Learn about the significance of market research and how it can benefit your business.
Market research is an essential component of any successful business strategy. It involves collecting and analysing data to gain insights into customer behaviour, market trends, and competitors. By understanding these factors, companies can make informed decisions that lead to better products, market sizing, competitive advantage, increased sales, and higher profits.
What is market research? Market research is the process of collecting and analysing data on customer behaviours, preferences, and trends. It helps businesses identify market opportunities such as demand for specific products or services, important features, target market, ideal locations, and attractive price points. Identifying market opportunities is critical for success, allowing businesses to differentiate themselves from competitors and meet customer needs.
Market research data helps businesses identify opportunities and gaps in the market that can be filled with new products or services. For example, identifying highly affluent mothers (of younger age groups) with children to push premium diapers. Knowing the market size of highly affluent mothers in a certain point of interest and knowing the catchment heatmap of where they are mostly seen, will support on-the-ground marketing activities and set realistic sales goals.
Investing in market research is crucial for businesses to gain valuable insights that enable informed decision-making and long-term success. It allows businesses to create products and services that meet customer needs, differentiate themselves from competitors, and capitalise on emerging trends.
The importance of market research Done properly, effective market research offers many benefits to companies such as:
1. Understand your customers Conducting market research can help your business to understand customers better
Market research can help you identify your customers' pain points and challenges. For instance, if you track visitors’ footfall surrounding train stations, and understand footfall density, one may infer that last-mile access might be an issue for a particular station as most commuters who reside near the train stations are not seen taking the train. One could further analyse the demographic profiles of the commuters – perhaps they are skewed higher affluent or they are seen working in areas not covered by the train routes to determine the next best action.
One of our clients, a Filipino rail transit provider, suffered a significant decline in passengers taking rail transit during the early days of the COVID-19 pandemic. With the information extracted from ADA’s IFA Targeted Survey , our client was able to have a better comprehension of the reasons for non-commuters taking alternate modes of transportation, the pain points of current commuters as well as driving factors that influence their choice of transportation mode. These insights prove to be a valuable resource for them to prioritise the areas that warrant improvements to their service.
2. Evaluate your competition As market research reveals information about your competitors’ strengths, weaknesses, unique selling propositions (USPs), and marketing strategies, you can identify opportunities to differentiate your products or services and gain a competitive advantage.
For example, based on your competitors' USPs, you can identify areas where your products or services can differentiate themselves. You can also analyse your competitors' marketing channels and messaging to develop more effective marketing campaigns that set your business apart from theirs.
Additionally, you can identify your competitors' weaknesses and develop products or services that address these shortcomings and appeal to dissatisfied customers. In short, the information obtained from market research is beneficial in developing a successful business strategy that makes your brand stand out from a sea of offerings that are similar to one another.
At ADA, we worked with a taxi service provider in Indonesia to understand the decline in passengers during the pandemic. Even during recovery phases, the number of passengers is still not reaching the number prior to the pandemic. We geo-fenced central business districts and identify taxi stands. By narrowing down to highly affluent business travellers, our dashboard tracks the footfall density of passengers in different areas at different time intervals of the day. The dashboard was also enhanced to showcase the home and work locations of target markets. Armed with the insights, the taxi service provider managed to optimise their route planning and strategically position or reposition their taxi stands to service areas identified as underserved hot locations to capture market share.
3. Reduce business risks Information acquired from market research such as recent market trends, consumer behaviours, and preferences helps you make informed decisions with minimal risks.
For instance, before launching a new product or service, you can conduct market research to understand the sentiment and demand for it, consumer preferences, as well as the competitive landscape. This information can help you determine whether there is a viable market for your offering and how to position it for success. Furthermore, you can adjust your plans accordingly, avoiding spending costs on failed products or strategies.
In ADA, we worked with a Tobacco company to identify the most ideal locations for market penetration strategy. We identified and mapped target audiences to visualise their footfall distribution, mapped favourable points of interest in relation to their customers and competitors’ customers, and identified hotspots with densely populated areas with target customers to open new outlets. This reduces business risk in terms of opening stores at less favourable locations.
