Introduction
Market research is the basis of any marketing move or formation of a strategy. Without it, managers can be overconfident and think they might not need research. That is one of the biggest mistakes made in my business today. With Kudler’s example, we will look at the importance of market research, wherein the case market research is needed the most and the importance of competitive analysis.
Market Research
The importance of market research is self-explanatory because of the existence of such concepts as the ‘financial growth gap’. This is the difference between actual and projected/expected business performance due to the lack of market research. This means that lack of market research almost always causes a negative difference in performance, and why would it not? This brings us to the question of what market research does for a business.
Market research consists of everything from customers to competitors. Not just the different players in the market but the market itself are studied as well. In Kudler’s case, we see that the business started off on a small scale and later expanded. Expanding business means expanding your market, customer base, operations and problems. Thus, greater management skills are needed and without planning, efforts are wasted. There is no doubt that tackling a newer bigger market would mean developing a new market strategy. For that, Kudler needs to get more than just an idea about the different factors affecting the business. These factors can be examined through close study of the market, its players, customers, competitors, economics, market dynamics, location, suppliers and much more. First of all, Kudler needs to focus on its strong areas; the fact that customers know the business as a source of good quality, organic, well-prepared, home-like, tasty food products, all available under one roof. But that is not enough to take on the big fish in the bigger pond that Kudler’s is stepping into.
The areas where Kudler’s needs to focus on, as far as market research is concerned, are the market analysis, customer preferences, suppliers, branding and competitors. The market analysis part ensures that the new bigger market is understood and no mistakes are made during the business. This would be an overview of what sort of products are already there, what are the dynamics, different macro and micro-environmental factors that affect business; kind of like a preview for the research areas that follow.
For Kudler’s to retain its good standing even after expansion, they need to keep the customers feeling as if they are walking into that same homely shop that sells their favorite foods, with sales representatives that know them by name and most of all; the food that tastes the same. With new customers with different preferences and options to choose from, Kudler’s needs to know what they want, how they want it, why they want it and what do they not want. This can be done through customer research surveys; interviews, focus groups, questionnaires and even by using relevant secondary syndicated data available from research agencies. By understanding customers, Kudler’s will be able to maintain that standing that it has had since its inception; it will know how to, not only satisfy customers but delight them by knowing what they want before even they know it. Also, the focus should not be lost from its current and loyal customers as the majority of the business comes from those few loyal customers. Many businesses, when they expand, make the mistake of neglecting their current customers in the greed to acquire more. But what they end up with is a pool of disloyal and unprofitable customers with a few that works out. It is also much more cost-effective to deal with your current loyal customers who are less susceptible to competitor’s promotional activities, are less costly and timely to service and know the company well.
Suppliers also play a major role in the market. Since the business will be expanding, Kudler’s will have larger requirements and prompter service times. The business needs to analyze its current suppliers and meet with them to determine and decide whether the large-scale operations can be supported by them or will Kudler need to find new suppliers that can cater to their increased needs for fresh produce. Another issue here is the change in quality with the change in suppliers; Kudler’s cannot afford to lose quality over quantity but some compromise must be made. Therefore supplier evaluation in terms of capacity, service and quality needs to be conducted for current as well as other suppliers for future prospects.
Perhaps the main part of a market study is to get a clear brand picture of Kudler’s name. In this section, the business needs to see where the name stands relative to its competitors and the market from a customer’s perspective. The customer analysis covered earlier will serve an important purpose here and will help Kudler’s determine the edge it has over competitors and the areas of improvement for the future. Kudler’s need to have a value proposition based on its life-long values and image, and create a brand association with those values. This will help the business differentiate itself from competitors and create a place for itself in the minds of the consumers.
Finally, the most important aspect that needs to be discussed in reference to this paper is the competitive analysis; the study of the competition and how it works. Since Kudler’s will be expanding into newer bigger markets, it will face large-scale competitors already there, who have made a name and place in their market. Kudler’s will be a newcomer into the expanded market and will need to experience fierce competition. This analysis will be done on information such as data on all relevant competitors in the market, their products, services, unique selling propositions, their strengths and weaknesses. By knowing what the competition is like, Kudler’s will fully understand what it takes to make it in the market or fail. They will know what current customers look for and avoid in the products that they offer. Most of all, by understanding the competition, Kudler’s will be able to set itself apart from them and be different so that it can make a mark on the minds of the customers. Therefore, a thorough competitive analysis allows a company to understand others like itself and is a vital part of formulating a successful market strategy.
Conclusion
A strategy based on comprehensive market research ensures that every concerning factor is considered and that no area is missed. It also determines whether the business is ready to expand operations or not; because the expansion of operations in unfavorable conditions can work the opposite way for businesses and if not prepared, can cause well-established small-scale businesses to meet their doom. Kudler’s is a well-known business and by understanding the market dynamics before further expansion, it will know just what to do in order to maintain that success.
References
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McBride Financial Services. (n.d.). 2009. Web.