To make effective strategic decisions, business leaders need an accurate and objective understanding of market growth trajectories, key opportunities and threats, and the overall competitive landscape.
However, conducting market research is usually easier said than done, especially in a business environment where people are called to do more with less amid frequent budget cuts and staff turnover.
Market research is often a time-consuming, labor-intensive task, and organizations may lack the specialized skills and tools to build a complete knowledge base. As a result, many organizations choose to outsource market research to obtain the information they need by working with a third-party research firm. Outsourcing comes with several key benefits.
Top Reasons to Outsource Market Research
1. Make Data-Driven Decisions
“In this day and age, where major decisions need to be supported by independent data, there continues to be a need for outsourcing market research,” explains Lee Steinbock, Co-Director of Freedonia Custom Research (FCR), a division of MarketResearch.com. It’s much easier to make effective business decisions and gain stakeholder support when you have credible evidence to back up your strategies.
2. Access Specialized Knowledge and Skills
Market research firms offer expertise that companies may not have internally, such as developing economic models for measuring demand and forecasting market growth. A third-party firm can also pinpoint trends that cross multiple industries and offer a richer, wider viewpoint on any given topic.
3. Gain a Fresh, Impartial Perspective
Companies can become mired with internal biases and blind spots. “We don’t always know what we don’t know,” says Research Manager Jennifer Christ of The Freedonia Group, a division of MarketResearch.com. “Companies can be slowed down by being committed to their own view. An outside market research partner can help a company see new opportunities and trends.”
4. Gather Competitive Insights
“Firms like FCR also have the ability to call a company’s competitors, which is ethically difficult for a company to do internally,” says John Sherwin, Co-Director of Freedonia Custom Research. This primary market research can uncover detailed and actionable insights about a competitor’s product portfolio, pricing, distributors, sales growth, and more.
5. Obtain Qualitative Research
Competitive intelligence is just one component a market research firm can provide. Custom market research firms like FCR are adept at interviewing market participants on every node of the value chain, including customers and trade partners. These in-depth interviews can answer important “why” questions that dig deeper than surface-level numerical data to help businesses pinpoint specific areas of improvement.
6. Save Time and Money
There are several different ways to outsource market research services, but “all of this can typically be done in a faster time frame than if the work were to be done internally,” according to Steinbock. By purchasing insights, companies can save hundreds of hours of research and access information that would be very difficult to obtain any other way.
Although market research is not cheap, it can help mitigate the hidden costs associated with poor business decisions and free up staff to focus their efforts on other urgent tasks.
7. Maintain Flexibility
Outsourcing market research also gives companies much more flexibility. “Companies are able to acquire market research on an as-needed basis instead of hiring, training, and retaining an in-house staff,” explains Christ. When headcount and overhead costs are a concern, maintaining this flexibility can give you a valuable edge.
Possible Disadvantages
Outsourcing market research may include some potential disadvantages if you aren’t careful. The quality of the market research you receive will depend on the quality of your research provider and whether they are a good match for your needs. Incomplete or inaccurate data or analysis can lead a company down the wrong path, so it’s important to vet a research firm ahead of time. Understanding the scope of the research and maintaining good communication is also key to avoiding misunderstandings.
How Companies Outsource Market Research
Many types of market research are readily available for immediate purchase through “off the shelf” syndicated market research reports (such as those available on The Freedonia Group and MarketResearch.com). These reports are an excellent option if you need information on a broad topic. For example, if you need an overview of the US pet food market, plenty of market research reports are available for download at the click of a button. Coverage varies, but syndicated market research reports typically provide expert data on market sizing and forecasts, segmentation, industry trends, market drivers and challenges, and the competitive landscape.
Companies can also commission more targeted data about smaller, niche industries through custom market research projects. For example, if you were a specialty manufacturer looking to expand into the North American market, you could hire a custom research firm to obtain a better understanding of the market potential in each US state, the competitive landscape, and other factors that could facilitate a successful market entry. The information in a custom market research project is proprietary and confidential, which is another added benefit.
Custom market research can help address a variety of business challenges that may require more targeted information such as new product development, geographic market expansion, financial filings, mergers and acquisitions, capital expenditures, and competitive intelligence.
Combining Multiple Resources
Keep in mind that companies often use a blend of internal and external resources—as well as syndicated research and custom projects—to achieve different goals at various times. A quality third-party research firm should serve as an extension of your team, working collaboratively with you to help supplement the knowledge and skills you already have internally.
Best Practices for Outsourcing Market Research
To ensure a successful outcome, be sure to find a market research firm that is experienced and has a depth of knowledge in the area you need.
“Get to know the company,” Christ recommends. “What is their quality control process? How long have they been in business? What kind of communication can you expect?”
If you need a custom project, choose a firm that will provide regular updates during the research process and are willing to explain the assumptions that go into the analysis. If you need a published market research report, find out what kind of support is provided after the sale to address questions you may have about the data.
In addition, make sure you fully understand the scope of the research to ensure it contains the information you need.
Key Takeaways
Outsourcing market research offers businesses a strategic advantage by tapping into specialized expertise, saving time, and often reducing costs. Partnering with a reputable research firm can give you access to a broader range of methodologies and resources to support informed decision-making and enhance competitiveness in the market.
Need Research Assistance?
Speak to our experienced research specialists about any information needs you may have. Call 800.298.5699 (U.S.) or +1 .240.747.3093 (International) or email customerservice@marketresearch.com.
Where to Learn More
If you are curious to learn more about the capabilities of Freedonia Custom Research, download a free white paper about voice of market studies, which provide deep market insights and actionable data directly from market participants.
About the author: Sarah Schmidt is a Managing Editor at MarketResearch.com, a leading provider of global market intelligence products and services and the parent company of The Freedonia Group.
