Market Research on the Success of a New Business - Coursework Example

Market research to the success of a new business Contents Contents 2 Introduction 3 Discussion 3 Conclusion 8 References 10 Introduction Market research is a significant decider of the future success, failure as well as sustainability of a new business. A number of studies and real world examples have indicated that market research is vital for the success of a start up venture as well as an existing business. Market research provides direction to a new business venture from two major dimensions: one being the management of the business and the other being the marketing of the business. Smart business management and marketing decisions are absolute necessities for the profitability and success of any business. The market research processes help the entrepreneur of the venture to gather relevant information regarding the external business situation based on which he or she can take the suitable marketing and management decisions for the business. The carrying out of a suitable market research can be done through the internal personnel of the company as well as through a third party market research company. Whatever the avenue of the market research is, the results of a market research are expected to add value to the probability of success of the business in the market through an understanding of the external factors that are likely to affect the success as well as the continuity of the business Discussion Market research is an essential strategic management tool for the creation of a feasible business plan that would enable a new business venture to initially create a place for itself in the highly competitive business segments and to thrive in the market in the long run as well. Market research conducted for a start up venture is essentially the process of becoming knowledgeable and gathering information about the target market of a new business (Malhotra, 2002). A market research process may serve four types of primary objectives which are Exploratory: The exploratory view of market research as a tool is taken up for analyzing the overall situation prevailing in the target market in which the new business will be set up. Predictive: The predictive view is aimed at analyzing the future trends, opportunities, risks and requirements of the market which helps the company to decide on its priorities and set its objectives and strategies. Diagnostic: The diagnostic view encompasses the identification and subsequent consideration of the opportunities and risks present in the market. Descriptive: The descriptive view of market research considers the explanation and description of the existing market situations and aims at identifying the core reasons driving the present market condition (McDonald, 2007). Market research helps a business to understand the context for the new business, accurately define and target the appropriate customer segment, verify whether there is an advantageous level for demand for the products and/or services of the business in the selected market, collect information about the potential customers and the existing competitors of the business, identify the opportunities and gaps in the market, decide the marketing strategies and processes, gather feedback on the business idea and have an overall explorative understanding of the industry in which the business will operate (Ulwick, 2005). The most significant objective of a business is to make financial profits as well as ensure continuity of the business in a continuously changing external business environment. The new business environment is clearly depicted by the market in which the business is supposed to operate. Market research is undoubtedly the single solution and the most significant factor for setting the foundation for the future success of any new business venture. However, market research is a complex process which is often the least comprehended activity within a business plan. Figure 1: The market research process (Source: Ulwick, 2005) It can be understood that market research is necessary because the core objectives and strategies of any business are decided by keeping in mind the most significant stakeholder group of the company which is the customer group. Market research encompasses an understanding of the customers from different perspectives like mindsets, inclinations, preferences and consumer behaviour patterns that ultimately control the demand and supply structure of the market. Understanding the demand and supply factors in a market is essential to devise the business and corporate strategies in the short term as well as in the long term of the business (Kathleen, 2011). The primary consideration of any new business venture should be the market in which the business is to be introduced. The term ‘market’ in this context means the external environment of the business including the economic conditions of the market, the consumers, suppliers, competition level, opportunities for collaboration and expansion as well as the current and future opportunities and threats in the market. An entrepreneur should start the market research process by assessing the most significant criteria for running his/her business and map these criteria to the internal resources and capabilities that would be available to the business. It is critical for a new business venture to understand the customer base in the market, what products and services the customers want, how they want their products and services and what prices are they ready to pay for these products and services. After analyzing these requirements, the start up business should try to organize its resources and business strategies including the four Ps of marketing i.e. product, promotion, price and place of distribution in a way to efficiently and effectively meet these identified criteria (Frederick, 2009). Apart from the selection of the target customer group and the in depth understanding of the target customer requirements, a market research process also enables a business to consider a very important perspective of the business i.e. the level of competition existing in the market. Figure 2: The components of market research (Source: Beri, 2007) The critical objectives of an effective market research should include the following Identifying the target market for the new venture. Evaluating and analyzing the target customer groups. Achieving a strategic fit between the needs and wants of the customers with the products and services offered by the business. Formulating the marketing and management strategies of the business so as to capture the opportunities and mitigate the risks associated with the venture. These components should be extensively investigated to create the most beneficial position for the new business in the market (Beri, 2007). The main drawback associated with the process of market research for start up businesses is that often the entrepreneurs do not have an exact idea regarding the starting point from where the market research should be commenced (Kaplan, 2003). However, there is a step by step approach for market research that should be taken up to ensure the success of the business. The process of market research is not only useful in indentifying the key success areas of the business but it also helps to assess a number of other criteria that would be necessary for driving the success of the venture. Often a carefully planned explorative market research helps to prevent the future failure of a business by enabling it to identify the critical success factors and making it equipped to remain prepared for any internal or external crises situation (Leideckern and Bruno, 2005). Market research has effects on a business in both the short term and the long term functioning of the business. In the start up phase of a business, the information collected through market research helps the business to form an idea of the requirements of the market and thereby prepare itself to meet the necessary criteria. In the long term scenario, market research helps a company to monitor the changes and developments in the external business world and thus, take suitable decisions to adapt to the changing market demands and conditions. In both the short run and long run, market research enables a business to determine whether the ideas regarding products, services and business processes are viable or not, to identify whether the emerging potential customer groups within the target markets, to analyze the market dimensions like competition, demands etc. and to continuously assess the capabilities of the business with relation to the requirements of the market (Clarke, 2010). Conclusion Thus, it can be concluded from the above discussion that market research is an essential component of a business plan that would ensure the survival, success and future growth of a new business. In a nutshell, it can be said that market research increases the chances of success of a new business by enabling the entrepreneur to comprehend the competitive nature of the business and mitigate the risks associated with the business. Often many business failures are identified to have been caused by poor market research. In order to succeed in any business venture it is necessary to minimize the risks rather than directly preparing for taking the risks. In line with this, the most significant effect of market research on a business is that it helps the business to be prepared for the risks as well as to reduce the risks through suitable strategies developed through an understanding of the external situation of the business. It can be identified that it is not possible to have a successful business without having access to the right information regarding the demand levels, customer behaviour, existing and potential competitors, collaborators and the overall scenario of the market for the business. References Beri, M. 2007. Essential of Marketing Research. New Delhi: Tata McGraw Hill Education. Clarke, G. 2010. Business Start Up and Future Planning. London: Straightforward co Ltd. Frederick, G. C. 2009. Marketing for Entrepreneurs: Concepts and Applications for New Ventures. London: Sage Publications. Kaplan, J. M. 2003. Patterns of Entrepreneurship. Hoboken: John Wiley and Sons. Kathleen, R. A. 2011. Launching new business ventures: An entrepreneurial approach. Boston: Cengage. Leidecker, J. K. & Bruno, A. V. 2005. Identifying and using critical success factors. Long Range Planning, 17(1), pp. 23-32. Malhotra, N. K. 2002. Basic Marketing Research: A Decision-Making Approach, New Jersey: Prentice Hall. McDonald, M. 2007.  Marketing Plans, 6th ed. Oxford: Butterworth-Heinemann. Ulwick, A. W. 2005. Business Strategy Formulation: Theory, Process and the Intellectual Revolution. North Carolina: IAP. Read More