Is market research expensive? Should I invest in it?
Should I invest in market research?
Before deciding whether to invest in market research, consider this: in Brazil, more than 71% of new companies close within their first five years! On the other hand, “expensive” could mean:
• Investing in equipment, raw materials, packaging, staff, registrations, a lawyer, an accountant and HR, and not getting the return you expected.
• Putting in your own money or borrowed capital, only to “discover” a few months later that there’s no market for the product!
• Spending on design, decor, rent, renovations, inventory, advertising and marketing, only to find out that the customers who walk by your location don’t have the income to buy what you’re selling!
So “expensive” is quite subjective and can’t be judged in absolute terms alone! All these situations are examples that very often explain why so many new businesses fail to survive or get established.
But they also show how research could guide business owners when they make risky decisions.
There’s still little awareness that research exists to reduce business risk, to replace guesswork (I think it’ll work, I think it’ll sell, I think customers will want it, I think there’s a market, I think it’ll be great…) and to test hypotheses!
The real question behind “is market research expensive?” is always: how does the cost of the research compare with the amount you plan to invest? In other words, if a venture requires a certain amount of capital, what share of it should go to research to reduce the uncertainty?
Nobody does research just because it’s interesting, trendy or fashionable!
Market research exists to answer specific questions, resolve doubts that carry risk, guide strategy and positioning and support decisions; in short, to help companies grow, projects get off the ground and ideas turn into results!
Serious research looks at data from the past, tracks what’s happening now and points to future trends and directions.
But making proper sense of all these numbers and indicators takes experience, accumulated knowledge and a great deal of study and analysis. That, however, is a topic for our next article, on how to choose the right research company.