When Market Research Reveals An Ugly Truth: Breathe A Sigh Of Relief
What do you want from market research? Ideally confirmation – of your expectations for the future development of your business.
More often than not, this is what happens. Your instinct and market knowledge has served you well: the segment does hold potential, their business idea is competitive, and the market value is significant.
Sometimes however, this isn’t the case. Here’s an example of where it all went wrong, and when the ugly truth was revealed.
The story so far
Company X was expanding its existing business to the UK market. Management had estimated ten thousand units as their market size, and all were strong potential sales for them. They built a sales and marketing strategy, and were beginning to action these, when a stakeholder recommended formal market research.
We carried out a thorough market research and analysis exercise. Our conclusions when reporting back to the client were (in a nutshell):
- Market size figures were significantly overestimated: your market size is no more than two thousand five hundred (just 25% of the original estimate of ten thousand).
- Yes there is demand for your product in the UK marketplace: customers have expressed a strong interest in it
- Pricing must be keen, as the economic recession has focused customers on looking for the most cost effective services.
Quick thinking and innovation
While the bad news about their market size estimates was indeed that – very bad news – the company re-adjusted its plans accordingly. The initial shock and dismay quickly turned to positive thinking about how close they’d come to a really bad decision.
This company took on board the realities that market research revealed, and acted quickly. They were nimble and innovative enough to get back to basics, create an alternative business model for their company and change direction.
So what seemed like a disaster when they read our research quickly turned into a new opportunity. And what could have been a disaster was averted through research.
What do you expect from market research? Have you ever started a business with unrealistic expectations of your market or are you an effective market research user?