What is Market Research: Methods, Benefits & Role in Financial Decisions

Key Insights

1. Using simple surveys or watching what’s popular can help you keep items in stock that your customers really want.
    
2. Doing a bit of research can keep you from buying products that just sit on the shelf, which could save you a lot of money.
    
3. When you know what your competitors are doing and what your customers like, you can set better prices, offer discounts that actually attract buyers, and increase your profits.

The process of collecting data about customers, competitors, and market conditions for the purpose of enhancing business decisions is known as market research. It helps businesses learn about what customers want and how to succeed.

Example:

With a ₹10,00,000 budget, Ramesh plans to open a restaurant in his town. He has been doing market research before starting our restaurant, to minimise risks and make a well-informed plan.

• Understanding His Target Market: Ramesh determines whether the population at large likes vegetarian or non-vegetarian food.
   
• Analysing Consumer Behaviour: He observes that the local office workers spend between ₹150 and ₹300 every day on lunch.
   
• Identifying Market Trends: He observes a demand for home-cooked, healthful meals.
   
• Interpreting Results: Ramesh chooses to open a low-cost, healthful restaurant based on his research.

Table: Ramesh’s Market Research 
 

This research table reveals key insights into customer preferences, budgets, and trends for a food business.
 

By aligning the menu with market demand, offering affordable, healthy, and traditional meals, the business can effectively attract and serve its target audience.

Ramesh implements this research to create an effective strategy for his restaurant. This blog helps you understand market research. Next, we will talk about the key methods of market research.

Bonus Tip: Review trends every 3-6 months. Always research before launching new products or changing prices to stay relevant and competitive.

Key Methods of Market Research

Businesses make use of methods for market research to collect data about their clients and competitors. These techniques help in making well-informed decisions before setting up a business.

Example:

Rakesh wants to use ₹5,00,000 to open a mobile accessory store in his city. He uses many kinds of market research techniques to understand competition and demand before making an investment.

Key Methods Rakesh Uses:

• Surveys & Questionnaires:
  • Rakesh asks 100 people in his area about their mobile accessory preferences.
  • Finds that 70% buy screen guards (₹100-₹300) and cases (₹200-₹500) frequently.
     
• Competitor Analysis:
  • Visits 5 nearby shops and notes their prices, best-selling items, and customer complaints.
  • Discovers that most shops don’t offer discounts on bulk purchases.
     
• Observation:
  • Watch customers in electronic markets for a week.
  • Notices many ask for branded items (₹500-₹2000), but shops have limited stock.
     
• Online Research:
  • Checks e-commerce sites (Amazon, Flipkart) to see trending accessories.
  • Learns' wireless earphones (₹800-₹3000) sell the most online.

Table: 
 

Rakesh improves his chances of success and effectively plans his store by applying these strategies.

Bonus Tip: Businesses often see 20-30% higher sales by aligning products with demand, offering right discounts, and cutting unpopular items.

Benefits of Market Research

Businesses can better understand customer needs, market trends, and competition by conducting market research. For higher revenues, it reduces risks and improves decision-making.

Example:

In a podcast, Amber, the owner of a chain of restaurants, discussed how market research allowed him to expand his company from ₹20,00,00 to ₹2 crores in just three years.

Key Benefits Amber Experienced:

• Understands Customer Preferences:
  • Conducted surveys and found that 60% of customers wanted healthier options.
  • Added a "Healthy Bowls" menu (₹200-₹400), increasing sales by ₹5,00,000 per month.

• Identifies Profitable Trends:
  • Tracked food trends online and noticed demand for vegan desserts.
  • Introduced vegan gulab jamun (₹120 per plate), selling 200 plates per day.

• Reduces Wastage & Costs:
  • Analysed sales data and stopped slow-moving dishes (saving ₹50,000 per month).
  • Focused on top-selling items like biryani (₹250 per plate).

• Beats Competition:
  • Checked rival menus and pricing, then offered combo meals (₹350 for thali + drink).
  • Attracted 30% more customers than competitors.
     
