A marketing strategy is a company’s overall program of actions to attract consumers and turn them into customers.
The key thing in the above definition is “program of actions”. Entering the market with a product is like starting a new game. Since you are new to the game, you don’t know the rules and you don’t know who you are playing against.
This is where market research comes to the rescue. Market research allows you to know the rules of the marketing game by understanding your target audience. It also allows you to understand who your opponent is by assessing the strengths and weaknesses of your competitors.
Research is what marketers do to plan their actions and outperform their competitors. It’s also what marketers use to determine the strengths and weaknesses of their own marketing strategy.
But is market research an absolute business prophecy? Unfortunately no. Even market research companies recognize this – here’s a quote from one of them:
(…) it cannot be claimed that market research is an exact science, as it would be unrealistic and unreasonable to expect market researchers to predict the exact demand for a new concept, given that there are many variables that can affect demand beyond the competence of market researchers.
This is why market research, while important, is “only” part of marketing and “only” an experiment. It’s up to you to decide if and when you will run the experiment and when to end it.
For example, Crystal Pepsi seemed very promising in the market research phase but failed when it entered the market (the same thing happened with New Coke). Xerox’s idea of a commercial copier was not liked by the research analysts. Xerox did it anyway, and the rest doesn’t matter anymore.
When to do market research?
Paul N. Hauge and Peter Jackson, in their book Do Your Own Market Research, point out three specific situations when market research is actually useful:
Setting goals. Knowing things like market size or a description of potential customers can help you set sales goals.
Problem solving. Low sales? Poor profitability? Market research can help you understand whether your problems are internal, such as a poor-quality product, or external, such as aggressive competition.
Supporting company growth. Understanding how and why consumers choose products will help you decide which products to launch.
Another answer to the “when” question is the importance of the decision you need to make. The more important the marketing problem you are solving, the more market research you will need.
For example, launching a new car on the market is a big deal, right? So maybe Ford could have avoided losing $350 million dollars on the Ford Edsel if they had done their research right. I mean, with the right methods, it’s not hard to predict that consumers will find a car too expensive and ugly.
Market research doesn’t always have to be a massive and complex project. The relatively new trend of flexible market research allows you to research the market on a regular and cost-effective basis. With this approach, you use small, iterative and evolutionary methods to respond to rapidly changing circumstances and adapt to unknown market territories.
Additionally, if you are working in a startup environment, especially if you are developing an innovative product, you may be interested in customer development. In this methodology, market research is the most “agile” and is closely linked to the product development process.