The global market research market increased from $69.6 billion in 2016 to $76.37 billion in 2021. By 2026, that figure is expected to reach $108.57 billion – a compound annual growth rate of more than 7%.
Market research is important for organisations across the spectrum. We have already discussed its advantages and disadvantages in a previous article, but what exactly is the purpose of market research within a commercial setting?
With 23% of organisations yet to devise a clear market research strategy, we’ll take a deeper look in this article at how you can utilise it to strengthen your position.
The Multifaceted Purpose Of Market Research
Market research extends far beyond just gathering data. It serves various essential purposes that contribute to an organisation’s growth and stability. Here, we explore the multifaceted purpose of market research for businesses:
1) Risk mitigation
In the complex and ever-evolving business landscape, risks are everywhere. Market research acts as a shield against these uncertainties. By exploring in-depth market dynamics, it helps businesses identify potential risks and threats.
Armed with this knowledge, companies can proactively develop strategies to mitigate these risks. Whether it’s a shift in consumer preferences, a new competitor on the horizon, or economic fluctuations, market research offers a safety net.
2) Strategy development
Market research can be the compass that guides strategic decisions. It provides critical insights into market trends, customer behaviour and emerging opportunities.
Armed with this intelligence, businesses make intelligent and informed decisions. From crafting overarching business strategies to fine-tuning marketing plans, market research is the cornerstone upon which strategies are built.
3) Customer understanding
In today’s customer-centric world, understanding your audience is paramount. Market research offers a window into the minds and hearts of consumers. It uncovers their preferences, needs and pain points.
Armed with this intimate knowledge, businesses can tailor their products, services and marketing efforts to resonate with their target audience. It’s the key to forging lasting and meaningful customer relationships.
4) Product development
A successful product isn’t born out of chance. It’s meticulously crafted through research. Market research informs every step of the product development process.
It validates initial ideas, hones in on essential features and ensures that the final product aligns with customer expectations. In essence, it prevents costly missteps and drives innovation.
5) Competitor analysis
To succeed in any market, it’s crucial to understand the competitive landscape. Market research unveils your rivals’ strengths and weaknesses, enabling you to devise strategies that exploit opportunities and mitigate threats.
Alongside real-time, curated competitive intelligence, you can position your business effectively and stand out in a crowded marketplace.
6) Market entry and expansion plans
Expanding into new markets or growing within existing ones requires a roadmap. Market research provides that blueprint. It identifies opportunities, assesses barriers and reveals the cultural nuances of different regions. It enables businesses to make informed decisions about market entry and expansion, avoiding costly misjudgements.
7) Financial planning
Budgets, pricing strategies and financial forecasts are the lifeblood of any business. Market research is the source of the data needed for sound financial planning.
It offers insights into market trends, demand fluctuations, and pricing benchmarks. Businesses can allocate resources judiciously, set competitive prices and make informed financial projections.
8) Brand positioning
In a crowded marketplace, your brand’s position is everything. Market research helps in identifying your Unique Selling Proposition (USP) and understanding how your brand is perceived by consumers.
It guides you in crafting a compelling brand image and messaging that resonates with your target audience. You can position your brand effectively and carve out a distinct identity.
The Synergy of Different Types of Market Research
Market research isn’t a one-size-fits-all practice. There are various types of market research, including qualitative, quantitative, primary and secondary research.
Combining these diverse approaches offers a more comprehensive understanding of the market. Qualitative research delves into the “why” behind consumer behaviour, while quantitative research quantifies trends and patterns.
Primary research provides first-hand data tailored to your objectives, while secondary research offers a broader perspective. The synergy of these methods paints a richer and more nuanced picture of the market.
In essence, the purpose of market research can be summarised as being a multifaceted tool that empowers businesses to navigate challenges, make informed decisions and seize opportunities. It’s the cornerstone of success in today’s dynamic and competitive business landscape.
Final Thoughts On The Purpose Of Market Research
Market research isn’t just about data. It’s a practical guide in the business journey. It helps you spot risks, chart strategies and connect with customers. For many businesses, it’s the secret sauce for product success, outsmarting competitors and expanding rapidly.
Market research has many types and many uses. You can use some or all depending on the nature of your business and challenges you face. The key takeaway though is that market research creates value for organisations looking to make smarter, more informed decisions.
FAQs Regarding The Purpose Of Market Research
How does market research aid in mitigating long-term business risks?
Market research plays a pivotal role in mitigating long-term business risks. It provides a comprehensive understanding of market conditions, regulatory changes and shifting consumer behaviour.
Businesses can make informed decisions and implement strategies that anticipate and address potential risks, ensuring their long-term stability and resilience.
How does market research aid in mitigating long-term business risks?
Market research plays a pivotal role in mitigating long-term business risks. It provides a comprehensive understanding of market conditions, regulatory changes and shifting consumer behaviour.
Businesses can make informed decisions and implement strategies that anticipate and address potential risks, ensuring their long-term stability and resilience.
Can market research be applied to international market expansion?
Certainly, market research is essential for international market expansion. It helps businesses understand the intricacies of foreign markets, including market entry barriers, cultural nuances and opportunities. Companies can tailor their expansion strategies, minimising risks and increasing the likelihood of success in new markets.
How does market research contribute to sustainable business growth?
Market research is a cornerstone of sustainable business growth. By continually assessing market conditions, consumer feedback and competitive landscapes, businesses can make data-driven decisions.
This approach not only drives immediate growth but also ensures long-term, stable expansion, as it allows companies to adapt to changing market dynamics and evolving customer preferences.
