Market research should be the first step in any marketing plan. It is the core activity that will allow you to better understand your ideal customers and market demands. Market research should be done to help decide on new markets to pursue and to evaluate market changes. Market research is a starting point for a continual process that your business should be going through as long as it is in existence. When companies don’t do this, they wake up one day and realize they have no market and no business.

Market Demands

Market research should provide you with a deeper understanding of market demand. It’s nice to believe that everyone needs or wants what you have to offer, but it is seldom the case. Market research will assist you in determining the market’s desire for your business offering. It will also assist you in determining which offering has the most market potential. Consider how the founder of Liquid Death did not pursue the product until he had determined probable market demand. He first witnessed artists dumping their monster cans to refill them with water at rock concerts. This enabled him to recognize that there was a demand for “cool looking” water in the rock concert industry. Only after this discovery was he able to pique the interest of investors because he knew the estimated market size and demand.

Understanding Who Your Customers Are

Market research should assist you in developing a knowledge of your customers. “Customers buy when they feel understood, not when they understand.” These three critical questions should always be answered by market research. What is the psychographic that influences the purchasing decisions of my ideal group? What factors are most important to my target audience? What aspects of my business can I improve to increase the perceived value from my ideal customers? This level of customer understanding enables for the most successful marketing. Consider T-Mobile’s rapid rise in the telecoms industry. They concentrated on determining what was most important to their customers. Contracts that are simple to read, have no hidden fees, and dependable service. This is what prompted the focus of their advertisements. They also knew the buying budget that people were working with, which led them to develop the price plans for friends and family members. This awareness of their clients has resulted in rapid growth in a highly competitive industry.

Identifying Price Points

Profitability determines whether a business succeeds or fails. Many businesses have failed because the sale price did not meet the costs of the operation. During this market research phase, you should gather insights into your potential customer’s price reference point. This is critical to ensuring that your company can and will remain profitable as it grows. The value obtained must always feel larger than the money paid for a product or service

Conducting initial and continuous market research is crucial to the health and profitability of your company. Without market research, you are speculating and hoping to solve the right problem, find the right consumer, and set the right price for your product or service. This market testing and understanding will save you money on advertising and months of wasted time going after the wrong market group, and it will keep your business evergreen.