Businesses large and small benefit from market research. The question is what kind of research is needed and how much to allocate. Market research costs vary according to the type of research and how comprehensive it is. Finding out more about the market is an investment that can yield returns in sales and profitability.
What Is Market Research?
Market research is the process of collecting and evaluating information about an industry, companies within the industry, and their products and services. The research is also focused on present customers and potential markets. There is often further analysis into demographics, spending habits, and location of the customer base.
Thorough market research is essential to test the waters before starting a new business, launching a product, upgrading a service, or moving into a new market. It provides information about competing companies and provides insight into understanding potential markets. This research is the first step towards developing market segmentation or dividing potential customers into distinct groups for focused strategies and product differentiation.
The process of market research includes primary and secondary research. Primary research is conducted and compiled by the company or is outsourced. Secondary research is prepared by a third-party, such as reports from government agencies and studies produced by trade associations.
Obtaining secondary information that has already been prepared may be free or may cost a small fee. Secondary information is usually less expensive than primary research, and it can be accessed relatively quickly. However, the drawback of secondary information is that it is not unique and competitors have access to the same market data.
Primary research may require an investment of time and money, but it is original and can provide unique insights. Companies will have to decide whether it is worthwhile to have in-house departments conduct the primary research or to enlist the aid of a marketing research company. The material for primary research may include surveys, interviews, focus groups, phone calls, and alternative data.
Budgeting for Market Research
The first step to setting a budget for marketing research is to look at the overall budget for the entire project, then determining what percentage of the general budget will be used for market research. Decide on a percentage that is reasonable for the product or launch.
Once the amount has been decided on, adjust expectations according to the budget. If there is $100,000 allocated in the marketing research budget, avoid drawing conclusions from the first $5,000 worth of surveys. On the other hand, if the marketing budget is $10,000, spending $2,500 on surveys should yield crucial information.
Use What Is Available
Original research is valuable, particularly if it is custom-made for a specific company or product, but before outlining these projects, ensure that all of the secondary research has been used. There is a wealth of syndicated research in journals on the market, competitors, products, and potential customers. Although primary research is important, no one wants to pay double for the same information. Collecting what can be gleaned from existing reports saves time and money.
Examine Costs and Information
After a thorough examination of secondary information, it is a good practice to take a second look at the budget in case it needs to be revised downward because of the amount of information that has been found or upward if new questions have emerged.
Before conducting primary research, do a full examination of what kind of information is needed, what are preferred sources, and how much it is going to cost. Generally, customer market research reports can cost anywhere from $5,000 to $50,000. The more the reports cost, the more specialized and in-depth the information is. It is essential to be prepared for how much information can be expected at each price point.
Top Level Reports
Top-level reports cost between $100 and $1,000 and are a general view of the market, the size of the industry, the major companies in the given industry, the fundamentals of the industry, and the top players and reasons for the current state of the industry.
Full Market Reports
Full Market Reports run the gamut from $1,500 to $8,000, but the average cost around $3,500. They provide a full picture of an industry, including categories and sectors, the state of the market, and projections for its future. The report will discuss innovations and trends and provides expert opinions on what can be expected in the industry for the next few years.
Product Detail Market Reports
A Product Detail Market report costs $15,000 to $35,000. Like the Full Market Report, this report covers the industry and performance of top players and subcategories, but it provides an in-depth fundamental analysis of all categories, subcategories, and major companies.
Rather than just indicating market trends and innovations, the Product Detail Market Report will discuss trends for specific products in certain markets and regions. The Product Detail Market Report is ideal for a company that wants to know how much their product is selling in specific areas of the world compared to competing products and services.
Market Research as an Investment
Market research is the key to ensuring the product releases and innovations reach their targets. For most companies, market research is a worthwhile investment. Whether or not it will yield a full return on the investment depends on planning and finding the right market research option and budget for a specific project.
There are ways of keeping costs down by doing secondary research, but for custom research, the higher the cost, the more specific the information. It is a question of how specific the research needs to be and the size of a marketing budget. Finding the right price range and type of research is likely to yield significant rewards.