Benefits of Market Research
The basic goal of every business is to deliver value to customers. If a customer sees value in a certain good or service, he will be willing to pay money for that good or service. Market research is the gathering and analyzing of information about a group of potential customers. Market research can benefit a business in many ways.
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Determining the Viability of a Product or Service
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One of the primary goals of market research is to determine how specific products or services will perform in a certain market. Conducting surveys about consumer preferences help a business determine whether certain a product or service is viable. For instance, an inventor might think a certain new device has great potential, but if market research shows few people would be willing to buy the device at a profitable price, the inventor might choose not to pursue the product. Market research can help businesses avoid making costly mistakes.
Identifying Opportunities
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Another benefit of market research is that it can allow a business to identify needs and opportunities in a market. For instance, if many of the customers given a survey about smart phones commented that they wanted a phone that could record HD video, a business could launch a phone with HD video recording capability to take advantage of the untapped demand in the market.
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Identifying Threats
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Market research can help companies identify potential threats and sources of competition to their businesses. For instance, a video rental company might take surveys of their customers and discover that increasing numbers of customers prefer streaming videos online. Failure to identify and react to changes in consumer preferences and the presence of competitors can cause successful businesses to lose market share. For example, "USA Today" states that Blockbuster, a popular video rental company, filed for bankruptcy, in part due to competition from Internet video services and subscription services like Netflix.
Forming Plans
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Market research helps companies develop effective plans of action --it allows businesses to find out what consumers like and dislike about their products and services and to adjust their products and services to better meet the demands of their customers. Market research can also give insight into how to sell products most effectively. For instance, if market research shows that a large proportion of the target market of a certain sporting good watch football on Sunday, a company might decide to advertise the product during football games.
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