Let us talk about the importance of market research especially for small, medium, and emerging businesses in India. Is it absolutely necessary? Is it cost-effective? Shouldn’t a business focus more on B2C or B2B selling than learning about user behaviours, buying patterns and market scenarios?
Market research services after all will come for a cost, and for a start-up or MSME with limited budgets, does it make logical and business sense to spend budgets on it?
These are vital areas of concern for a small business, and one that must be thought through. In this article, we look at why market research for start-ups is important and share some tips to get started.
Significance of market research and analysis for MSMEs and start-ups
The objective of market research (whether doing it in-house or hiring market research companies) remains the same:
- Understanding the pulse of the market, customers, and competition
- Evaluating whether your idea/product/service has merit and will be loved
- Identifying new opportunities based on user feedback, market analysis, trends etc.
- Having competitive edge, staying ahead of competitors, and being the go-to brand for target audiences
Market research done right also helps to forecast and plan, allocate budgets for various marketing and sales activities (e.g., customer acquisition through digital marketing initiatives), and even help to build a business plan to attract investors for funding.
On that note, let us look at some aspects that makes market research useful for small businesses.
Understanding the market pulse for strategic planning
One of the key benefits of market research is to understand the pulse of the market, customers, and competitors.
Most businesses usually focus on building products and sales, with little effort being put into understanding how the product is performing, or what features the customers enjoy and want, or how competitors are promoting their offerings etc. In short, there is little knowledge of the market.
As a small business there are several ways you can gather relevant information on market dynamics:
- Primary (field) and/or secondary research
- Qualitative and/or quantitative research
- Surveys and polls
- Focus groups, interviews, and observations
- Social media polls and listening
- DIY research (can be a combination of multiple tools and techniques)
- Research and analysis of sales data and insights (includes customer buying behaviour, sales patterns, customer engagement, etc.)
It is possible that you may not have the tools or skills required to conduct market research successfully. In such cases begin with what you have.
For instance, if you are a D2C business, create profiles on social media (e.g., Instagram, Facebook, Twitter). Share relevant content, join Groups, follow other brands and individuals etc. This will be a good place to gain knowledge on trends, what people want, what features make customers happy, what competitors are doing, how are they promoting their products/services etc. Also, leverage features like polls to listen to the voice of customers (VoC) better.
Testing new product idea with targeted market research
How do you know if your idea is great and will be a hit among users? Whether you are building a mobile app, or starting an online store, or upgrading customer support services, every innovative idea needs to be tested, evaluated, and scaled. Market research services can help with that.
Similarly, if you want to upgrade an existing product and add new features and functionalities to it or want to find new markets and audience groups for expansion, it is recommended to study and analyse the market first, to keep risks and investments at the lowest.
For instance, if you are a furniture manufacturer looking at exploring new markets and/or adding new items to your product line, market research can help you to identify:
- Potential markets (e.g., Indian cities where there is demand for custom or retail furniture)
- Buying behaviour and spends for optimal pricing (e.g., buying frequency, willingness to purchase, estimated spends, online vs offline purchase etc.)
- Competitors and threat of new market entrants
- Best sellers, slow movers, high- and low-priced products, audience cohorts etc. (e.g., study tables and chairs can be best sellers, wooden beds can be slow movers, cribs for newly born children can be an audience cohort)
In times like these, onboarding a market research firm can be helpful as they will have the competence to help you target the right audience and collect relevant data. While this may be more expensive than doing it inhouse, the ROI makes it worth it.
Identifying new opportunities
Another reason why small businesses should invest in market survey and research is for the new opportunities it helps to identify. For small businesses with limited resources, it is often difficult to find new opportunities for growth. By conducting surveys with customers, research on competitors, and following trends, businesses can find new growth opportunities effortlessly.
For instance, if you are a handloom cloth manufacturer, market research can help you find out:
- Market size and growth potential (this will usually be secondary research by referring to published articles and reports)
- Location (city, district, state) wise market potential (with reference to demography, customer buying behaviour, competition etc.)
- Buyer profiles (including details on demography, spends, channels of purchase, frequency of purchase etc.)
- Alternative products in the market (can be similar or lookalike)
- Competitors (new and existing) and their offerings
- Risks associated for new entrants (and estimated revenue losses)
- Market entry options (i.e., whether though franchise, partnership with local business, online stores, retail store, etc.)
In a competitive market, there is always a business opportunity present somewhere. With timely research, you can discover and make the most of it. Whether it is for expansion, product pricing, strategy, or any other, research is imperative.
Gaining competitive edge
Customer loyalty can be fickle, and it is no mean feat to keep your customers loyal and returning (and advocating). Market research will help you understand how.
From learning what your customers love about your brand, to knowing how they prefer to purchase, or how much premium they are willing to pay for value-added services, there is a lot to discover from market research. Today, there are different market research tools and techniques present that can help MSMEs leverage research for business growth.
Market research can also help you learn more about your competitors and their products. This will not only help you improve your products, but also address customer pain-points. Winning customers is not easy, and by offering products/services that help them solve challenges, customer acquisition becomes easier.
Getting started with market research and analysis for MSMEs
It goes without saying that the role of market research in your business’s growth is immense. It is not an easy task, can be daunting and time-consuming, but worthwhile in the end.
You also must keep in mind that market research is only one step in your business’s growth journey – you will still need to focus on the other aspects including production, marketing and sales, customer satisfaction to name a few.
Some tips to getting you started with market research would be:
- Start with what you have – whether you onboard a market research firm or conduct research using DIY surveys and social media listening, what is important is that you start
- Allocate budgets for market research – whether it is a small budget of a few thousands to a larger budget of lakhs, ensure that your annual business plan includes budgets for research
- Keep research an ongoing process – have a small team dedicated to conducting research round the clock; whether it is on customer pain-points, or competitor strategies, continuous research helps to keep businesses up to date and drive informed decision making
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