The Importance of Market Research Before a Business Expands
Posted 26 Aug, 2020
Author - Priscilla Aimila
The Importance of Market Research Before a Business Expands
The goal of all businesses is to grow and expand operations, a task which is often easier said than done. To achieve growth, a business must have a great model as well as generating a healthy profit, which allows it to further market its product/service and acquire more customers in the future.
Those which are exceptionally successful in their efforts may have the opportunity to expand beyond the confines and set up base in other locations or states. Here are some of the reasons market research is incredibly important before a business starts expanding:
Competitors Whilst a
business may have a completely unique, effective business model in their
initial location, there may be many more competitors in the new locations, who
are likely to be more established in such places than the business looking to
expand. These competitors could pose a significant threat to the business’s
chances of success when operating in a new location.
Market research allows a business to gauge the number and power of their
potential competitors, and make a more informed decision about how/when/where
to expand. They could, for instance, begin their expansion in a different area
of any given place if one area is saturated which businesses of the same
type.
Customer Base Without doing market research, there is no way
for a business/company to know what its chances of success are in relation to
its potential customer base. For it to succeed in the long run, there will need
to be a market for its product/service. If there is no market, then it may
be up to the
company to create one, or expand to a different location with a more
established market.
Having a loyal customer base is essential in helping businesses which expand stay afloat (expansion is, after all, a very expensive process), so market research can give them a good overall impression of how popular they may be before they spend money in expanding.
Investors/Shareholders It is worth noting that shareholders of any
given company will also want to be reassured about overseas expansion, given
the risks it poses. Market research also provides investors with hard evidence
that expansion will be both successful and rewarding overall.
Clearly, expanding without conducting market research massively contributes to the risk levels associated with expansion. As such, market research is essential for any business considering setting up in another location.
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