Home » Business » Benefits of Market Research for SMEs [column]

Market Research is defined as the process of gathering data on goods and services to determine whether the product or service will satisfy customers’ needs.

Market research can identify market trends, demographics, economic shifts, customers’ buying habits and important information on competition.

Business market research is therefore the process of collecting data to determine whether a particular product or service will satisfy your customer’s needs or not. Knowing this information is essential to the success of SMEs’ business ventures.

The information generated is useful for making strategic business decisions, uncovering unmet customer needs, and in many cases, help you discover new ideas for products or services.

Every player in the SME sector, like those big corporates, should understand that markets are dynamic hence are continuously changing.

This then calls forth for these players to be proactive through studying and understanding what is taking place in the broad economy and specifically in their sector in order to develop counter measures so that they remain in business.

SMEs should be able to undertake basic research to help them answer some of the most crucial questions to better understand their markets. Market research should be able to help with the following business strategic issues

Identify problem areas in your business

Understand existing customers and why they chose your serviceroduct over competitors

Identify new business opportunities and changing market trends

Recognise new areas for expansion, and increase in customer base

Discover potential customers and their needs to incorporate your findings into productsservices

Set achievable targets for business growth, sales, and latest product developments

Make well-informed market decisions about your services and develop effective strategies

Market research for SMEs should not be a once off activity but should be a continuous activity for the overall growth of the business. Some of the aantages of undertaking market research will include the following:

Market research not only helps in identifying new business opportunities, but also helps in designing marketing campaigns that will directly target your potential consumers’ interest and help in increasing sales. Marketing research provides valuable information about the potential of a particular market segment, during a specific time, and within a particular age group.

Marketing research is a good evaluation tool that can be of great use in comparative studies. You can track your company’s progress as well as the growth of your competitors. By keeping an eye on your competitors, you can devise strategies that would keep you ahead of your business rivals.

With market research you can reduce the chances of loss to a large extent. Before launching a product, you can identify problems and determine possible solutions. Research carried out after the launch of a product can help you find loopholes and devise plans to counter that loss and increase profits.

The above are critical as they inform the process of developing and designing mechanism to counter competition. From a banking perspective, these mechanisms are of paramount importance because they form part of the basis upon which credit can be aanced or denied.

Banks are usually interested in knowing some pertinent information that can only be generated from carrying out basic market research.

A banker would be interested to know from the SME entrepreneur an estimate about the size of the market, the location of the market, the total number of competitors, the sources of raw materials, and other important information which forms the core of the business proposal. It is in light of this that the SMEs should be continuously scanning around their environment so as to provide it as and when required by the potential funders.

SMEs should understand that market research is essential for the survival and growth of their business. It enables you to improve the competitive nature of your business and reduce your risks.

This makes it very easy to approach a bank with confidence because you will be having all your facts. The current buzzword is “Evidence based” which simply means that in everything that the SME sector players do, it should be supported by the hard facts of the prevailing situation on the ground.

It is the evidence that the bankers would be interested in on making an appraisal of the credit application submitted for a business venture. Therefore having the correct facts forms the basis for the success of the application.

Market research should also be able to provide information to the various business organisations on the sources of funding. Once a business has been able to identify its products and markets, it should be able to tell the type of resources and the source of those resources. Banks are not the only sources of financing for SMEs, some of the funding can be obtained from certain Non-Governmental Organisations or State institutions.

In the case of trying to source the funds from the NGO sector data collected through market research becomes the requisite information for developing a project proposal and the budget to the proposal.

From the above it can be deduced the Market research is important for SME business ventures and should not be just a one-off activity. For the success of these ventures they should conduct research on a continual basis to keep up with market trends and to maintain a competitive edge.

Regardless of whether you’re starting or expanding your business, market research is vital to understanding your target market and increasing progress.

SMEs can also pool resources together in an organised set up and conduct research on areas of common interest such as value chain analysis, for example, and understanding market linkages within the various SME sector.

This kind of research is important because SMEs can be useful markets for other SMEs, especially if they produce intermediate products.

Another important aspect of pooled research is for providing for evidence based aocacy for the SMEs sector on issues that affect their businesses where they can lobby for better trading conditions backed by sound research. This is essential for SME development.

Sanderson Abel is an Economist. He writes in his capacity as Senior Economist for the Bankers Association of Zimbabwe. For your valuable feedback and comments related to this article, he can be contacted on abel@baz.org.zw ltmailto:abel@baz.org.zwgt or on numbers 04-744686 and 0772463008.

Source : The Herald