When starting your business, it’s very easy to get tunnel vision on what you’re doing. However, it’s vitally important that you’re well aware of how your competitors affect your market. This can, for example, help spot a gap that isn’t being exploited by current market forces. However, an often overlooked, but necessarily key, aspect of competitor analysis is to see what competitors are doing well. This can ensure that you’re well positioned to enter the market.
A successful business is reflective and constantly evolving. The most effective way of doing this is by establishing a feedback loop. This can take the form of personal interaction or offering small incentives for filling out online or paper surveys. This means you can stay abreast of what customers think work and don’t work. It’s important to analyse for trends so as not to overcomplicate your business approach by trying to please too many differing wants.
An important component of any business plan is the pricing strategy. Market research can help you determine which pricing strategy is best for your product and business. For example, there may be a gap in the market for a prestige pricing model or you may find that a loss leader would help break into a new market. For example, Microsoft has spent over $2bn on its Xbox One and has lost the company in excess of $400m since it launched last November. However, Microsoft is trying to position itself towards a monopoly, which would yield impressive future sales whilst carving out a new market for home media centres.
This is particularly key in a market that has a divorce of customer and consumer. The best case study for this is products aimed at children. One way of evaluating consumer needs is by setting up focus groups. From these, you can observe how consumers use your product and note ways in which you your product’s functionality can be improved. This could be as simple as updating a set of ambiguous instruction.
When siting your business consider the following:
Market research can be a great way of determining a direction for a new product or service. By combining the information you’ve gained from the above, you can create something that’s differentiated from your competitors, fulfils customer needs, is market-tested and priced appropriately.
Overall, market research is a vital tool for ensuring your business’s success. Without it, you run the risk of alienating your customer base, either through your product, service or price, or losing out to your competitors.