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Market Research Important for Business Success

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All economic players, whether involved in big or small business ventures should understand that markets are dynamic and continuously changing. This implies that there is very little time for relaxing for any serious minded business person. A business person ought to be proactive in studying and understanding what is taking place in the broader economy as well as in their specific business sector in order to develop counter measures.

The long term viability of their business depends on their being up to date with changing consumer tastes, macro-economic conditions, government policies and so forth so that they can make informed decisions. A business person should also be aware of what his or her competitors are doing so that they can respond appropriately to emerging threats. This is only possible if businesses continuously analyses the environment in which they are operating.

Entrepreneurs should understand that knowledge about markets is essential for the survival and growth of their business. It enables one to improve the competitive nature of their business and to reduce risks.

What is Market Research?

Market research is the process of collecting data to determine whether or not a particular product or service will satisfy customer’s needs. This information is essential to the success of business ventures especially those in the SME business sector. The information generated is useful for making strategic business decisions, uncovering unmet customer needs, and in many cases, help you discover new ideas for products or services.

Market research can identify market trends, demographics, economic shifts, customer’s buying habits, and important information on competition. Market research is not supposed be a once off activity but should be continuous activity for the overall growth of the business.

Why is market research important?

Market research should be able to help with the following business strategic issues;

Identify problem areas in your business

Understand existing customers and why they chose your service/product over competitors

Identify new business opportunities and changing market trends

Recognise new areas for expansion, and increase in customer base

Discover potential customers and their needs to incorporate your findings into products/services

Set achievable targets for business growth, sales, and latest product developments

Make well-informed market decisions about your services and develop effective strategies

What are the advantages of market research?

Market research helps in identifying new business opportunities and designing marketing campaigns that directly target your potential consumers’ interest helping in increasing sales. Marketing research provides valuable information about the potential of a particular market segment, during a specific time, and within particular age group.

Marketing research helps track your company’s progress as well as the growth of your competitors. By keeping an eye on your competitors, you can devise strategies that would keep you ahead of your business rivals. Market research can help in reducing the probability of a business making losses.

Before launching a product, you can identify problems and determine possible solutions. Research carried out after the launch of a product can help you find loopholes and devise plans to counter that loss and increase profits.

Market research assists businesses in the process of developing and designing mechanisms to counter competition. From a banking perspective,these mechanisms are of paramount importance because they form part of the basis upon which credit can be advanced or denied. Banks are usually interested in knowing some pertinent information that can only be generated from carrying out basic market research.

Market research should also be able to provide information to the various business organisations on the sources of funding. Once a business has been able to identify its products and markets, it should be able to tell the type of resources and the source of those resources.

Banks are not the only sources of financing for SMEs, some of the funding can be obtained from certain Non-Governmental Organisations or State institutions. In the case of trying to source the funds from the NGO sector, data collected through market research becomes the requisite information for developing a project proposal and the budgets supporting the proposal.

What is the nexus between market research and banking?

A banker would be interested to know from an entrepreneur; an estimate of the size of the target market, the location of the market, the total number of competitors, the sources of raw materials, and other important information which forms the core of the business proposal. This information can only be generated through rigorous research.

Knowledge of the business environment is critical before approaching your banker. This makes it very easy to approach a bank with confidence because you will be having all your facts. Bank analysis of credit applications is “evidence based”.

This simply means that the bank assesses and grants credit based on the hard facts of the prevailing situation on the ground. It is the evidence that the bankers would be interested on making an appraisal of the credit application submitted for a business venture. Therefore having the correct and credible facts upfront, forms the basis for the success of the credit application.

What methods can be employed in conducting useful research?

SMEs can also pool resources together in an organised set up and conduct research on areas of common interest such as value chain analysis for example and understanding market linkages within the various SME sectors.

This kind of research is important because SMEs can be useful markets for other SMEs especially if they produce intermediate products in each others production value chain. Another important aspect of pooled research is for providing for evidence based advocacy for the SMEs sector on issues that affect their businesses where they can lobby for better trading conditions backed by sound research.

Sanderson Abel is an Economist. He writes in his capacity as Senior Economist for the Bankers Association of Zimbabwe. For your valuable feedback and comments related to this article, he can be contacted on abel@baz.org.zw or on numbers 04-744686 and 0772463008