Why Is Market Research Important For Your Organization? All Essential Reasons

Last Updated June 22, 2022

2020 changed the market research industry in two ways:

  1. The pandemic significantly changed the relationship between consumers and brands. This forced market researchers to get insights to help reinvent organizations’ approaches towards how they function on a daily basis.
  2. The MR industry itself had to change massively and adopt new technology to thrive when in-person interactions and surveys were restricted.  

However, 2021 fueled some significant trends in market research like:

  • Adoption of new technology to collate, analyze, and communicate findings. 
  • Automation of processes to deliver insights quicker. 
  • A blended manual and automated approach for research.

And these market research trends are here to stay

But why do you need to know this? 

No matter what kind of organization you are in, market research gets you the insights you need to grow. 

This is why market research is important for any organization. But knowing that is not enough. You also need to know precisely how market research comes in handy for your organization, and this post will help you with that. 

What is market research?

Market research is an organized effort to gather data about target markets and audiences. Typically, this data gives organizations insights like: 

  • Who is their ideal audience,
  • Their needs and challenges,
  • People’s perception of the organization,
  • Market size and competition, etc.

This data further helps organizations make informed decisions for their process, branding, and outreach. 

Market research is beneficial to a variety of organizations like:

  • Businesses
  • Political campaigns
  • Nonprofits
  • Healthcare, etc.

Its widespread impact across industries is why market research is an important aspect of every field. 

Difference between market and marketing research

When talking about market research, it’s not uncommon to come across the term “marketing research.” 

While both terms stem from the same industry (research), there is a subtle difference between both that can be summarized as follows: 

Market researchMarketing Research
What is it used for?To study a specific target market or audience segment to inform a variety of business decisionsTo study a market or audience segment to inform all aspects of an organization’s marketing
Primary data points/insightsMarket trends, audience challenges, competition, audience attributes, etc. Concept testing, brand perception, advertising effectiveness, copy testing, etc.

Generally, market research is an umbrella term that also encompasses marketing research. But since the objective is different, marketing research became a methodology of its own. 

For this post, we’ll be focusing on market research. You can check out our guide on the marketing research process here

Types of market research

Before we go over why market research is important, let’s take a quick look at how it’s conducted. 

The process of data collection for market research can be divided into two main categories:

1. Primary research

This entails collecting first-party data, which is information that you procure directly from your customers. Popular methods of primary research include: 

  • Surveys
  • Interviews 
  • Online forums
  • Focus groups
  • Observations, etc.

2. Secondary research

Secondary research refers to second-party data, which is information that already exists in the market. You simply go over it and interpret it for your organization. Examples of secondary research include: 

  • Articles
  • eBooks
  • Benchmark reports
  • Whitepapers, etc.

Both these categories of market research can be further divided into two types:

  1. Qualitative research: Collection of data that is more subjective in nature, like open-ended questions. 
  2. Quantitative research: Collecting data, typically numerical, that can be measured for statistical analysis, like ratings. 

Each of these research methods serves a specific need and comes in handy based on the insights you need. For more details on these research methodologies, check out our detailed post on types of market research methods.

Next, we’ll look at some of the most common reasons why market research is important for different types of organizations. We focus specifically on:

  1. Businesses
  2. Nonprofits
  3. Political organizations

Let’s dive in. 

Why is market research important for businesses?

Businesses often struggle with making strategic decisions since most of them are made out of assumptions or hearsay. However, market research provides companies with relevant data, thereby helping them make more informed decisions. 

Businesses most commonly leverage market research for the following data. 

Identify new customers

It’s a fact that in business if you’re not growing, you’re dying. While many factors indicate growth, the primary one that all efforts lead to is the growth in customers. 

With market research, you get the answer to questions like:

  • People who will be best suited for your product or offerings.
  • What are their behaviors and characteristics?
  • What are they looking for, and how can you fill those needs? 
  • How can you position yourself so they find you easily? 

These questions, in turn, help you determine where you can find your new customers and how to best appeal to them and draw them in. 

Best method for research

To find new customers, a mix of primary and secondary qualitative research works best. More specifically, focus groups, online forums, and surveys for primary research and industry and market reports for secondary research.

Initially, you may not have enough data or access to the right people to survey to start. At this point, some secondary research will be best suited to give you a headstart. Once you have a better idea of which audience segments to target, you can go ahead with primary research. 

You May Also Like: What is the Right Way to Conduct Online Market Research? All the Techniques Explained

Identify the opportunity for expansion.

Another aspect of a business’s growth is the expansion in its offerings and services. This could be a result of:

  1. Changing market trends that may require a company to expand its services. 
  2. Nearing a point of customer saturation for their existing services. 
  3. General expansion to offer a more comprehensive solution. 

