What are the benefits of market research?
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Posted: Thu 1st Feb 2024
Tired of throwing darts in the dark when it comes to your business? You're not alone. Many small business owners juggle countless tasks, leaving little time for in-depth planning. But what if you found out there's a secret weapon that could significantly boost your success?
Market research is simply about understanding your customers and the world around your business. It's about gathering valuable insights that can help you make informed decisions, avoid costly mistakes and, ultimately, grow your business.
In this blog, we explore the key benefits of market research for small businesses like yours. You'll discover how this powerful tool can help you identify your ideal customers, understand your competition and launch new products and services with confidence.
What is market research?
Market research is the process of gathering insights about your customers, competitors and the overall market. It's like having a roadmap for your business, showing you where the opportunities are and how to avoid pitfalls.
Want to understand more about what market research is? Read our guide
How do I carry out market research?
Ideally, you should have customer data coming from different sources. You can collect information on your current and potential customers by doing interviews, surveys, desk research, social listening and customer trend reports.
But it means little if you don't analyse the data thoroughly. By properly researching your target market, you get one step ahead and have an advantage against your competitors. You can also use this information to guide your most important strategic business decisions.
And building a stronger understanding of your customers means you can:
improve existing offers
discover new ideas
gain valuable feedback
learn how to better communicate and present your brand
How market research benefits a small business
Benefit 1: Make better decisions
One of the biggest advantages of market research is that it takes the guesswork out of decision-making. Rather than relying on intuition, you can base your decisions on real data.
Example:
A small coffee shop in Bristol conducted a simple customer survey to find out which drinks were most popular. The results showed that their seasonal lattes were a hit, while certain tea blends were rarely ordered.
With this insight, the owner streamlined his menu, reduced waste and focused on promoting the business's top-performing products.
By using market research to guide your choices, you can make sure every decision lines up with what your customers actually want.
Benefit 2: Identify opportunities for growth
Market research isn't just about solving problems – it's also about spotting new opportunities. By understanding customer needs and market trends, you can identify areas for growth.
Example:
A small boutique in Manchester noticed growing demand for sustainable clothing. Through online surveys and social media polls, the founders discovered their customers were increasingly looking for eco-friendly options.
Acting on this insight, they introduced a line of sustainable fashion, which quickly became a best-seller.
By staying in tune with your customers and market trends, you can adapt your business to meet emerging demands and stay ahead of the competition.
Benefit 3: Avoid costly mistakes
Making decisions without proper research can be risky. Whether it's launching a new product or expanding into a new market, mistakes can be expensive.
Example:
A UK-based food delivery start-up planned to expand into a new city. Before moving forward, it conducted market research to assess demand.
The business discovered that the city already had a saturated market with strong competitors. By pivoting its strategy and targeting a less competitive area, it saved thousands in potential losses.
Market research acts as a safety net, helping you avoid decisions that could harm your business.
Benefit 4: Build stronger customer relationships
Market research isn't just about gathering data – it's about understanding your target customers on a deeper level. By learning what they value, what frustrates them and what keeps them coming back, you can build lasting relationships.
Once you have your research results, you should have enough ammunition to formulate the most effective way to communicate to your customers. Ideally, you should know what they like/don't like to hear, see and do. Then you can tailor what you say to them to make them take action.
Example:
A small bakery in Cardiff conducted customer interviews and discovered that many of its regulars wanted more gluten-free options.
By adding a dedicated gluten-free range and promoting it, the business not only attracted new customers but also strengthened its bond with existing ones who appreciated feeling heard.
When you listen to your customers and act on their feedback, you show that you value them – and that loyalty often translates into repeat business and word-of-mouth referrals.
Benefit 5: Make your marketing messages more effective
Marketing can be one of the trickiest aspects of running a small business. How do you know if your campaigns will resonate with your audience? Market research helps you fine-tune your messaging, choose the right channels and target the right people.
Example:
A local gym in Leeds wanted to increase its membership. By surveying its current members, it discovered that many people joined because of flexible class schedules.
Armed with this insight, it crafted an advertising campaign highlighting its flexible hours and saw a significant uptick in new sign-ups.
With market research, you can avoid wasting money on broad, ineffective marketing efforts. Instead, you'll focus your resources where they matter most, reaching the people who are most likely to become loyal customers.
