Updated: Mar 2, 2020
Having a Clear Objective When Conducting Market Research Will Help You Save Tons of Time!
Customers today hold all the power of making a buying decision. With the development of internet and technology customers, today are well aware of the market scenario and they often conduct online research before making a purchase. Thus it isn't that easy to influence modern-day buyers. As a marketer, you have to understand exactly where your buyers are conducting the research and the factors that can or are influencing their purchasing decision. For instance, consider the following statistics:
90% of mobile users turn to search engine first to address their needs
80% of Instagram users follow a business account
85% of Generation Z uses social media to learn about new products.
54% of online buyers purchase the items in their abandoned shopping cart after seeing a discount on those prices.
Whether you are a newbie with a recent startup or an old experienced veteran it is highly significant that you conduct market research before starting your business venture.
Market research is the process of determining the viability of your product or service by analyzing the buyer’s persona, target customers and the market position relative to your competitors to ascertain the success of your product among these people. It is a critical tool to help companies understand what their customers want, develop products that their customers would use and maintain a competitive advantage over other companies in their industry. Netflix and Apple did their market research prior to any other competitors and utilized all the open gaps in the movie and mobile phone industry. And probably you would still remember giants like Nokia or Blockbuster LLC who failed in their market predictions are nonexistent today. Thus in today's world, you need to anticipate and predict the change in order to stay in business. And a thoroughly conducted market research allows you to understand your customers and market and adapt accordingly.
Without any further delay, now we would get to the core objectives of effective market research!
#1 Market Positioning
Market positioning refers to the place that a brand occupies in the mind of the customers and how it is distinguished from the products of the competitors.
For instance, Colgate is positioned as protective while the products of Patanjali are trusted to be fully organic. Coca-Cola brings happiness and Axe deodorants have a sexual appeal. This is all about market positioning and defining the identity of your brand. Another relevant example is that of Telsa and Prius. Tesla decided to break into the electric vehicle (EV) marketplace with a luxury sports model. At this time, the electric vehicle market valued economy over form and function. Tesla decided not to compete with the Chevy Volt or Toyota hybrids and instead go after the high-end market.
Positioning strategies can be conceived from a variety of ways such as attributes, price, quality, functionality and the type of customers involved. Each approach provides a different way to influence the customer but the core objective of all of market positioning is to achieve the following goals:
Understanding the role of your product/services in the current market, and the impact that it brings.
Understanding how customer perceive your product/services.
Understanding how your competitors position differently to tackle different target audience.
In the preceding section, we would discuss the five common positioning approaches that you could use in your research.
Product Attribute Positioning - This idea focuses on the attributes or characteristics of the product which serve as benefits to the customers. Colgate uses benefit positioning strategy through this message that "brush with Colgate to prevent cavities and gingivitis.” This attribute could be the benefits that your product/service could offer, or the perceived value of your product in the market.
Product Price Positioning - This strategy associates your product with the idea of the competitive price to engage customers. By understanding the price point of similar product offer by different companies and studying the price position of each products you will be able to recognize the different market segments that your competitors are focusing, and discover what each customer segments are paying for the products.
By understanding how your competitors price their product, and the different kinds of customers that the price attracts, you will have a clear picture of how your product should be position through the pricing aspect.
Product Quality Positioning - The quality of the product could include a variety of factors. They could be the texture, the materials, the graphics, the appearances and many more. Utilizing quality positioning you can distinguish your target audience and the suitable price point for your product. Think about the difference between a snow jacket from H&M and a snow jacket from Canada Goose, the quality of each jacket will influence the price for each product, and the price of the product will determine the type of buyers.
Product Functionality Positioning - There are numerous products in the market with multiple applications. This category positions your product based on its uses or applications. A brand like Horlicks which was mainly developed for medical purposes positioned itself in the minds of retail customers as a health drink thereby expanding its consumer base from medical to retail. The Asus gaming laptop, as depicted in the name, is designed specifically for dedicated gamer who are looking for higher performances.
Geographical or Cultural Positioning - This method is very significant especially for brands that aim to expand and grow internationally. The idea is to align your product with the geographical and cultural identity of your customers. Air India uses maharaja as its logo to high light the Indian tradition. Many businesses have their logos or names created base on their native language or culture to appeal to this specific group of customers.
Why Should You Understand Your Market Positioning?
Market positioning is a critical part of marketing research. Think about it this way, marketing research should be a converging process in which infinite of information are being categorized, selected and filtered down into pieces of critical data that will be useful for your business.
And what you are doing during market positioning is segmenting your market base on a variety of attributes. Could it be the price point being your competitive edge? Or is it the product functionality that will be the main specialty for your business? And, maybe it can be a combination of different attributes. But most importantly, the positioning can help you set a suitable and realistic boundary to your market, and helps clarify the customer segments and single out critical competitions so you could identified them more easily during your research.
#2 Viability of the Business Idea
It must be in your knowledge that most of the business ideas fail within the first year of their launch. The scarcity of funds and the inability to execute the idea are often the major reasons behind the failure. This can be prevented if a proper market research can be done to determine the viability of the business.
Google Glass is just one example of a seemingly good idea that was executed but no one wanted or needed it. Not only was it marketed badly, but it also looked unattractive, and had some safety and health concerns. It's ridiculously high price tag ($1500) didn’t make the situation any better especially when it failed to offer a clear benefit for the user. The product may have been invented for Google's unique purposes, but in terms of the values that the product could provide to the consumers were a failure.
Now lets look at a list of criteria that you could use to validate the feasibility of your business idea.
Technological Viability - This section particularly addresses the technological viability for your product. Is the technology possible to acquire? Is the product possible to create? How long would it take to complete the product, and would the timeline be reasonable? There are a lot of questions regarding the technical aspect of your product and services.
Financial Viability - As the name suggests this analyzes the funds required for the execution of your business idea. This is where you determine the fixed and variable costs of your business and the initial investment that you would use for business acquisition, inventory, working capital, and many other expenses. You need to determine if you have the capability to fund and sustain your own business, before going head straight into business.
Legal Viability - Consider for instance that you plan to open a liquor store in Kansas of Mississippi. The fact that both are 'dry states' and the state laws allow localities to prohibit the sale of liquor. Thus you must consider the legal aspects of your business before starting your venture.
Social and Cultural Viability - Again consider the example of liquor only this time you intend to open your international Liquor store at some Muslim State. This probably would be the last place on the globe that you would want to go to. Since the social and cultural norms of Muslims strictly prohibit Liquor consumption hence it is important to consider the social and cultural viability of your business.
Market Viability - Imagine starting a luxury real estate business at the start of the housing crisis. Gauge the state of the economy, and think of how it relates to your upstart. Thus accessing the market situation is highly important. If your business idea doesn’t relate to the market or fulfill a gap in the market, it would not be a profitable business.
#3 Redefining and Refining Your Business Product/Service
Once you have positioned yourself in the market and determined the viability of business the next step is to refine your business venture accordingly to cater to the market and your target customer. The insight provided by the positioning and viability models must be used effectively to provide some unique value-based product to the consumer. The idea of this section is to exploit the vacant spaces in the market identified in the previous sections and apply it on to your business to improve your products, or services.
You could be rephrasing your mission and vision statement, or you could be adding new functionalities to your current product/service to better serve your target market. At the end of the day, marketing research should help you identify your weakness and strength, along with your audience and your competitions so you could make suitable adjustments accordingly.