What is market research? Think of it as a way to determine whether or not something will work for any given business. Many people employ some form of research in their everyday lives such checking to see if the running water in the sink is too hot or cold to wash one's hands with, accepting a taster of ice cream before deciding which flavor to purchase, or trying on clothing to see if it fits properly before buying.
As a consumer, this type of market research data is crucial to many buying decisions. As entrepreneur, the same information - but with a slightly different focus - can make or break a business.
Why Is Market Research Important?
Market data collection can involve a whole variety of information invaluable to new business owners or veterans alike. Some forms could include:
- Finding out what shape the local economy is in to see whether or not a high end retail establishment would be a useful (and profitable) addition to the community;
- Checking patents before investing $50,000 into a specialty fabric;
- Seeing if any buyers would be interested in purchasing a handmade doohickey for $29.99 before making 100 of them;
- Determining if an item that sells for less than a dollar can turn a profit;
- Asking current customers if they would be interested in having an additional product or service added to the current offerings before looking into zoning restrictions and requirements.
How Did Market Research Come About?
Before the industrial age, market research wasn't necessary. If a consumer required something, they found someone who had the skills to create whatever was needed from scratch, and catered the item or service to the person's specific wants and needs. There was no such thing as assembly lines or wondering whether or not inventory would sell, and service providers knew pretty quickly when demand would increase based on their very personal relationship with clients.
How Entrepreneurs Use Market Research Today
Today however, things have changed dramatically. Many entrepreneurs will never meet their customers face-to-face, and they won't have the opportunity to make a second impression when it comes to service, price or quality, as there are many competitors willing to snatch away a client with something better, faster, smaller or cheaper . Market research allows the business owners of today to learn as much about their current and potential customers as the entrepreneurs of yesteryear, which assists them in both anticipating and meeting everyone's needs.
Having said that, market research isn't always fool-proof. Mistakes can and will be made. But an entrepreneur who uses market research will be better equipped and well informed to make the right decisions and save a whack of cash in the process.
For more information about marketing research try: Free Marketing Plans, Marketing Strategy - Differentiation, and Business Plans - Market Analysis Section.
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