The market is like the house in gambling. You can’t beat it, but you can only learn from it. Figure out its tells and cues, and then act accordingly.
Market research is essential to learning how the market works, what it values, and most importantly, how it can work for you. With this knowledge in hand, you can learn how to dominate your niche.
1. Internal Analysis
The first thing you need to understand is your own business. If you can’t, how can you understand your competition or customers? Having a third-party market research company perform market research can help improve the efficiency of your business model, workflow, direction, goals and objectives, and more.
The more you can learn about your own business, the better. Really dig into the numbers and take an objective look. You will need to in order to see what the market is telling you about itself.
Every company, new or old, can benefit from having an unbiased, objective look into the condition of the market, its industry, and how they fit into it all.
2. Competitive Analysis
Your competition is changing all the time. The only difference between performing market research on your own business and on those of your competitors is that you cannot know what your competition is planning.
Paying a third-party to look at what they are doing right and wrong is invaluable. Understanding your competition is key to understanding their weaknesses, which you will need to learn from in order to bypass them in the marketplace.
The data you collect on your competition will tell you about their pricing, their guarantees, and what makes their business special. With this information, you will better be able to develop a value proposition and to position yourself as the leader of the pack.
3. Market Validation
Many businesses rely on direct interactions with their customers to learn how they feel. However, there is so much more information you can research to get you a bigger picture. For example, you can research demographics, proximity, regions, and more.
If the majority of your customers come from a specific area of your city, for instance, you can take advantage of this information by running a targeted advertising campaign in that area to validate an idea or increase your customer base.
This can save you a lot of time, especially if you are close to sourcing products in a specific niche. A quick Facebook Ads or Google AdWords campaign can help you test whether a product will perform well and whether you actually know your target audience.
A market research company can help you with all of this because they have experience studying specific industries and target audiences.
4. Understanding the Market
Businesses live or die by the market. If the market doesn’t want what you are selling, you most likely will not be able to run a profitable business.
Sure, some businesses succeed, like Starbucks (they sell more expensive coffee in areas with less-expensive coffee shops), but these businesses are the exception to the rule. Many coffee shops have failed over the years.
Understanding the market is essential to learning whether an advertising campaign will work, whether a successful product launch is probable, and whether you need to alter the direction of your business to better serve the needs of your customer base.
5. Understanding External Forces
Companies rarely stay static. They are always changing, especially if they contain an online component.
The internet has grown so much in the previous two decades that drastic changes can affect a company every week. It happens more often than you might think.
Think about it like this:
- How many graphic designers are being forced to compete with Fiverr?
- How many web developers are being forced to compete with WordPress or Wix?
- How many writers are being forced to compete with Upwork?
Industries change all the time as a response to external stimuli that affect their bottom line, and market research can help you understand these trends. You can use this information to better prepare and protect your company against the inevitable impact such growth will have on your business.
It’s All in the Execution
You probably have friends that think they have a million-dollar idea. When you try to talk to them, they are reluctant to tell you because they’re afraid you will steal it.
Here’s the thing, ideas aren’t worth anything if you can’t execute.
Proper market research will help you take your idea from a concept and turn it into a reality. Data is everything in the world of business and understanding how your industry functions and where your product will fall into it is essential.
Some of the best products have failed over the years because they were marketed poorly, while crazy products, like the Pet Rock, have succeeded because of brilliant marketing.
Understanding the various roles of market research, and the different subsections of your business they affect, is vital to using such research correctly.
Remember, ideas are a dime a dozen. You need to learn how to execute if you want to succeed.
A business without proper market research, or the understanding to direct a market research company towards a specific goal or query, will not utilize it effectively. The first step to utilizing this type of research effectively is knowing where to direct it and how to act upon it. Only then are you in a position to dominate your niche.
Ellen Baron is the CEO and founder of Ruby Cha Cha. She helps B2B businesses with market research to drive sales, build branding and keep their customers happy. She is also a fan of reality TV, Alsatian wine, and dogs.