Marketing research is a critical tool that businesses and organizations use to gather valuable information about their target market and industry. By conducting research, companies can gain insights into customer needs, preferences, and behavior, as well as market trends and the competitive landscape. In this article, we'll explore five reasons why marketing research is important for businesses and organizations.
5 reasons why marketing research is important
Is your company on the fence about investing in marketing research? If so, read on for five reasons why marketing research is important to the viability and longevity of your business.
1. Marketing research helps businesses understand their customers.
Knowing your customers is the first step in running a successful business. And while this may sound simple enough, it can be difficult to look inside the consumer psyche—one whose needs, preferences, and behaviors are ever-evolving.
Fortunately, marketing research can give you a peek behind the curtain, helping you understand what motivates current as well as potential customers. A marketing research survey, for example, can provide insight into pricing sensitivity among a segment of your target population. The data yielded may suggest that boomers are more likely to purchase a product based on price alone while millennials are more motivated by the values of the respective company. Based on this information, you can tailor your offerings to better meet these needs.
Let’s take a closer look at what else marketing research can tell you about your target audience.
a. Marketing research reveals demographic data.
Through conducting surveys, you can better understand characteristics of your buyers, like age, gender, race, and ethnicity. You can also collect socioeconomic information like education, income, and employment status. These variables can help you engage in audience segmentation, which essentially involves tweaking your brand messaging to appeal to various subgroups.
b. Marketing research illustrates purchasing behavior.
Marketing research tools like surveys, transaction tracking, and social media tracking can also shed light on when, why, how, and what consumers are buying. A better understanding of purchasing behavior can help your company develop brand messaging that strikes a chord with its target audience. If consumers tend to shop between the hours of 5 and 8 p.m., for instance, your company may send an email coupon at 4:45 p.m. to prime that behavior.
c. Marketing research helps companies appeal to potential customers.
It’s important to learn as much as possible about your current customers. However, it’s equally important to learn about people who are at the beginning of the customer journey. A deeper understanding of what motivates these individuals can help your business turn clicks into conversions.
2. Marketing research helps businesses manage risk.
Risk is an intrinsic part of the business world. However, by understanding market trends and customer behavior, businesses can anticipate changes in demand and adjust their strategies accordingly. Market research can also help businesses identify potential obstacles or challenges and develop contingency plans to mitigate those risks.
For example, let’s say a company hopes to introduce a new product to the market. Before investing significant time and financial resources into product development, market researchers may conduct a series of surveys to determine if consumers are even interested in the respective product. This mitigates the risk of introducing a good for which there is no demand.
Other examples in which marketing research can be used as a tool for mitigating risk include:
- Conducting ad testing to determine if brand messaging resonates with consumers
- Hosting product development focus groups to receive feedback before revealing a new product to the larger market
- Organizing customer satisfaction surveys at various points of the customer journey to determine any issues affecting sales
- Administering price testing to determine the ideal price for a new product
3. Marketing research helps businesses stay competitive.
Marketing research gives companies a competitive edge in many ways, one being a greater awareness of the industry itself. By understanding what other businesses are doing, your company can develop strategies to differentiate itself and stay ahead of the curve. For example, if research indicates that laundry detergent manufacturers are increasing prices, a company can either decide to a) keep up with the times and increase costs, b) keep costs the same, or c) decrease pricing to appeal to a specific target market.
Marketing research also helps companies determine areas where they may be falling behind. If several healthcare conglomerates are expanding telehealth services, it would be wise for a hospital to also make moves to provide digital appointments. Otherwise, patients may take their business elsewhere.
How else can marketing research help your business stay competitive?
a. Marketing research aids in trendspotting.
It’s important for companies to keep up with industry patterns. However, it’s also important for companies to predict patterns before they even happen. The fashion industry provides a good example of this. Trend forecasters analyze decades—centuries even—of socio-cultural data in an attempt to be the first company to put out a ‘hot’ new product that appeals to modern sensibilities.
b. Marketing research allows businesses to identify gaps in the industry.
Similarly, marketing research can help companies realize a demand that has yet to be satisfied. Through marketing research surveys, for instance, an organic snack food company may see that consumers are craving more savory gluten-free snack options. Using this data, the company can one-up competitors by introducing a new product.
4. Marketing research gives businesses the tools to measure success.
Net profit is an important indicator of a company’s success. However, if profits are plummeting, it can be difficult to know if this is because of your company’s performance or industry-wide factors like increased materials costs and decreased demand. Because of this, businesses must rely on a more holistic approach to evaluating success.
Fortunately, marketing research can be a helpful tool if you want to measure business health using more than dollar signs. Here’s how marketing research can help you gauge company success.
a. Marketing research provides insight into customer satisfaction.
Sure, your company could be making money. But if your customers aren’t satisfied, your financial gains are likely to be short-lived. To determine if customers are happy with your products or services, you can conduct a customer feedback survey questionnaire.
Alternatively, you may choose to conduct a longitudinal panel survey. Unlike an ad hoc survey, which takes a snapshot of consumer opinions and behaviors, longitudinal studies (like monthly or quarterly trackers) monitor how consumer attitudes change over time. This tool is especially helpful if you want to see how customer satisfaction changes after the introduction of new protocols or training methods.
b. Marketing research helps businesses assess employee satisfaction.
A financially profitable company isn’t necessarily successful if its employees aren’t satisfied. To assess this metric of success, you can conduct surveys, in-person interviews, or focus groups. The results from these marketing research assessments may also shed light on the efficiency of your staff.
c. Marketing research provides insight into the performance of competitors.
It can be constructive to compare your company’s performance to that of competitors. This can help you understand if dips or rises in profit are unique to your company or simply an industry trend.
5. Marketing research helps businesses make informed decisions.
For decades, companies have made key business decisions based on gut feelings alone. But the new age of marketing revolves around data-driven decision-making: a process in which business decisions are informed by metrics and analytics. This contemporary model helps companies make solid choices that reduce risk while improving performance.
Since marketing research lends itself to data generation, it’s an integral part of this equation. For example, data yielded from a brand awareness survey may illustrate that men aged 50 to 65 in a specific geographic area are the least familiar with the brand. Using this information, the company can invest marketing dollars in a way that will yield true results.
Other examples of using marketing research to support data-driven decision-making include:
- During a focus group, a company discovers that 60% of women are dissatisfied with the playback speed options of an audiobook app. In response, software developers dedicate time and financial resources to adjusting that feature.
- Survey data reveals that as the price of microwaves increases, so does customers’ perceived value of the product. With this in mind, a company chooses to increase prices by 30%.
- A popular food chain conducts a series of phone interviews to assess customer service at various locations. Afterward, the company mandates that employees at the restaurants with the lowest reviews take customer service training courses.
All this to say, marketing research has many different applications. By gathering data about customer preferences, market trends, and industry dynamics, businesses can make decisions based on facts rather than assumptions or intuition. This can help businesses avoid costly mistakes and increase their chances of success.
Conduct high-quality marketing research with Kantar
Marketing research is a critical tool that businesses and organizations can use to gather valuable information about their target market and industry. By conducting research, businesses can gain insights into customer needs and behavior, stay competitive, make informed decisions, manage risk, and measure success.
And during VUCA times (volatile, uncertain, complex and ambiguous), keeping a consistent pulse on consumer sentiment and behavior is essential to driving the right decisions for business growth.
However, in today's rapidly changing business landscape, marketing research can feel complicated and overwhelming. That’s where Kantar comes in. As an industry leader, we provide tips and tools to help you navigate each step of the marketing research process, from survey design to data visualization.
Want to get started? Speak to our award-winning team to learn how we can help you conduct marketing research.