What is the purpose of market research?
is conducted to reduce risk and enable businesses to make better decisions.
When setting up a business, entrepreneurs face a huge amount of risk. Often they risk their own money, with many businesses failing within the first year. By undertaking market research, entrepreneurs are able to reduce this risk.
Market research enables entrepreneurs to find out information, such as:
- what customers want
- what needs aren’t currently being met
- how much competition there will be
- what the business should aim at
- how much the business should charge for its product or service
Making better business decisions
A business may undertake market research to help it make better business decisions. A business may want to make a change to a product, add a new product to its range or change its location. Before it does so it may want to find out whether customers will respond positively to the change. For example, before bringing out a new type of coffee, a cafe might conduct market research to find out whether its customers would buy it. By doing this, the cafe can see whether the change is likely to be a success.
Making informed decisions gives a business a higher chance of being successful.
