Businesses hoping to grow, have a variety of options when it comes to increasing sales. Market research is one outlet that is often overlooked. In their eagerness, entrepreneurs often race to a solution without grasping the insights necessary for success. Although some brands do not consider market research when it comes to sales growth, many who do are able to reel in its value when looking to grow. We have lined out five key ways it can help you increase sales which could change the way you use market research forever.
A competitive advantage could be a number of things. A better price, a superior product, better packaging, or a larger distribution. Determining which advantage is ideal for your business requires market research, specifically on your competition. A competitor analysis will reveal what options are available to take advantage of in the market, and based on the strengths and weaknesses of your competition, will help prioritize those options.
Conducting market research that maps out the competitive landscape will also allow you to identify what positioning is best for your brand or product, developing your brand image, along with sales. Ultimately, this information allows you to determine a competitive advantage that leads consumers to switch from competitors, to your brand.
Conducting research early on to define your target market before you launch a product is most common and certainly important, but only half of the picture. Target markets aren’t static, and as a result, a business should conduct regular market research to stay on their toes. Consumers will change in age, preferences, and interests as a matter of natural course. A business that can quickly anticipate, adapt, or address changes in consumers, is likely to perform best in a market and identify new opportunities first.
Market research, more than anything, is a tool that listens to consumers. It’s almost a given consumers will have some sort of feedback to share on a product, brand or retailer. They may be saying that they like the quality but not the price of a product or their feedback may suggest they have particular frustrations when shopping at a certain store. The variety of feedback a consumer can give can be greatly instrumental to sales initiatives and identifying underlying causes for sales trends.
Combining this and determining your competitive advantage, means you’ll have an understanding of the target market and competitive landscape so you know exactly what to do, who to do it for, and when to do it.
Many factors lead to poor sales numbers. It could be due to timing, packaging, distribution, quality, or many other reasons. Stagnant sales, declining sales, or even sales under-forecast may reflect first on your sales process, but could be in part due to other factors - most easily identified through market research.
Understanding consumer drivers or barriers of purchases, determined through market research, is the easiest way to understand why products aren’t selling. Many business only look at point-of-sale (POS) data, seasonality, or other trends they hear about in the market as a cause. What this does is neglect the underlying consumer-oriented cause and leaves you only addressing the tip of the iceberg.
A retailer may tell you that your product isn’t selling because it’s priced too high. What your insights could tell you is that it’s priced just right, it’s just the placement within the store that’s wrong or the packaging that misleads consumers or fails to call out key attributes that drive purchases. Either way it’s likely you can find a way to encourage your product to sell by complimenting your sales data with market insights.
While a business can certainly survive with just one product, a truly successful business will identify new opportunities for their products and more importantly, their brand, through product insights. Market research is very impactful to determining which direction to take your sales portfolio. For example, it can answer whether a product should be eliminated, new features should be added or an if a new product should be developed. According to Adrian Pepper of the Association of International Product Marketing and Management (AIPMM), there are four strategies a company can take to grow a sales portfolio:
1. Gain more users by converting competitor brand purchasers to your brand or by increasing the usage of your product. This is certainly challenging to do if you don’t know what your competitive landscape is or the usage behavior of your product.
2. Attract new users, by entering new markets. Different from the first strategy, this one looks to enter a completely new segment identified through market insights, whether that is through going global or gaining access into more channels. The other option with this strategy is to identify unknown uses for your product that could apply to a different target market then your existing users.
3. Replace a current product with a new product for current customers. The right insights reveals the life cycle of a product, and the right time to introduce a replacement. Product insights with your existing customer base will let you know the right features to drive repurchase rates. A good example of this is Apple; they stick to a regular schedule for their product releases and always have something new to show for it, which keeps their existing consumers excited for the next generation of its products.
4. Offer new products based on consumer insights that complement the current products. A good product mix encourages purchases and enhances the sales portfolio. However, this can be a daunting task to try and take on first thing, so it’d be beneficial to look at this strategy once a business is more mature.
No matter the primary objectives you had for conducting research, it’s likely you can utilize those insights in more than one area. In this case, it can be used for support during retailer negotiations to help increase placement or buy-in and therefore, sales. So if one of these ways of utilizing research to increase your sales hasn’t already resonated, then this one might.
Retailer negotiations can sometimes be a hard sell. Retailers can map competitors against each other or utilize their own insights and market knowledge against their suppliers. A business having already conducted research for their own internal purposes, should almost always try and take a few key insights to use in retailer negotiations. Whether it’s truly compelling or not, having hard facts or evidence greatly increases credibility.
Specific pieces of evidence gained through shopper insights, like net promoter score, repurchase probability or in-store behavior are all impactful tools to help gain listings or improve placement on shelves. Ultimately, market research allows companies to quantify their reasoning and rely on more than just the product itself. This can be huge to small and medium sized business when just the slightest edge can mean a world of difference to their bottom line.
Market research can have a larger impact than just helping to increase sales. Not only does it help diagnose the root causes behind a change in sales, it can help streamline the product development process, influence the way you budget, lend insight to engineering, design, new innovations and more. Market research has a purpose within every function of a business, and can truly bring them together.
Once you get started with market research it has significant positive effects generating data-driven decisions, therefore reducing risk, improving strategic decisions and supports multiple aspects of a business.