Benefit 6: Measures your reputation
It's always good to know how you stack up against your competitors. Market research finds out just where you are and then, according to the results, lets you take action to change people's perceptions.
Benefit 7: Uncovers and identifies potential problems
You can get consumers' reactions to a new product or service when you're still developing it. This should enlighten any further development so it suits its intended market.
Benefit 8: Establishes your market positioning
It's important to know the position of your business at particular moments in time. Information from market research helps you benchmark and monitor your progress, which can be useful when making decisions and taking action.
VIDEO: Everything to know about market research
Marketer Anna Morrish looks at how businesses can understand their position online, including how and what they appear for in search results. She also discusses competitors and what you can learn from them:
Pros and cons of primary and secondary research
There are two main types of market research: primary and secondary. Both have their own benefits and drawbacks, but they can be just as important as each other if you want a comprehensive idea about how customers of the past, present and future behave.
Benefits of primary market research
Also known as "field research", this is research you (or someone you commission) carry out first-hand to gather data and information straight from your target audience.
The main types of primary research include surveys, interviews, focus groups and questionnaires.
Here are the main benefits:
Greater control: When you're the ones doing the research, the sky is the limit! You can decide how your data is collected and monitor sample sizes, helping you focus more specifically on the exact type of data you're looking for.
Accuracy: Primary market research ensures all the information is gathered by a trusted pair of hands, making errors and inaccuracies less likely.
Proprietary rights: This is important, should you want to keep your findings hidden from competitors. Primary market research belongs to the researcher and thus can deny others access.
Drawbacks of primary market research
Time-consuming: While the data you acquire is often invaluable, these methods take a lot of time and effort.
Expensive: A potential expense of making sure your primary research is conducted properly is outsourcing to an agency, if you feel you don't have the in-house skills to do the job.
Reliability and accuracy: This can be affected by small sample sizes, and also (often subconscious) leading/loaded questions.
Benefits of secondary market research
This is when you analyse information already available to you. The main types of secondary research include data collection via online archives, libraries, news articles, textbooks and educational institutions.
Here are the main benefits:
Affordability: Secondary research is a low-cost practice. You can do it at any time, in any location. And while it's a potentially time-consuming exercise to trawl through archives or textbooks, it's cheap.
A broad range and availability of information: Not only are secondary sources easy to find online or in libraries, they're also essentially never-ending. There is likely to be data readily available for most business-related topics under the sun, so the likelihood of finishing your research empty-handed is minute.
Credibility: This is where secondary sources can complement primary research methods. If your trusted and respected secondary sources back up the findings within your previously conducted surveys or focus groups, it'll add a layer of authority to your data which was perhaps originally absent.
Drawbacks of secondary market research
Readily available information: This means competitors may already have access to this information, rendering your findings less useful.
Out-of-date information: With trends and behaviours forever changing, basing your actions solely on old and possibly obsolete data can have the opposite impact to what was originally intended.
Lack of specifics: Unlike with primary data, the inability to focus specifically and forensically on key points of interest can mean findings, while useful, don’t have that ultra-tailored flavour to them.
Real-life small business success stories
To see the impact of market research, let's look at a few examples. These examples show how small, targeted research efforts can lead to significant results.
A food truck in London: This business used customer feedback to identify the most popular dishes. By focusing on these and introducing a loyalty programme, they increased repeat customers by 20%.
An independent bookshop in Edinburgh: By analysing sales data, the owner noticed a rising interest in local authors. They hosted events featuring Scottish writers, boosting foot traffic and sales.
A hair salon in Birmingham: Market research revealed that customers wanted more eco-friendly hair products. By introducing a sustainable product line, the salon attracted new customers and enhanced its brand image.
How to get started
Ready to try market research for your business? Read our guide, How to conduct market research, for all the steps you need to take to get up and running.
Summary
Market research offers a wealth of benefits for small businesses. It helps you make better decisions, identify opportunities for growth and avoid costly mistakes – all while staying attuned to your customers' needs.
Whether you're running a small retail business, a coffee shop or a tech start-up, understanding your market can give you the competitive edge you need to succeed. So why wait? Start with simple market research today and watch your business thrive.
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