Doing research is immensely important when planning to start a business. Each and every business has its own set of target audiences. It would be extremely difficult to understand the target audience of a business, their habits, expectations, and behaviors, without carrying out a detailed market research. As underlined by Kavan Choksi, market research largely comprises of gathering data and information pertaining to the target audience of a company, and helps in understanding how viable their offerings would be.
Kavan Choksi marks the reasons why market research is important when starting a business
Market research is a vital component when starting out a business. It involves capably gathering and analyzing information about the target market, competitors, customers, and industry trends. Such insights are gained with the help of market research and provide entrepreneurs with a solid foundation for making informed decisions. Here are some of the major reasons why market research is important when starting a business:
- Identifying and understanding the target market: Market research aids entrepreneurs in identifying their target market, which comprises of potential customers who have high odds of purchasing their products or services. By carrying out market research, entrepreneurs can gather valuable information about the buying behaviors of the customers, along with their needs and preferences. This knowledge aids the entrepreneurs to tailor their offerings to meet the particular demands of the target market, leading to greater customer satisfaction and increased sales.
- Assessing market viability: Prior to putting in resources and time into a new business venture, it is vital to assess the market viability. Market research allows entrepreneurs to effectively evaluate the size of the market, the level of competition, as well as its growth potential. Entrepreneurs can determine whether there is a viable opportunity for their business to thrive based on the analysis of market trends, demand patterns, and industry forecasts. Such insights are highly useful in steering clear of any potential pitfalls and ensuring a higher chance of business success.
- Developing a unique value proposition: To attract maximum customers and differentiate the business from the competitors, a strong value proposition is essential. Market research helps entrepreneurs to effectively identify gaps in the market and gain a better understanding of customer concerns. Entrepreneurs can determine how to position their products or services uniquely by proactively studying competitor offerings. Market research offers insights into what the target audience prioritizes the most, and helps entrepreneurs develop a value proposition that addresses those specific needs, thereby providing the business a distinctive competitive edge.
- Pricing strategy: Zeroing on the right price for the services or products provided by a company is quite important. With proper market research, entrepreneurs would be in a better position to understand price sensitivity, customer perceptions, as well the price points at which their offerings are most likely to be accepted in the market. Entrepreneurs may analyze competitor pricing and conduct surveys to establish a pricing strategy that is competitive yet profitable.
In the opinion of Kavan Choksi, market research mostly starts by collecting data via methods, right from simple observations and surveys to focus groups and interviews. Such data can be both qualitative and quantitative in nature, provide insights into several important factors like consumer behavior, market trends, competition, and pricing.
