing the knowledge gaps, early on, more pertinent data can be obtained about markets, buyers, and trends. Enabling careful examination and understanding to distinguish between beliefs and facts. 

Research Tells a Story

Market research should gather and evaluate data from a specific market segment or industry. It should also cover the essential needs and issues of a business to help shape decision-making. In other words, market research is an “aim small, miss small” activity. When it is conducted effectively, a business should be able to better understand the gaps in their knowledge, such as: 

  • Who are my customers?
  • What to offer and how much
  • When to offer my product or service
  • What is my company’s reputation among customers and competitors
  • What to invest in and who to hire
  • How to enter or expand in a market
  • Why do customers buy and for how much 
  • Is my business successful when compared to my competitors?

Failure to adequately research a market can lead to insignificant findings, perceived methodological flaws, or rejected results. 

While there’s a lot of consideration that goes into starting market research, the payoff can be huge. To get started, choose a narrow business challenge to investigate or hire an agency that can help dig into the data.  

Sources

Long, H. (2021, June 20). The economy isn’t going back to February 2020. Fundamental shifts have occurred. Washington Post.

Hartmans, A., & Leskin, P. (2019, May 19). The History of how Uber Went from the most feared startup in the world to its massive IPO. Business Insider. 

Carufel, R. (October 19, 2020). As Budgets Get Cut, Market Research Nose-dives During COVID). AgilityPR Solutions.

Moore, R. (June 4, 2019). 11 Disruptive Innovation Examples (And Why Uber and Tesla Dont Make the Cut). OV Blog. 

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