Why conduct market research? An expert answers your questions

The role of market research has evolved over the decades, and I believe it has gained importance. Economic turbulence, the speed of markets, and rapid changes in customer behavior are all arguments in favor of conducting a market study. Twenty years ago, market research was an essential step before launching a business. Today, my view is that the market must be studied continuously in order to anticipate risks and take new directions. The world of entrepreneurship has never been so complex.

In this article, I analyze the situation as objectively as possible. And you will see that although I run a market research firm, I try to introduce nuance into my statements.

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Reducing risks and securing your investment

The first reason for conducting market research concerns risk management. The statistics speak for themselves: 50% to 60% of companies cease operations within the first five years. Among the main causes of these failures, the mismatch between supply and demand ranks first. A colleague from the university, Nathalie Crutzen, demonstrated that 28% of failures were due to a mismatch between the market and the product. Another study conducted on 101 startups showed that 42% of them shut down due to lack of market demand for their product. Failure at the launch stage is therefore common.

This reality affects companies of all sizes, from micro-enterprises to large corporations. Market research acts as a safety net, making it possible to identify these pitfalls before they become fatal.

I also believe it is important to remember that failure does not only concern the company as a whole. Failure can also concern a new product. On this subject, as an expert in the food sector, I like to point out that 80% of food products are withdrawn from shelves within 12 months of their launch. In times of economic uncertainty, companies tend to reduce innovation, which is ultimately a very poor strategy. Many academic studies have examined this issue. To put things into perspective, it is also useful to recall the limitations of market research. In most cases, the techniques are effective and make it possible to understand purchasing barriers and drivers. However, in the case of highly innovative (disruptive) products, market research appears to be less effective.

Finally, I would like to emphasize that not all companies are equal when it comes to failure. Small and medium-sized enterprises are more exposed, which, in my opinion, reinforces the usefulness of market research. Unlike large companies that have significant resources to adjust their course, small businesses often only have one chance to succeed with a launch. Prior market analysis allows them to optimize their limited resources and avoid risky investments.

85% of funding applications are rejected because they present significant shortcomings in market analysis.

A marketing strategy grounded in reality

Validating demand and sizing supply

Beyond risk reduction, market research makes it possible to validate the existence of real demand for your product or service. This validation does not only confirm that potential customers exist, it also allows you to quantify and segment this demand.

If you make a mistake in evaluating supply and demand, your financial plan and business plan will not hold up. In this regard, I find that the most telling example is that of local retail businesses. Demand depends on the catchment area, and supply depends on the competitive pressure within that area. If you define the area incorrectly, all your assumptions will be wrong. To learn more, I refer you to:

• this page where I explain techniques to conduct a location study
• this example of a market study for a gym in which I discuss the definition of the catchment area

The value of a market study is also to confront you with the reality of a situation so that you can no longer look away.

Understand your competitive environment

Competitive analysis is another key component of a market study. If you tell me you have no competitors, you are lying to yourself. This refusal to see the situation objectively is the subject of the presentation below, which I invite you to browse, even briefly. I believe that one of the main benefits of a market study is precisely to confront you with reality so that you can no longer look away.

This approach is not only about identifying who your competitors are, but also about understanding their strengths, weaknesses, and the opportunities they leave open in the market. I have always believed (and successfully applied) that you should interview your competitors’ customers to understand their sources of dissatisfaction. This can be done through techniques such as mystery shopping, but also by using a survey-based approach.

A study conducted by McKinsey & Company shows that companies that regularly analyze their competitive environment increase their chances of growth by 30%. This analysis allows you to:

• Identify direct and indirect players operating in your market. Direct competitors offer products or services similar to yours, while indirect competitors meet the same customer need through different means.
• Analyze their pricing, communication, and distribution strategies. This understanding helps you position your offer in a differentiated way and avoid mistakes they may have made.
• Detect underserved or neglected market segments. These niches often represent the best opportunities for a new business, especially for smaller structures that can be more agile than established players.

Optimize your commercial strategy

Market research provides the essential information needed to build an effective commercial strategy (both in inbound and outbound marketing). It helps you understand where your customers are, how they gather information, what their decision criteria are, and what barriers to purchase they face.

This in-depth understanding of your target audience helps you:

• Choose the most relevant communication channels. Instead of spreading your marketing budget across all platforms, you can focus your efforts on those that actually reach your customers. Despite the rise of generative AI, I remain convinced that inbound marketing still has a strong future and that strong branding is essential.
• Adapt your sales message to the specific expectations of each segment. The arguments that convince a company are not the same as those that appeal to an individual consumer.
• Set prices aligned with the perceived value for your customers. Market research reveals the acceptable psychological price for your target audience, helping you avoid pricing mistakes. I refer you here to two in-depth articles I wrote on pricing research methods, and in particular on the Van Westendorp method.

Facilitating access to funding

Market research plays a decisive role in securing funding. Without a market study, you will not obtain any loan from a financial institution. Whether you approach a bank, private investors, or public organizations, all will require a rigorous demonstration of your project’s viability. Here are 2 telling statistics:

• 85% of rejected funding applications have significant shortcomings in their market analysis. Funders aim to minimize their risks and need tangible proof that your project meets a real market need.
• More than 90% of applications for European funding contain no market data and are based on unrealistic assumptions. I obtained this striking statistic from a colleague who evaluates projects for the European Commission.

Another broader aspect is essential to understand: money has never been so expensive, and rising inflation driven by geopolitical tensions will not improve the situation. A well-conducted market study reassures stakeholders and builds credibility by providing:

• Quantitative data on market size and growth potential. These elements allow funders to assess the potential return on investment.
• A detailed analysis of the target customer base, including consumption habits, purchasing power, and buying motivations. This deep understanding reassures stakeholders about your ability to generate sales.
• A clear competitive positioning that demonstrates your differentiating advantage. Investors must understand why customers will choose your offer over competitors.

Anticipate changes and adapt your offering

The market is constantly evolving under the influence of technological, regulatory, societal, and economic factors. Market research helps identify these trends and anticipate their impact on your business.

This ability to anticipate is particularly valuable in uncertain economic contexts. Companies that monitor their environment can adapt their offerings ahead of competitors and seize emerging opportunities.

For example, the 2020 health crisis profoundly changed consumption habits (see our 2026 forecasts). Companies that identified early signals of digitalization were able to quickly adapt their business models, while others were heavily impacted.

Frequently asked questions about market research

How much does a market study cost?

The cost of a market study varies significantly depending on its complexity and the methods used. For a study conducted internally by the entrepreneur, the budget may be limited to a few hundred euros (online survey tools, travel costs). A study conducted by a specialized firm generally costs between €5,000 and €25,000 depending on the scope of the project. This represents a worthwhile investment compared to the financial risks of a failed launch.

How long does a market study take?

The duration depends on the chosen method and data availability. A desk study can be completed in a few weeks, while field research typically requires 4 to 12 weeks. Time is needed for questionnaire design, data collection, analysis, and final reporting.

Can you skip market research for an innovative product?

Even for a revolutionary product, there is always a market to analyze. Innovation does not create a market ex nihilo; it addresses an existing need in a new way. Market research helps identify this need and assess the acceptability of your innovative solution.

How do you know if your market study is reliable?

Reliability depends on several criteria: the representativeness of the sample, the neutrality of the questions, the diversity of information sources, and the consistency of the results. A good study combines quantitative and qualitative methods and compares primary data (collected directly) with secondary data (existing studies, official statistics). Transparency in methodology is also a key indicator of quality.