4.1.1 - Why businesses research markets
A business can have an attractive idea and still find that too few people want to buy it. Market research helps it understand customers, recognise opportunities and make decisions with better evidence.
Understanding customer needs
Market research starts with a question about the people a business hopes to serve.
Market research
The collection and analysis of information about a market, including customers and competitors, to support business decisions.
Customer needs are the requirements a product or service must meet for customers to find it useful. Customers may care about price, convenience, reliability, appearance or several features together. A need for a quick lunch is different from a preference for a particular sandwich filling. Research can uncover both, helping a business decide which features matter most.
Consider an illustrative small lunch shop near offices. Its owner assumes customers want a larger menu. Conversations instead reveal that the queue is the main problem: customers have a short lunch break. Offering advance ordering may satisfy this need better than adding dishes. The research changes the decision because it explains why customers are dissatisfied.
A large international appliance manufacturer can use research to compare what households need in different countries. Available space, buying power and preferred features may differ. Selling the same model everywhere without checking these differences can leave important needs unmet. Customers' stated wishes also need to be compared with what they can afford and actually buy.
Finding gaps in the market
A gap exists when a group of customers has a need that existing businesses do not adequately satisfy.
Gap in the market
An unmet or poorly met customer need that could offer a business opportunity.
Research into competitors shows what is already available, at what price and for which customers. Research into customers shows what is missing. Combining the two is stronger than simply noticing that no shop sells a particular product.
In an illustrative town, sports shops sell standard shoes but local walkers report difficulty finding wide-fitting walking shoes. That could be a gap for a specialist retailer. The retailer still needs evidence that enough customers want the shoes, can pay a viable price and can be reached. Absence of a supplier may reflect weak demand rather than an attractive opportunity.
For a large business, a gap might be a customer group overlooked within an existing market, rather than a completely new product. An illustrative travel company might discover demand for accessible booking information and trips designed for customers with limited mobility. Meeting that need could attract customers whose requirements competitors handle poorly.
Continue this lesson.
You’re previewing NovaLearn without an account. Create a free account to read the rest.
Create free account