If you thought multi-national brands have never had a misstep in their marketing strategies, then you are mistaken. Coca-Cola may be a major player in the soft drink industry but they failed to carry out market research before developing new products. When sales declined in the late 1970s and early 1980s, Coca-Cola surmised taste was the culprit. As a solution, they launched New Coke, which tastes sweeter than the original Coke and Pepsi. Market researchers failed to consider the emotional effect Coke has on its consumers, perform a proper survey on the original Coke and New Coke and withdrew the original Coke from store shelves to sell New Coke. Instead of getting more sales, it turned out to be a failed product. Consumers were repulsed by a differently designed New Coke and pined for the original Coke.
4. Improve customer satisfaction By gathering feedback from customers and understanding their needs and preferences, you can make improvements to your products or services that better meet their expectations. This can help increase customer satisfaction and loyalty, and reduce churn rates.
Besides, you can also identify areas where your products or services may be falling short of customer expectations. For example, you may discover that customers are dissatisfied with your customer service or the quality of your products. This is where you can take steps to address these issues, improving customer satisfaction and ultimately, the success of your business.
High customer satisfaction also equates to positive word-of-mouth recommendations. Satisfied customers are more likely to recommend your business to others, which can help attract new customers and grow your customer base. With glowing reviews and testimonials, you are on the right track towards establishing a positive reputation in your industry, which can further boost your following and ultimately, generate revenue and profit.
Repeat customers or loyal customers can also serve as an indication of satisfied customers. At ADA, we track IFAs (identifiers for advertisers) to see if the same visitors appear at the same geofenced locations or stores. We have been using the tracker to measure customer loyalty and clients have used it as part of their key performance indicators.
5. Measure the effectiveness of your marketing campaigns Market research is one of the avenues for businesses to assess the effectiveness of their marketing campaigns. Metrics like customer engagement, brand awareness, and customer satisfaction, allow businesses to identify which campaigns are resonating best with their target audience and generating desired results. This enables them to allocate their marketing budget more effectively and increase the ROI of their campaigns.
By measuring customer engagement metrics such as click-through rates, conversion rates, and social media interactions, businesses can determine which digital marketing campaigns are effective. Additionally, businesses can use brand recognition, recall, and loyalty metrics to gauge brand awareness and perception, painting a picture that can be a guide to enhancing brand perception and fostering customer loyalty.
Measuring customer satisfaction is integral for businesses to identify areas for improvement in their products and services. By leveraging customer satisfaction surveys, footfall trackers, and analysing feedback, businesses can make necessary changes to increase customer satisfaction and retention. All in all, market research gives you the needed information to measure the effectiveness of your marketing campaigns and make informed decisions, so you can achieve the marketing objectives that are set in place.
Different types of market research There are many methods that companies can apply to conduct market research, including:
1. Primary Research Primary research is first-hand data collection. Some methods of primary market research companies can use include:
Website Metrics. Implement website analytics that can provide data about traffic and engagement on your business website to understand how users interact with your website. Heatmap. Use market research tools that can record user activity on your website to understand in more detail how users interact with the elements on your website. Customer Surveys. Conduct surveys on customers directly to find data related to questions that your company wants to find answers to. Use platforms such as SMS, email or whatsapp to distribute the questionnaire. 2. Secondary Research Secondary research is research conducted using data from other parties that is open to everyone. Using second-hand data can help companies to reduce costs because they are generally available for free and can be accessed as quickly as possible.
Several methods of secondary market research that companies can use include:
Government Report. Government reports related to economic or industrial development generally contain information such as trade statistics, finance, and specific sectors. University Research. University research can be a high-quality source for broad information, such as general market conditions or predictions regarding specific sectors. Online Publication. Online publications related to a sector can be a valuable resource for understanding trends in that sector. 3. Qualitative Research Qualitative research is the best way to understand how people interact with products or services, such as perceptions and preferences.
Because of its nature, this research takes more time, starting from the preparation stage to the analysis. However, your business can take advantage of market research services to speed up these processes.
Some of the methods of qualitative research that companies can apply include:
Focus groups; Surveys; Creating online forums; And Case study. 4. Quantitative Research Quantitative research is about using numbers to answer questions. You can easily analyse data from this research to find out trends, patterns, and insights.
To collect quantitative data, your business has several methods such as:
Interviews; Polls; and Survey. Achieve long-term success with market research Market research is an essential component of any successful business strategy. Not only does it endow you with information on your customers and competition, but you can also exploit the data obtained to identify new market opportunities, reduce business risks, improve customer satisfaction, and evaluate the effectiveness of your marketing campaigns. Invest in market research today so you can gain a foothold in the industry you are in.
