We saw how market research can help to guide strategy or decisions, and despite that, for various reasons many organizations still do not fully subscribe (if at all) to the idea of carrying out research.
So, what are the pitfalls of not doing market research? Although there are many, we’ve narrowed them down to the biggest three.
- Wasted money
- Wasted time
- Business failure
The above three points are pretty blunt, aren’t they? But that’s the truth.
Starting a business without doing proper investigation and analysis is a gamble.
The entrepreneurs we talk to are excited about starting their business. They can hardly wait to get going selling their product or service. In fact, they may resist taking time for research.
And, budget is a common concern too. Often, they want to use all their budget on product and promotion and skip the research step. That is a recipe for disaster.
No Analysis? Expect to Waste Time
Let’s take for example Sara and Ryan. They’re proud owners of a startup skincare company. Although this is their first business, they’re confident. They’re bringing a new skin lightening cream to market. They know it will be successful!
Because Sara prematurely committed to a manufacturing schedule, they decided to rush to market.
They skipped the crucial points of actually finding out:
- Who is their ideal customer?
- Do they like the product?
- Would they buy it?
- How much would they pay?
No Analysis? Prepare to Waste Money
Sara and Ryan were only concerned about their manufacturing schedule. So, they made some fatal mistakes.
Now they’re out of money, and out of options.
Here’s What Happened
Rather than taking the time to research:
They assumed their ideal customer was a 25-year old woman in college.
Wrong – the best market would have been a professional woman in her early 40s.
The 25-year old did not like their product. But, they did like the bright packaging. The main thing this consumer didn’t like was the consistency of the cream. It was too heavy. Younger women like lotions not creams.
So now, Sara and Ryan have a garage full of cream they can’t sell. Not only have they wasted precious time. They’re out of money.
A Better Way…
By doing initial market research, these owners could have avoided deadly mistakes. And, they could have made changes before wasting money in manufacturing.
When you’re investigating a market and consumer response – that is the time when you can make quick changes. Then, come back and see if you’re any closer to a winner.
The mistakes didn’t have to be fatal. Sara and Ryan could have:
- Stayed with the same public (college women 25-years old). But, change the formula from a cream to a lotion. This would have been easy. And since they hadn’t purchased the bottling, they wouldn’t have lost any money.
Or they could have kept their product the same and surveyed a different demographic. If they would have queried professional woman in their 40s, they could have had a huge success.
The important point is:
Market research saves you time and money.
If you want to be confident you’re on the right track with your products or services – contact us today for a free 30-minute consultation.