The competitive nature of business makes every strategic decision count. Market research plays a role in helping to make the best business decisions. With competition among companies today getting steeper, one misstep can cause a company to lose the market.
Insight from market research deserves attention; findings show that between the years 2000-2018, more than half of Fortune 500 companies have had closures, mergers, or acquisitions. This fact indicates that companies need to be cautious in making decisions if they want to avoid failure. Every step has to have a solid foundation. This is where market research becomes important, as elaborated further in reasons below:
Decisions need to be based on valid information and relevant insight
Strategic decision-making needs to be carefully planned. Decisions cannot be based on assumptions or “gut feelings”. Relying on instincts means that a decision’s accuracy cannot be accounted for. Market research provides a stronger basis for strategic decision-making, particularly relating to marketing problems. Research findings can offer accurate and valid information, and also insights relevant to today’s conditions.
It is important to understand that every decision has to be based on correct and relevant information. Not every bit of data collected will be suitable for different decision-making processes. As such, a market research study needs to be custom-designed for a particular/specific problem.
Current and constantly updated data will also help in safeguarding information accuracy. For example, data from five years ago cannot be the foundation for today’s decision-making as situations and conditions may have changed. Hence, research period is a factor that cannot be dismissed.
Market research is able to offer a picture of actual market conditions, and this is a crucial factor of why market research is needed. Decisions made without taking into account real-life conditions will not have the precision businesses need. When a market research study design is able to gather all relevant information, insightful basis for valid decision-making is made possible. Furthermore, strategic decisions will have more accuracy and risks of miscalculation can be minimized. This is why market research is the answer to informed and insightful business decisions.
Market research provides an external perspective
Technology progress and market transformation have caused a disruption across all fields of businesses. A simple example: who would have thought that the taxi industry can lose its stability with the surge of online transportation platforms? This situation partly came about because companies of the previously established taxi industry did not anticipate change. They failed to heed external counsel, and hence lost the competition.
In this regard, market research acts as counsel with an external perspective which companies will need. Market research provides insights to anticipate various things:
- New technologies
- Potential competitors/threats
- Consumer behavioral shifts
- Socio-economic changes
- Growth or shrinking of the market
Understanding of the above points is crucial, as strategic decisions can be made based on the information companies have in advance.
Take an example in which market research finds a shift in consumer behavior. A company can arrange a new system to accommodate that shift. This enables better strategic decisions for businesses.
Utilize market research findings with caution
Market research does offer significant help as the basis for strategic decision-making. However, market research is not a medicine to cure all illnesses. The correct understanding and interpretation of findings also determine how helpful a market research study can be. So comprehensive analysis of collected data is paramount in order to utilize market research findings effectively. Deep-dive analysis will minimize misinterpretation of data.
That being said, the option of not conducting market research at all may bring more severe disadvantages. Without market research, there is no solid basis for strategic decision-making. This is why it is vital for businesses to conduct market research.