The Benefits of Conducting Market Research before Launching a New Product or Service
Launching a new product or service can be an exciting yet daunting endeavor for any business. For entrepreneurs and business owners, much of the success in this process depends on having the right understanding of their target market.
In addition, they'll have valuable insights that can help identify and capitalize on potential opportunities while also avoiding any potential pitfalls.
Conducting market research prior to launching a product or service can mean the difference between success and failure – so don't go at it without doing your homework!
Some interesting case studies show the vital role of market research before a product launch. Coke sampled a population to test the new Coke. This was a sweeter version of the original Coke.
The sample population loved the new one. So, the company decided to withdraw the original version. It was a big mistake because the larger population missed what they were familiar with.
The company disregarded the emotional connection customers had to the old product. They should have carried out a sentiment analysis to know the new product's impact.
Another example is Coors launching the Rocky Mountains Sparkling water in the 90s. At that time, their beer was also very popular. The company did not factor in the confusion the two products would elicit. Neither did Coors differentiate itself from other bottled water companies. There was no reason customers would choose their water over what already existed.
Our article explores the benefits of market research when launching a new product or service.
Market Research Helps Identify Customer Preferences and Needs
Before launching a product, look at the target audience. You will then need to develop a list of questions.
- Do your customers have a particular need for whatever you are about to launch?
- Do they have a particular preference, especially from competitors?
- Is there a market gap you are trying to fill?
- What are the customer pain points the product provides a solution to
- How will the new product change the customers' lives?
- Can your target audiences afford the new product etc.?
Getting clarity on the points above is critical. That is the only way to develop products or services that meet customer needs.
Take the example of launching new mobile phones into the market. The first step would be to look at what already exists. The market research will ask relevant questions to identify what could be missing.
Customers can provide feedback that they would like longer-lasting batteries or larger screens. That shows a gap in the existing products to which you can then provide a solution.
What the company will realize is tons of savings and resources. The development team can focus on what is relevant. It removes the guesswork in knowing what the customers want.
But beyond that is the potential for revenue generation. If you launch a product that the market needs, then you can be sure of positive uptake.
Market Research to Assess Market Demand
By leveraging market research, you can gain valuable insights into consumer preferences and purchasing decisions—allowing you to craft effective strategies and campaigns to attract new customers and keep existing ones engaged. With the right market research, you’ll be able to anticipate consumer needs before the competition does, allowing you to get ahead of the game.
Market data can provide useful insight into several factors, including.
- An understanding of the market size. Only launch a product or service if there are enough people to buy it. That will also have a significant impact on the growth possibilities for the company.
- Assess market potential by looking at emerging trends. Other insights are opportunities, threats and changing consumer behavior.
- Competitor analysis to know how much competition you will face with a new product. If there is a market saturation of the product or service, joining the fray won't make sense. That is, of course, unless you have a USP to capitalize on. That was a lesson Coors needed to learn with the launch of bottled water.
- Market research allows for testing demand for your products or services. Focus groups or online market research in the form of surveys can provide critical data. The same applies to analysis from platforms like social media or online searches. You can get a solid idea of the audiences' interest in your offering.
Also, take advantage of offline and online resources. These are ideal for both primary and secondary market research. Quirks online market research is a fantastic resource for market insights. The market data comes from case studies, qualitative/quantitative research, and focus groups.
Lower Risk with Market Research
With the right data and analysis, you can determine which strategies will be the most effective in reaching a target audience, identifying the competition and developing innovative products and services.
Additionally, conducting market research provides you with valuable insights into trends and consumer preferences, helping you stay ahead of the curve. By doing so, you'll be prepared to adjust quickly to market changes and remain competitive.
Investing in market research is a step towards mitigating risks and can provide your business with a long-term advantage in a rapidly changing landscape.
Successful companies invest in research and development (R&D) departments. Take the example of Apple. In terms of success, it ranks highly in the market. It would be easy to think that they will launch products without taking time to do market research.
After all, they have loyal followers who will line up for days, waiting for new products. But Apple's R&D expenses run into billions of dollars. As of 2022, they spent $26.251 billion on R&D. That signified a 19.79 increase from the previous year.
Now you may think that that cost is quite high. But if they were to go through the entire product development cycle, that cost would be nothing to discuss.
By understanding the market, you will launch your product without high risk levels. You will:-
- Know whether the target market will receive the product well
- Research in the product development stage can identify errors or what needs improvement. Without this, the cost of a product recall would be too much to handle.
- Identify opportunities the company can tap into with the new products or services.
- Avoid or mitigate any threats that will impact the successful uptake of the product, etc.
Here are other case studies that highlight the importance of market research.
In the 1980s, Colgate, the renowned toothpaste company, decided to go into frozen dinners. The consumers were unable to get the connection between oral hygiene and food.
Lack of product differentiation led to the quick end of Microsoft Zune in 2006. The challenge was that the product was very similar to the Apple iPod. Microsoft did not also take the time to do proper segmentation. Yet the insights were available. All the company needed was proper market research.
Kodak missed out on a fantastic opportunity to continue to have market dominance. The company did not latch onto the new trend, which was digital cameras. Other companies were busy innovating and responding to customer needs for better technology. Kodak was still churning out film.
These costly mistakes saw the company lose over $10 billion in revenue from 1996 to 2011. The company lost over 10 billion dollars in revenue.
Market Research Will Help In Marketing the New Products
Marketing new products or services is a must. The company must create awareness and hype in the market. So it is important to do market research when developing marketing strategies. The reasons are:-
Market research will help provide a better understanding of the target market. Remember getting clarity on preferences and needs is crucial when launching new products.
Market research will help identify critical channels you can use for marketing. It lets you know where your target audiences are. And, which platforms will give you the greatest reach. Let's say that your primary marketing tactic is to use digital marketing.
But, the market research reveals that the target audience consumes analogue media. That will inform your thinking when allocating budgets for marketing. You will put aside an amount that will go into print, electronic and outdoor advertising.
Competitor analysis is another critical component of marketing. Market research lets you see their tactics and how audiences respond. With clarity, you can develop better strategies to ensure a point of differentiation.
Market research will be necessary for measuring the success of your marketing campaigns. Analyzing conversion and engagement metrics shows if your marketing tactics are working.
Sentiment analysis will provide feedback on what your customers think. What you get is a powerful tool to change or improve what you are doing for better results.
Final Thoughts
Market research can be invaluable when it comes to launching a new product or service. It can help you identify and target the right customers, refine your products and services, create effective marketing strategies, understand industry trends and pricing, and much more.
An essential tool for any business looking to make sure their new offering is relevant and successful in the current market, market research can ultimately save time and money. It also ensures your products and services stand out from the competition.
Don’t go into a new venture blind: use market research to gain the insight needed for success.
Yet, from the case studies above, the lack of market research is not a challenge for only small companies. Even industry Giants have had to deal with the consequences of skipping this critical step.
Don't become a statistic that will one day provide references of how not to launch a product. Market research facilities are available for hire if you don't have in-house resources.
