Introduction
In a competitive business market, companies want to outdo each other and make as much profit as possible. To succeed at this, however, requires a deep understanding of the marketplace and the needs and wants of customers. This is accomplished through comprehensive market research. Successful businesses recognize the relevance of research to a company and as a result, allocate millions to market research to remain on the competitive edge and increase their bottom line.
Market Research and Types of Market Research
Experienced marketing researcher Mateusz Markosiewicz defines market research as a process of gathering, analyzing and interpreting information about a given market. There are two main ways of doing market research. The first one is known as primary research. This type of research is done by the business itself or when the business hires a marketing research firm to engage the target market to gather data and information to solve a marketing problem. This is done by adopting qualitative and quantitative research tools like Surveys, polls, Interviews, and focus group discussions. The importance of this method of research is that the findings are specific to your product, services and your marketplace and as such, data gathered through primary research is more applicable to your business.
The second type is secondary research. Here, companies use already existing data done by other researchers, data collectors, and businesses, to solve their marketing problems. This is done when companies use second and third-party sources like articles, reports and industry-generated statistics. The importance of this type of market research is that it gives you an understanding of the marketplace and the competition.
Importance of Research
Generally, market research is important to the long-term goals of businesses. This is because market research allows you to identify and measure the number of risks a business should take. The Boston Consulting Group Matrix (BCG matrix) provides a tool that businesses can use to evaluate and manage their brand portfolio. This tool can be used to identify and categorize which products and services are worth pursuing and those that need to be taken off the market. According to the BCG matrix, products that are “Question Marks” have high market growth but low market share. A product in this category is usually a new product and its high market growth makes it a reasonable candidate for investment. Products in the “Stars” category are products that have a very high popularity and thus have high market growth and high market share. These products are top-performing products of companies. They are low-risk investments and require continued investment to keep growing. “Cash Cows” are products that are fully established as leaders in the marketplace. Due to having an already established reputation these products require minimal investments but produce high amounts of cash. “Dogs” on the other hand are low-performing products. They have low market growth and low market share and as a result, are often phased out by businesses.
Another importance of market research is that it helps businesses to assess their strengths, weaknesses, opportunities and threats (SWOT) in a marketplace. The SWOT analysis provides a framework to assess the competitive positioning of a company. This is done by combining internal and external data gathered to create highly strategic plans to ensure the success of a company. In the SWOT analysis, an Internal assessment is done to establish the strengths of the company. That is, what the companies excel at and what sets them apart from the competition. This could be a proprietary technique or formula that works for them. An example is the Coca-Cola recipe. The weakness of a company refers to a negative attribute that affects productivity or limits the growth of a company. These weaknesses vary and range from financial limitations to low-quality products or services. External assessments are done to evaluate the threat a company faces and the opportunities that are available on the market. Threats are usually factors companies have little or no control of. They include Government laws, policies and regulations, Inflation, increasing competition in the marketplace and even Natural disasters. Opportunities are external factors that have the potential to give a company a competitive edge or contribute to a company’s success. This can be in the form of government policies, an increasing market population, or a crisis a competitor is facing, among others. Accuracy in research is the best way to get desired results from SWOT analysis.
Additionally, market research enables businesses to save money. When businesses know who their customers are, where they are, and how to reach them they save money on advertising costs. An important market research technique used to achieve this is market segmentation. This technique involves grouping a target market into demographic, geographic, psychographic and behavioural segments. Demographic segments are done along the lines of race, gender, and age among others. Geographic segmentation involves grouping the target market based on its location. Psychographic segmentation explores internal characteristics that influence the consumption habits of the target market. Factors to consider in psychographic segmentation are personalities, values and beliefs, hobbies, and social status, among others. Intricately linked to psychographic segmentation is behavioral segmentation. Behavioral segmentation considers factors such as customer loyalty and rate of use/purchase of a product or service. Each segment informs the marketing strategies to be employed. This allows businesses to create bespoke advertising messages and strategies for their target market and save on advertising costs.
Lastly, market research enables businesses to know the concerns of customers and improve their products or services. Customers are the ultimate deciders of which products or businesses survive in a competitive marketplace. This means that businesses must pay attention to customer feedback. Conducting surveys is the trendiest way of collecting customer feedback, another important way of collecting customer feedback is to monitor social media interactions about your brand or product. Social Media allows you to directly engage customers and make them feel valued by responding to their concerns in-app. It also helps you to keep up with changes in customer preferences which is essential to remaining relevant in a competitive marketplace.
Conclusion
Research is essential to the development, growth, and sustainability of a business. In an increasingly competitive marketplace, businesses must make well-informed decisions that will ensure their continued success. Market research ensures this. Businesses in Ghana must make use of the litany research services in Ghana to gather data to gain valuable insights that will ensure their growth, sustainability, and expansion.