Businesses use research to set themselves apart from their competition in various ways. It can provide valuable information on consumer buying habits, for example, giving data on attitudes to products and brands. Research is especially important for people who want to launch a startup, as it helps them assess if an idea can support a new business.
Using Research to Evaluate Startup Viability
Market research allows entrepreneurs to base the viability of their business ideas on facts instead of enthusiasm. People can get excited about starting a business that focuses on their interests, but research helps determine if there is a big enough market to support a prospective business and make it profitable. Reports done by the U.S. Federal Trade Commission and other government agencies, trade associations and market research firms can help entrepreneurs spot market trends and determine who might buy their products and services.
Using Research to Estimate Costs
Businesses, especially new ones, often cost more than their owners anticipate. Nonetheless, research is needed to estimate at least a year's worth of business expenses to create a budget. You won't be able to set the correct prices for your products and services or turn a profit if you don't know how much it costs to run your business. Your research should include things such as the cost of insurance, business licenses and product packaging.
Using Research to Set Prices
Research helps businesses get a handle on pricing and prevents them from pushing themselves out of the market by setting prices too high. Some of this research includes tracking competitors' prices. That not only involves examining how much competitors charge for products and services, but it also includes noting the features or extras they offer. You might be selling a product that costs more than similar items. However, if customers can do more with your product compared with others, that might constitute a selling point that justifies not lowering your price.
Using Research to Analyze Competitors
Businesses also can size up their competitors with consumer research. Examine competitors' blogs, social networking sites and websites. Take note of any comments that consumers post on your competitors' sites, paying close attention to negative and positive responses about products and services. Consider how your business can outshine competitors based on those customer comments. Visiting competitors' stores is another way to research the competition. Examine the store layout, then note whether it's easy to find products and whether the store feels cramped or cluttered. Also note the mix of products, and determine how your product inventory compares with your competitors' inventory.