Describe the reasons why a business conducts market research. - Leaving Cert Business - Question B - 2007
Question B
Describe the reasons why a business conducts market research.
Worked Solution & Example Answer:Describe the reasons why a business conducts market research. - Leaving Cert Business - Question B - 2007
Step 1
Size/Potential of Market
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Answer
The business needs to undertake research to find out the actual size of the target market and the potential to enter that market. This information helps in determining whether the market is viable and worth targeting.
Step 2
To Identify if There is Demand
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Conducting market research allows the business to gauge whether there is sufficient interest in the product. This feedback is crucial as it informs the business if they should proceed with production or adjust their offerings.
Step 3
To Establish a Price Point
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Market research assists businesses in determining how much it will cost to produce, distribute, and promote the product. Additionally, it helps ascertain how much potential customers are willing to pay, ensuring competitive pricing.
Step 4
To Identify Competitors
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Understanding the competitive landscape is essential. Businesses must gather information on the number of competitors, their product range, and pricing strategies. This insight aids in formulating strategies to compete effectively.
Step 5
Set Targets for the Business
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By understanding market dynamics through research, businesses can set specific goals and targets to achieve over a certain period, maximizing their chances of success.
Step 6
To Access Finance
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When seeking funding from financial institutions or government agencies, it is crucial for businesses to provide comprehensive market research. This validates their business model and demonstrates potential profitability.
Step 7
Identify More Opportunities
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Engaging with potential customers and monitoring market trends through research can lead to the discovery of new ideas and enhancements for existing products, opening doors for greater innovation.
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