Market Research for New Business

The Importance of Market Research for New Business

Market Research for New Business is the process of gathering information about the market a business intends to enter or compete in. The primary goal of this research is to understand customer needs, competitors, economic conditions, and market trends. By doing so, it supports the planning of effective marketing strategies and business operations. Market research enables new businesses to make more informed decisions, reduce risks, and enhance the potential for long-term success in new business development.

Case: The car company enters the “battery” market from the car manufacturing business to the large battery rental companies in Japan.

Industry

Automobile

Issues

The car manufacturing and sales industry, which serves as the company’s primary business, is currently struggling due to the entry of electric cars into the market. Following this, the company has witnessed a decline in sales across various vehicle types. As a result, the company is actively seeking new businesses that can serve as the primary revenue source in the future. However, the exact nature of this new business venture remains unclear.

Keywords

> Marketing research for new business development
> Partner for new business development
> Electric Vehicle (EV) disruption

Main result

This car company has collaborated with LiB to embark on a new business in the realm of environmentally friendly battery rentals. They surveyed the market and identified three business partners within a year. In addition, these batteries are versatile and can be used not only for electric cars but also for buildings. This groundbreaking initiative has led to the possibility of generating an annual revenue of up to 50 million baht for the car company.

Script

Companies that are planning to venture into new businesses are often concerned about how to effectively use their existing resources. This is particularly true for companies that have already allocated their various resources toward their existing businesses. When it comes to developing new products or services, these companies often struggle to leverage the advantages of their resources or capitalize on the strengths of their organizations. Further, despite their confidence in their own strengths, they are uncertain about the demand for these new products and services.

The subject of this case is a major car manufacturer in Japan that produces a wide range of vehicles, from two-wheeled vehicles and beyond. However, the emergence of electric vehicles in the market has not only led to a decline in sales across all their products but has also created opportunities for new electric vehicle businesses. The company wants to start a new business without delay as they do not want to miss any opportunities in the market in the event of a smooth transition. Therefore, they contacted LiB to help them establish a new business from scratch.

The car manufacturer possesses a valuable resource that can serve as a competitive advantage – a battery for a specific type of vehicle. They intend to use these batteries to establish a foothold in the electric car market. Initially, the company faced uncertainty regarding the target customer group for their batteries and the level of demand within each group.

To address these issues, LiB helped the car manufacturer identify business opportunities from an inside-out perspective. They recognized the potential of the battery business and proposed that the company establish its concept of battery rental services, known as Battery as a Service (BaaS).

[Market research on “batteries” in the Japanese market]

The most challenging aspect of this project was not creating new and unique business ideas but discovering opportunities to establish a new business venture in the battery rental market that new players cannot easily enter. The reasons behind this are explained below:

The car company lacks the capability to produce batteries themselves, which necessitates their reliance on existing batteries to launch their own battery rental business. However, the company is unable to offer batteries at a lower price and superior quality than established battery manufacturers. Therefore, the company is unable to discern the demand for their batteries in the market.
The car company remains uncertain about the existence of potential customers in the Japanese market, as their batteries are only compatible with certain types of vehicles.
The car company faces challenges in swiftly conducting market research due to strict company policies that require time to prepare documents requesting permission to contact external parties for data collection.

The factors that contributed to the success of this project were LiB’s ability to rank the usage methods of all types of batteries and conduct interviews with battery users from over 30 professions. As a result, they discovered a substantial demand for improved battery usage or dissatisfaction with current battery solutions in everyday life. This allowed LiB to devise a business model for battery rentals and secure the company’s initial customer base within three months.