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Are you planning to expand? Here's why market research is essential

Expanding your business in a new market can be incredibly intimidating. It is a completely new terrain that you know nothing about. And, since knowledge is power in the business landscape, you may want to spend some time on market research before expanding.

In today's data-driven era, gathering statistics, reports, studies, and other data is far more important than ever before. Businesses function and implement changes in their strategies based on the data they get from research. So, market research is the best way to make sure there is a market for your newest innovative product.

Market research mainly focuses on user and competitor research. And, while these two factors are both vital for business success, there are also other important elements that you can identify with your market research. Read below why market research is essential when planning to expand your business on a new market:

Research - Photo by Marten Newhall on Unsplash

Does your business idea resonate with the culture?

Bringing innovative ideas on markets that never heard about a product isn't new. In fact, in our fast-evolving world, this happens almost on a daily basis. However, this doesn't mean that every innovative business idea will be embraced by a new market that may simply not be ready for it. And, there is always one strong reason why certain markets are sometimes not so willing to embrace new ideas and that is: their culture.

Although we live in a globalized world, culture still plays a huge role in the purchase decisions of potential customers. Culture makes people feel a sense of belonging to a social group. And, it represents the values and attitudes that people have been raised in and live in. So, revealing a product that doesn't resonate with the culture or, even worse, might be considerate controversial or offensive, will simply won't work.

Find out who your competitors are

In today's busy business landscape, competition has grown at an immense scale. Over 627.000 new businesses are opened every year. And, this creates a huge competition in every industry. So, one of the key elements that entrepreneurs need to know when expanding on a new market is how many competitors already exist and what are they offering.

Knowing your competition is important due to two considerations. First of all, startups entering a market overcrowded with businesses that offer the same products or services are very unlikely to succeed because well-established businesses already have a great base of loyal customers.

Secondly, as the market research specialists from Sapio Research explain "Knowing your competitors is also vital as a matter of identifying what your business can do better than them in order to sell more. Whether it is a better marketing strategy or an improvement to an already existing product, identifying what are your strengths over your competitors can be a key to success."

Identify your potential target audience

Another key element of any successful business is represented by its customers. You may have the most innovative and well-designed product but if there is no one to buy it, your business is very unlikely to thrive. So, identifying your target audience on a new market is essential before you make any step closer to expanding.

Does your product solve the problems of your new buyer persona? How many customers would be interested in purchasing your products or services? For example, would selling winter coats in Australia be a good business idea? Obviously not, because that is not the type of product that will be bought or used by consumers.

So, market research is essential to help you identify the needs and wants of a new target audience. It can help you determine what the market is missing and what would customers pay good money for.

Moreover, identifying your target audience is also paramount in order to determine the direction and approach of your marketing strategy. Who are you going to sell to? What attracts the target audience the most? But most importantly, how can you connect with it? Only by knowing who are you planning to sell your products or services to, you can develop an effective marketing strategy.

Get the pricing right

Talking money may seem boring but it is a lot more essential than you would think when expanding on a new market. and, if you think that only your budget matters in this scenario, think twice! There is another vital aspect you must identify in order to create a successful strategy and that is the pricing for your products or services.

When analyzing the overall market and, most importantly, your competitors, you need to pay attention to the pricing strategies of other companies. Moreover, it is important to analyze economical factors that can affect your potential customers' purchase decisions such as average income, the average amount spent on financial responsibilities, and the average amount spent on a product or service similar to the one you sell.

Develop your marketing strategy

There are a number of things that you must identify within the new market you are planning to expand in order to develop an effective marketing strategy. The key elements that should influence your approach include the culture of the target audience, needs and wants, their education levels, and beliefs.

However, there is one more aspect that can be used in your favor if you make it the center of your marketing strategy. And, that is the red buttons of the potential customers. Each market is a segment with different red buttons that trigger the consumers. While for some segments environmental concerns are the main red buttons, consumers from other markets might be more focused on topics such as empowering women or fighting for equal rights. And, these topics offer great opportunities when it comes to converting potential customers into loyal customers.

Conducting market research when planning to expand your business is the first step for investing with the minimal risk possible. Well-detailed market research in which you identify your potential customers and competitors and other relevant information is vital to size up on a new market with a realistic approach.

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