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Is market research necessary for your small business?

by Chima Ezeokoye

March 27, 2021 1

For most small business owners, the market is likened to a huge sea where you row your little boat, throw in your line and hope to catch some fish. It is a highly unstructured and randomised system where hope and luck are the key strategies for success. If you fall into this category and are opportuned to know about market research, then you must have asked yourself at some point, “is market research necessary for my small business?” 

What is market research? 

The first step is to understand what market research is. Market research is the art of testing, tracking, measuring and analysing product ideas to gain valuable feedback from a sample of their target audience. The goal of conducting market research is to gain insight into your product, customer base and competitors.

To equip your business with the information required to make informed decisions. It is especially important when small businesses are trying to determine whether a new business idea is viable, looking to move into a new market, or are launching a new product or service. 

Why is market research needed? 

The next step in understanding if market research is necessary for your small business is to understand why it is conducted. These include; 

● Understanding the customers

Replacing assumptions and a false understanding of your customers automatically boosts your chances of meeting them at the point of their needs. By conducting research, you can create a profile of your average customer and gain insight into their buying habits, how much they’re willing to spend, and which features resonate best with them. 

● Finding opportunities

Conducting effective market research can also help you find niche opportunities you might not be privy of. By learning more about your customers, you can gather insights into complementary products and services. Because consumer needs change over time, influenced by new technology and different conditions, you may find new needs that are not being met, which can create new opportunities for your business. 

● Know your competition 

Let’s face it; you probably don’t know enough about your competitors. More so, what they do better than you makes them appear more attractive to your shared customer base. This is another way to leverage your market research. Adding competitor analysis as a part of your research will help you learn about your competitor behaviour, competitor’s strengths and weaknesses, product offerings and price point. Then you can learn how to position yours to take advantage of their shortcomings.

● Market forecast 

Beyond your customers, the local and international community have a direct impact on your business. When customers are in a state of mind which supports their purchase of your business, it can significantly boost your product’s market penetration. You can also face a downturn in sales volume when the public sentiments don’t support purchases of your product and services.

By conducting research with consumers, you can decide whether they are optimistic or apprehensive about the economy’s direction and make adjustments as necessary. A good example is when business owners had to decide on their product focus during the Covid-19 pandemic, as the economic environment was turning negative for some industries. 

You will agree that these are essential knowledge points to drive market penetration for your products or services. A well-conducted market research is necessary for businesses of any scale to understand their customers’ needs and serve them. 

Have you carried out a market research for your business? Share with us in the comments what you gained from the exercise.