No matter the reason, identifying expansion opportunities requires answers to questions like: 

  • How is the market changing? Are the business’ current offerings still relevant?
  • How big is the target market for the existing offerings?
  • What are direct competitors doing?
  • What complements your services, and will your customers benefit more if you offer them? 
  • Is there a gap in market needs and what you are offering? 
  • What are your competitors offering that you are not, but the market is demanding? 

Best method for research

Here, again, a mix of primary and secondary research (quantitative) works best. Primary research would work best for internal research like your customers’ needs. For more questions about market trends and competitors, you will have to do secondary research. 

Get to know your existing customers.

Your existing customers are a source of relevant data too. The kind of insights you can get from loyal customers can help you make better strategic decisions at every level. Plus, knowing your customers better also helps you understand:

  • What should you continue doing so your customers stick with you?
  • What areas can you improve on to ensure customers are satisfied? 
  • Things you can do to attract more customers like the ones you have.

Best method for research

Primary research is the best way to get to know your existing customers. You can have surveys that are both qualitative and quantitative in nature. 

Why is market research important for nonprofits?

There are several actionable insights that market research can provide to nonprofits. But all of them lead back to the same goal, which is ensuring that the nonprofit secures enough funding to keep running. Some of these essential insights are as follows. 

Identify new stakeholders.

When we say stakeholders, most of you may think it’s donors. While donors are essential stakeholders for a nonprofit, they aren’t the only ones. Nonprofit stakeholders also include: 

  1. Board members, 
  2. Staffers,
  3. Volunteers.

If a nonprofit has its mission and goals laid down well, market research can help them understand:

  • Who would be the best people to get to those goals?
  • The steps they’ll need to take to get to that goal. 
  • The kind of skillset you must look for. 
  • Who will be more likely to help you out with your mission? (E.g., with a donor/steward persona).

A detailed understanding of these questions and their answers will help you direct your outreach efforts better and bring in more passionate stakeholders.

Best method for research

If you have an extensive database of donors, volunteers, and others, you can carry out primary research because your existing stakeholders are likely to have a wealth of insights. If you’re a smaller organization, you can go with both primary and secondary research. 

Identify better outreach opportunities.

Communication is one of the most crucial aspects of a nonprofit. A strong communication plan helps nonprofits get to their target stakeholders, which in turn helps them reach their fundraising goals faster. 

To make communication efficient, you need to ensure that you know where your audience is and they are getting your message. You need to understand: 

  • Channels that your audience is most active on.
  • What are their communication preferences?
  • How can you improve your outreach efforts to reach your audience?
  • What are the latest fundraising channels that your target audience is most responsive to? 

Best method for research

Secondary research would help you get more universal trends and practices around communication and fundraising. However, if you have the resources, you can also leverage primary research to get some of these insights from your existing base. 

Why is market research important for political organizations?

Political organizations have been consistent users of market research. Campaigns and political consultants use market research commonly for the following use cases. 

Voter profiling and segmentation.

Voter profiling is the process of identifying target groups who are likely to support your policies and those that already do. Based on these insights, campaigns further segment contacts in their databases and target them accordingly. 

For instance, anyone likely to support you may need some persuasion, whereas those who already do just need to be nurtured to vote. 

Market research helps political campaigns find out:

  • What demographics, locations, communities, or other groups resonate with your policies the most?
  • What communities/demographics should the party target to secure the maximum support?
  • What is keeping other groups from supporting the policies?
  • Communication preferences of voters and likely supporters. 

Best method for research

Since political campaigns generally have access to voter databases, primary research works best. Campaigns often leverage telephone polling to carry out such voter id and persuasion campaigns.  

Understand candidate/policy perception.

To secure the win number, candidates have to make sure that voter perception is not different from how candidates want to be perceived – political campaigns leverage market research to ensure that. 

With the help of surveys, focus groups, and observations, campaigns tend to find out whether:

  • The voters agree with the candidate and their policies.
  • If the policies and candidates are considered strong enough to garner their vote.  
  • What would it take to persuade voters to agree with the candidate (if they don’t)? 
  • Do voters fully understand the policies, the candidate’s stance and how it will benefit the community? 

Without this data, campaigners would be lost on how to craft their messaging, outreach, and even policies to resonate with their target groups. This is why market research is important for political campaigns. 

Best method for research

As mentioned, campaigners leverage interviews, focus groups, and observations to understand voters’ perceptions, all of which come under primary research. 

Moving forward

Hopefully, the post answered the question, “why is market research important?” to your expectations. Now that you know its function and importance for your organization, you can prepare for the research. 

But before you start the process, you might want to get a hold of some tools to help you out. Our post on market research tools lists out some of the best software that you should look into. Shortlist what’s best for you and get started with your research!

Featured image source: Photo by Lukas Blazek on Unsplash