• Improves Marketing:
  • Found that Instagram ads brought more young customers.
  • Invested ₹10,000 per month in social media, increasing orders by 20%.

Table: 
 

This market research combines surveys, competitor analysis, and trend observation to identify key customer needs and gaps in the mobile accessories market.
 

By stocking popular brands, offering bulk discounts, and expanding budget-friendly wireless earphones, the business can meet demand and gain a competitive edge.

Amber's success provides an example of how market research can transform a small business into a successful brand. He increased his revenue by making intelligent choices based on market research and customer feedback.

The Role of Market Research in Financial Decisions

Before putting money into a business, owners can better understand consumer demands and market trends by conducting market research. It guides wise investments and guards against monetary losses.

Example:

Ankit has a ₹3,00,000 monthly budget for his clothing store. He improved his financial decisions and boosted his profits by 40% in a single year by conducting market research.

How Market Research Helped Ankit’s Financial Decisions:

• Right Inventory Purchase:
  • Customers were surveyed, and it was discovered that there was an increasing demand for ethnic clothing priced between ₹500 and ₹2000.
  • Reduced stock of formal shirts (slow-selling) and invested ₹1,00,000 more in kurta sets.
  • Result: Sales increased by ₹1.5 lakhs per month.

• Pricing Strategy:
  • Compared competitor prices and realised his jeans (₹1200) were overpriced.
  • Reduced price to ₹999, attracting more buyers.
  • Result: Jeans sales doubled, earning ₹80,000 extra per month.

• Discount Planning:
  • Found that customers preferred "Buy 2 Get 1 Free" over flat discounts.
  • Ran this offer on t-shirts (₹299 each) during festivals.
  • Result: Cleared old stock worth ₹2,00,000 in 15 days.

• Cost Cutting:
  • Noticed that ₹20,000 per month was wasted on unpopular sizes.
  • Stopped ordering XXL sizes (only 5% sales) and saved money.

• Best-Selling Items Focus:
  • Tracked sales data and found women’s sarees (₹800-₹2500) sold fastest.
  • Allocated 50% of the budget to sarees instead of shirts.
  • Result: Profit margin improved by 25%.

Table: 

This table shows how data-driven decisions, based on customer research and sales analysis, directly improved financial outcomes for a clothing business.
 

By aligning inventory and pricing with market demand, the business boosted sales, cleared stock efficiently, and increased profitability.

Ankit's research enabled him to make smart financial choices by reducing waste, setting the right price, and buying what sells. His store became extremely profitable as a result of this. For small businesses, market research serves as financial guidance.

Conclusion

For entrepreneurs, market research acts like a roadmap, revealing consumer desires, guiding investment decisions, and helping to avoid risks. Any small business, including clothing stores, can benefit from surveys and sales data to make informed decisions.

By analyzing trends, researching competitors, and listening to customers, you can save money, increase sales, and grow gradually. 

Research enables businesses, whether they are restaurants, mobile shops, or clothing stores, to turn assumptions into well-informed choices. The key is straightforward: success will follow if you conduct thorough research before spending.

FAQs

How does market research help my small business?

Market research tells you what customers want and what competitors are doing. This helps you make better decisions and avoid wasting money.

What’s the easiest way to do market research?

Start by talking to customers and observing what sells best in your area. Simple surveys or checking prices at nearby shops also work well.

Can market research increase my sales?

Yes! Knowing customer preferences lets you stock what sells. For example, adding popular items can boost sales by 20-30%.

How often should I do market research?

Check trends every 3-6 months, as customer tastes change. Before big decisions (like new products), always research first.

Why do some products sell while others don’t?

Research shows what customers prefer. For example, colourful phone cases may outsell plain ones, so stock more of what works.

Can online research help my local shop?

Yes! Check what’s trending on e-commerce sites. If wireless earphones sell well online, they’ll likely sell in your shop too.

What’s the biggest mistake to avoid?

Guessing instead of researching. For example, buying expensive stock without checking demand can lead to losses.

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