Why conduct market research? What are the reasons for SMEs to undertake this investment? Our market research agency receives several hundred requests yearly from small and medium-sized companies. Over the years, we’ve identified 6 recurring reasons for the need to analyze your market.
Contact IntoTheMinds to conduct your market research
1. Stage of company development
The practice of market research is closely correlated with company size. The larger the company, the more common market research becomes. The explanation is simple and is put forward in this research. The smaller the company, the closer it is to the field. In other words, the smaller the company, the more frequent and intense the manager’s direct contact with his market and customers.
As this article reminds us, the best ideas come from customers. In small companies, therefore, a closeness to the field can give the illusion of dispensing with more formal market research. Some scientists agree, claiming that conventional market analysis methods are inferior to co-creation exercises.
However, it’s important to remember that a few customers are only sometimes representative of an entire customer base. On the other hand, co-creation has also shown its limits.
2. New marketing manager
The appointment of a new marketing manager also triggers marketing research. The new appointee needs to understand their new market environment. They also often bring new skills to the table, which they intend to demonstrate. In fact, according to this research, 28 out of 33 institutions included learning market research techniques in their marketing courses.
The need for market research is practically addressed in 100% of cases where the marketing manager position has just been created. The need for this new position arises as the company grows and is keen to expand. This naturally leads to developing strategies based on reliable market data.
3. Financial resources
A search for new money can accompany a company’s need for growth. Whether through fund-raising or a contribution from another source, this influx of new financial resources predicts market research.
In 90% of cases, fund-raising enables the company to expand geographically. This expansion into new territories requires upstream research into the most promising markets. In addition to desk research, using a survey institute is quite common to verify demand on a large sample of marketing targets. It’s important to prioritize spending and concentrate first on the most promising countries.
4. New development
Developing a new product or service involves a certain risk of not finding its market. In some sectors, such as the food industry, 80% of new products are withdrawn from the market within 12 months of launch. One of the reasons for this is the need for more product-market fit. In other words, these products don’t meet the needs of their target customers.
Market research should be conducted as far upstream as possible to avoid the risk of spending money at a loss. While this may seem logical, some companies still need to conduct market research after the product/service has been finalized. At that point, all you can do is hope the results are good because it’s already too late.
5. Urgency of the situation
Certain urgent situations can also justify the need for market research. Here are just a few of the situations we have encountered in recent years:
- Competitive attack: a rival company has launched an offer, driving down your market share. We urgently need to understand the characteristics of this offer that are turning customers and prospects away from yours. Different methodological approaches are possible, depending on the type of customer (B2B or B2C).
- Intellectual property litigation: we have assisted several brands suffering from unfair competition from counterfeiters. In these extremely specific cases, the lawyers ask us to research to establish the confusion between the brands and, for example, the similarity of the logos. Such research takes the form of online surveys (CAWI), in which we conduct experiments on many respondents to establish the reality of the dispute.
- Company buyouts: In a company buyout, the buyer often asks an external advice firm to quantify the target company’s market size and growth potential. In this case, the analysis will take the form of awareness and competition research and may be accompanied by a more global analysis of market trends.
6. External obligation
Finally, the need for market research may arise from external obligations. In much the same way as an ISO9001-certified company is obliged to conduct a satisfaction survey, market research is necessary:
- When you want to launch a company and intend to borrow money, banks require a market analysis and business plan to assess the risks associated with the loan.
- If you want to set up as a franchisee, the franchisor will ask you to conduct market research to prove that your catchment area has the characteristics needed to develop the business.
Posted in Entrepreneurship.
