Why is market research important in business?

Market research is one of the most important activity one have to do before engaging in any business activity when starting up or introducing a new product or service. According to the University of Salford Manchester(2016) defined market research as "the systematic gathering, recording, and analysis of useful information about the market for planning and growth of the business activity." Market research is when an entrepreneur investigates whether the desired venture is favourable. It is also necessary when coming up with a business plan. It assist potential investors to see whether it is worth while for them to invest their money in the projects. This is because the market research outline the potential the proposed venture have to succeed in the current market. The research assist the entrepreneur to see their potential market segment they could penetrate and the readiness of the potential customers to purchase your products and services. Thus the target market, which we define as the segment of people we expect to sale our product or service. Some scholars like G Zaltman(1997), have argued that market research is one of the most important initiative that an entrepreneurs or individuals have to engage in before investing any resources in a project.

Market research help an entrepreneur to identify whether there are other players(competitors) in the industry that (s)he want to venture into or whether there are substitute products or services for what they want to offer. The presence of competitors will also change the dynamics of the proposed entity as they have to consider what they will bring that is unique from the products or services existing in the market. The understanding of the existence of competitors will lead into the research of the potential market share the proposed venture might pose when it start operating. Which will outline the potential strategies that the entrepreneur will use when launching the product or service. These strategies will include the level of marketing that the entrepreneur will need to engage in order to make their product or service to appeal to they intended customers.

Market research also shows the entrepreneur how spread out (geographical dispensation) the target customer are which will also assist incoming up with marketing strategy. The entrepreneur will be able to identify whether to use online marketing or to use traditional marketing as part of marketing strategy. Marketing strategy is sometimes referred to as Strategic marketing. Peter Drucker(1973) said,“ Strategic marketing as seen as a process consisting of: analyzing environmental, market competitive and business factors affecting the corporation and its business units, identifying market opportunities and threats and forecasting future trends in business areas of interest for the enterprise , and participating in setting objectives and formulating corporate and business unit strategies. Selecting market target strategies for the product-markets in each business unit, establishing marketing objectives as well as developing , implementing and managing the marketing program positioning strategies in order to meet market target needs”.

 A marketing strategy is the a initiative(policy) that a firm or entrepreneur adopt in order reach the their intend customer. This only possible when you are able to identify your target customers, customer behaviour, the places they love to hangout, and their age. For instance when establishing a college one of the strategies that the entrepreneur will end considering in their marketing strategy may include using social media as marketing tool due to the fact that most of their potential customers are students who spend most of their time online.

 The market research will also help the entrepreneur identify the most suitable pricing strategy that can be implemented for the venture to have successfully launch. This strategy will be determine by the type of customer you are targeting. Thus if you target customers are up scale if you use price penetration strategy they may end up not engaging in the product or service as they might be perceive to be of low quality.In that regard the entrepreneur would have better of use price premier in that type of a market segment. Market research is the foundation that is necessary in setting strategies that guarantee the success of the products or services as it identifies a couple of elements that have the potential of affecting them.